# Couples with math skills have more wealth by middle age

Winning Equation
November 18, 2010 12:00 am

#### Share with others:

If you're OK in math, you're more likely to be well off.

That's the conclusion of a study by think tank Rand Corp., which found that couples who scored well on a short test of math skills accumulated more wealth by middle age than couples who scored poorly.

Researchers found that when both spouses correctly answered three math questions, family wealth averaged \$1.7 million. That compared with \$200,000 for households where neither spouse answered any question correctly.

Household wealth increased sharply as scores of either the husband or wife rose, the study said.

Are you good with numbers?
Couples who correctly answered three math questions tended to be much wealthier than couples who did poorly on the test, a new study by think tank Rand Corp. found. Give it a try:
1. If the chance of getting a disease is 10 percent, how many people out of 1,000 would be expected to get the disease?
2. If five people all have the winning numbers in the lottery, and the prize is \$2 million, how much will each of them get?
3. Let's say you have \$200 in a savings account. The account earns 10 percent interest per year. How much would you have in the account at the end of two years?
Source: Rand Corp.
Answers: 1. 100; 2. \$400,000; 3. \$242.

The study found "a simple test that checks a person's numeracy skills was a good predictor of who would be a better family financial decision maker," said James P. Smith, distinguished chair in labor markets and demographic studies at Rand and co-author of the study.

Choosing the wrong person as a family's primary financial decision maker can have negative consequences, researchers found.

"While families choose the less-numerate spouse less than 20 percent of the time, when this does happen, total household wealth is lower," the study said.

The study relied on a sample of married couples from the Health and Retirement Study, a national survey of Americans at least 50 years old that is funded by the National Institute on Aging.

Skills needed to make successful investment choices are among the most cognitively demanding that a family has to make, especially as people age and assume greater control of decisions about their wealth, pensions and health care, Rand said.

The study also examined the impact that memory, mental status and other cognitive skills may have on household finances, finding that they had far less influence than math skills.

Among other findings:

• As the math score of each spouse rose, the percent of a family's portfolio held in stocks rose.

• A man was the financial decision maker in 62 percent of the households studied.

• Even when a husband scored zero (out of a possible three points) in his numeracy test, there essentially was a 50-50 chance that he was the financial decision maker. The male bias was smaller among younger couples in the study's 50-and-up age group.

Patricia Sabatini: psabatini@post-gazette.com or 412-263-3066.
First Published November 18, 2010 12:00 am

Latest Mortgage Rates Current Last Week
See local rates