Monday, March 1, 2010

What we think we know

On financial literarcy: “Levels of financial knowledge are strikingly low and, moreover, there is a sharp disconnect between how much people think they know and what they actually know. “ Read full remarks.

That's Annamaria Lusardi of Dartmouth College from prepared testimony for the Financial Crisis Inquiry Commission.

H/T Real Time Economics


Dad29 said...

That's likely the strongest argument against the "free marketeers."

While ignorance is not an excuse, at least SOME regulation is required to prevent metaphorical rape-and-plunder.

IOW, if all consumers are so damned smart, how did they make such horrific mistakes?

J. Strupp said...

That pretty much sums up the myth of the rational market doesn't it?

Nice to know considering that EMH was the foundation of almost every econ. and finance class I took in college.

Jeremy R. Shown said...

Oh I don't know Strupp. This crisis hasn't killed AIG and it is clearly dead. EMH is at least as resilient as that so I wouldn't count it out just yet.