Financial knowledge is a very good skill to have. Whether we want it or not, most aspects of our lives are about money. Data from the World Economic Forum shows that about half of Americans are financially literate. In the EU, 65% of citizens understand inflation, and 45% can explain compound interest.
Understanding economics can be hard, but the WEF explains that "it's important to develop a basic understanding of the influential role money plays in our work, social life, health, education and everything in between."
Perhaps driven by the knowledge that more than a third of the population is probably not very well-versed in financial matters, one netizen decided to ask what the dead giveaways are. "What screams 'I'm economically illiterate'?" they wrote.
Believing in trickle-down economics.Millionaires lecturing poor people how it's all about your attitude and mindset, as if the landlord will accept attitude as rent payment.Anyone promoting the idea that tax cuts for billionaires will feed the hungry, heal the sick, house the homeless, or in any way improve the lot of Joe Schmoe.Blaming a sitting president for gas prices.Refusing a raise because "it'll bump you up to the next tax bracket.".Professing that the current President is responsible for the economy, when in actuality, the President has very little to effect on it. Especially the global economy of which we are very much tied to."Investing" in crypto and NFTs.Not understanding marginal taxes.
No, there is no scenario where you get a raise and your take-home pay goes down because of reaching a new tax bracket.Confusing personal finance with economics.Complaining about endless credit card debt while getting every meal delivered. :|.Expecting prices to reduce when inflation goes down.There was a survey done in the last year or so, asking Americans whether they thought the current unemployment rate was a 50 year high or a 50 year low.
A substantial fraction thought it was a fifty year *high*.
Most people are totally unfamiliar with the actual economy and instead have beliefs driven by news headlines.A lot of people actively refuse to live at/below their means. You'll meet people making >$100,000 a year still living paycheck to paycheck because they just spend all the money they make.
Keep this in mind when people talk about the economy, since a lot of people complaining absolutely could be living comfortably if they downsized a bit. People who are actually struggling often sound basically the exact same as well-off people who have been slightly inconvenienced, which leads to a lot of distortion in how people perceive the economy.Big new truck parked in front of a house that looks like it is about to fall down.Asking why can't we just print more money to solve a recession.Routinely taking out payday loans.Oh man, there’s so many of these:
- Thinking that a tax write-off is equal to a tax refund
- Conflating one’s own financial struggles with rhetoric state of the national economy
- Thinking that rising interest rates are a cause of inflation, not a remedy of it
- Thinking saving cold hard cash outside of a bank is a sound investment strategy
- Defending tax cuts for the hyperwealthy while you personally don’t have two pennies to rub together.Tesla Cybertruck in an apartment complex parking lot.Belief in trickle down economics. Citing the commons problem.One time I worked at lowes, and a customer wanted to buy an item. I told her that she could buy the rest of the items and come back for that one when we had it in stock.
She says "no because then I'll pay more in taxes."
She must have thought that purchasing items separately would cost more in sales taxes.Old people on Facebook rambling about how people need to fill the empty minimum wage positions because they want someone to wait on them. Usually accompanied by "these jobs aren't career paths so you don't need living wage!"
And also "if we pay them more ice cream will be $10 a cone!".Paying the minimum on your credit card.Sunk cost fallacy.Confusing net worth with liquidity. Jeff bezos may have a net worth of billions but he doesn't have that money sitting in a bank. It's in his house, Amazon stock etc.Buying a new car when you are upside down on your current car loan, and you roll the balance into the new loan.Not knowing the interest rate of your credit card while carrying a balance. Especially on a large balance.Thinking that tax write-offs actually make some things free. I had an old boss that would constantly say since it was a write-off, what he was getting was free, even though he just spent $500 on it.Being upset over a smaller tax refund.Every single tik tok / Social media guru headline repeated but no actions ever taken
“ 401k ‘s are a scam and will be worthless “
“ need to have multiple air bnbs to retire “
“ it’s all about section 8 “
Etc .The relationship between supply, demand and price is fundamental economic knowledge, if they can't grasp that they would be considered "illiterate"."If we build more housing my rent will go up.".Proposing taxes on unrealized gains.Anyone with a single home who's pleased about soaring property prices
"Thank god I invested in the housing market when I did!"
You didn't invest dumbass. That's a roof over your head. It's a basic necessity. Now you will never, ever be able to afford anything better.I ran the finance department at a ~250 car/month Toyota dealership for the better part of a decade. 1-2 times a year, Toyota Financial (the corporate financial arm of Toyota, not the dealership) would run promotions on certain vehicles for a truly, sincerely no strings attached 0% financing PLUS a $1000 rebate on select models. The rebate did not apply to cash transactions, was applied at time of sale, and the financing carried no prepayment penalty, origination fee, or termination fee.
In short, if you setup financing and paid the car off in the very first statement, you would pay exactly $1000 less and get your new car's title when you go to register it exactly the same as you would if you were to pay cash.
The number of damn-near arguments I had with customers over this who insisted on paying cash anyways was simply astounding. I was literally able to give each of probably two hundred people over the years a legitimately free $1000 and they'd say no. More money than brains.Thinking your Social Security tax is saved for you to later use in retirement. Na, goes to pay boomers now and you are hoping one day young kids will get taxed for you."I did that" stickers.Thinking installment payments are significantly cheaper then paying all at once.Cashing your paycheck at the same place that sells gas.On the left: assuming everything can be paid for either (a) by just taxing rich people, and/or (b) by printing money because "modern monetary theory says you can".
On the right: assuming you can cut taxes and the increase in growth will mean you get more taxes than the reduction and hence can pay for increases in public spending.
Across the spectrum: wanting the state to do more but not be willing to pay for it in taxes.
