One of the topics we touch on in our book is the abysmal state of financial literacy in America. The fact of the matter is that some of the most basic financial decisions facing Americans are beyond their abilities. There are any number of explanations for this but to say that there is an obvious solution belies the complexity of problem.

Tim Richards at the excellent Psy-Fi Blog has a post up talking about this very issue of numeracy. Numeracy, or the the ability to reason with numbers and other mathematical concepts, is important for the development of a capable workforce but also plays in their ability to deal with the many oftentimes complex financial decisions we all face in our lifetime. The problem is that it is not entirely clear that additional education will magically make individuals better decision makers. Richards writes:

Basic numeracy is certainly something that needs to be improved, but on it’s own it won’t make a heap of difference to the real and complex financial decisions that are increasingly being devolved to individuals. Finding a way of funding the complex training that is really required would be a starting point; simultaneously introducing a simple quality mark scheme for a set of low-cost vanilla products would help reduce the tyranny of choice.  Doing nothing is not an option.  Well, not unless we really, really want another behaviorally induced recession really, really soon?

Richards rightly notes that we as a society continue to push more financial decisions down to the individual level. One need look at the 401(k) morass as an example of this downward distribution in individual financial decision making.  The interesting thing is that by and large the finance and investment blogosphere exists apart from the everyday needs of most savers.

Josh Brown at the Reformed Broker noted recently that a link to a seemingly mundane piece on retirement planning garnered more clicks that other sexier topics. Brown asks what it is us bloggers are really doing? From his post:

Why don’t we as financial bloggers focus more on this kind of practical thing? Clearly it’s what the readers are thirsty for. Is it because we think personal finance stuff is a ghetto of its own (, WalletPop etc)? Is it because we are afraid of veering to far into something that sounds like advice? Is it because talking about macro-economics and trading is sexy while retirement is boring?  I’m not sure I have the answer, but I’m glad to be finally asking myself the question.

It is a great question. One could argue it is more important to help the vast majority of individuals who have little or no interest in investing, let alone trading, become more competent financial decision makers than to help the most active investors became marginally more successful. It is one of the reasons why the work of some one like Carl Richards, author of The Behavior Gap stands out. Trying to simplify what can be complex decisions is a challenge not easily dismissed.

Where is this all going? I have no idea, but the topic is worthy of more discussion. Maybe there is no way to really bridge the gap. Then again with all the talent in the financial blogosphere maybe there is a path forward. Rich guys will (almost) always have access to competent advisers. What about the rest of society?

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