Kid Do Your Math

Copyright (c) 123RF Stock Photos. Got the free download.

Copyright (c) 123RF Stock Photos.

My niece, 13, is creative, original and engaging. She is also flunking math (by one point) and will be repeating 7th grade if she doesn’t fix this.

Lots of kids don’t like math, I know, but it’s killing me because …  because … because … there are so many reasons, but I wasn’t expecting to find one expounded upon in gory detail by an economics professor in the current issue of the prestigious Proceedings of the National Academy of Sciences.

This paper titled “Numerical ability predicts mortgage default” hits at my greatest fear for my niece (and all those out there like her) that kids who don’t master the basics early pay a high price the rest of their life.

The study, co-authored by Lorenz Goette with the University of Lausanne, shows (using statistics – that’s math, too) that people who are bad at math are at higher risk of defaulting on a home mortgage.

It’s almost obvious that this would be true but that scientists can see it in the data rigorously with all the “noise” of real life in there is striking.

Math books from another life. Credit: C. Johnson

Math books from another life. Credit: C. Johnson

Losing a job, the terms of the mortgage and strategic defaults were not the main “explainers” of the larger pattern observed, the scientists found. The big picture, what could best explain mortgage defaults for 339 subprime borrowers who took out loans in 2006 and 2007, was “poor numerical ability” (aka being bad at math).

I asked Lorenz what he would tell a 13-year-old about the dreaded subject and its importance, based on his research.

“Basic math is important to get many decisions right in life,” he said. “Keeping a budget, planning for long-term goals like going on a trip that you were looking forward, buying a house, etc.”

A mortgage calculator.

Math is so handy.

“Getting the math wrong can have really bad consequences,” he said. “If you get small calculations in your budget wrong every day, this can add up to a big mistake in the long-run and have very bad consequences. This is, in my view, what we see in our data: Home owners with poor math skills may lose control over their budget, run out of money and end up in a situation in which they are unable to make their mortgage payments. Our results show that they are at a much higher risk to default.”

“Of course, defaulting on your mortgage is a conscious decision and hence strategic at some level,” he said. “However, when you look at the data (as he and colleagues did in another paper in the NBER Macro Annual), it doesn’t look like individuals simply walk away from their homes in cold blood.”

We could argue all day about the policies that may or may not have contributed to the housing bubble, and the slick mortgage brokers and cheerful real estate agents who never get combat fatigue: “It’s always a good time to buy a house,” which is a lie if you can’t afford the house. But, why bother with the lame blame-game when it’s so much easier to learn basic math and become your own best ally.

If you don’t want to do math for math’s sake, be a warrior. Think of math as sword and shield to carry you forward in life – to battle back  the sharks who will always be out there.

There was a famous mathematician (I forget his name) who said that the lottery is a tax on people who are bad at math. So are mortgages you can’t afford. So is credit card debt.

Being at statistically higher risk of doing a lot of dumb things your entire adult life seems like an awfully high price to pay for not knuckling under NOW and doing your math homework.

I am sorry kid – you need to do your math and do it well. No excuses.

I will die if you become a statistic.

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2 responses to “Kid Do Your Math

  1. Great points, and a fascinating study! I would have to say another element is the teaching of math – I struggled like your niece did, and it almost seemed like my high school math teachers were speaking a different language that I couldn’t grasp, yet they didn’t know how to teach someone who didn’t get it. So even doing homework didn’t help. It took a computer algebra class in college to get me feeling caught up. I hear math teachers are better now – they know more about reaching kids who struggle – I hope so! At least you can help your niece through Skype and other free tools online – she might really need you. 🙂

    • Yeah, for kids who don’t like math the teacher is so key. Not all kids learn the same way; and, there should be techniques to identify these kids and then modify the curricula for them. Instead, I feel they are left to flounder … Skype is a good idea…. 🙂

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