For years, our editors have addressed our concern for this lack of economic awareness by using solid real estate fundamentals to illustrate practical applications of real estate activities. On a national scale, Robert J. Shiller, one of the co-founders of the Case-Shiller Home Price Index and coiner of the phrase “irrational exuberance”, wrote an article for the New York Times on the need to educate and advise the population on personal finance.
Shiller cites the alarming results of a Federal Reserve Bank survey given to a recent homeowners in which many respondents, despite having made the huge financial decision to buy a home, were unable to give the correct answer to the question, “What will a $300 item cost after it goes on a ’50% off’ sale?” A monetary stimulus package alone will do little good for such over-encumbered real estate owners (or anyone else!) if it’s just going to fuel the same kind of haphazard, aimless consumer spending that’s been going on for years.
It’s not just a matter of a few individuals being unable to make sound financial decisions – it’s an indicator of a much larger deficiency in the mindset of the nation’s adult population. As the headlines keep rolling off the presses to announce ever larger numbers of businesses and homeowners going bust, we would all be well-advised to invest in a little financial education to help us intelligently “kick our way” through the down economy.
Permalink to Article: http://www.nytimes.com/2009/01/18/business/economy/18view.html?partner=permalink&exprod=permalink
