Despite high objective numeracy, lower numeric confidence relates to worse financial and medical outcomes

Abstract

People often laugh about being “no good at math.” Unrecognized, however, is that about one-third of American adults are likely too innumerate to operate effectively in financial and health environments. Two numeric competencies conceivably matter—objective numeracy (ability to “run the numbers” correctly; like literacy but with numbers) and numeric self-efficacy (confidence that provides engagement and persistence in numeric tasks). We reasoned, however, that attaining objective numeracy’s benefits should depend on numeric confidence. Specifically, among the more objectively numerate, having more numeric confidence (vs. less) should lead to better outcomes because they persist in numeric tasks and have the skills to support numeric success. Among the less objectively numerate, however, having more (vs. less) numeric confidence should hurt outcomes, as they also persist, but make unrecognized mistakes. Two studies were designed to test the generalizability of this hypothesized interaction. We report secondary analysis of financial outcomes in a diverse US dataset and primary analysis of disease activity among systemic lupus erythematosus patients. In both domains, best outcomes appeared to require numeric calculation skills and the persistence of numeric confidence. “Mismatched” individuals (high ability/low confidence or low ability/high confidence) experienced the worst outcomes. For example, among the most numerate patients, only 7% of the more numerically confident had predicted disease activity indicative of needing further treatment compared with 31% of high-numeracy/low-confidence patients and 44% of low-numeracy/high-confidence patients. Our work underscores that having 1 of these competencies (objective numeracy or numeric self-efficacy) does not guarantee superior outcomes.

Competence, Confidence, and Gender: The Role of Objective and Subjective Financial Knowledge in Household Finance

“…Although the best combination of subjective and objective financial knowledge is to have corresponding high levels on both, our results also indicate that subjective financial knowledge in itself is beneficial for financial outcomes. Thus, our results are not consistent with studies suggesting that the benefits from having high confidence accrue only on individuals with adequate competences (Peters et al 2019). Further research is needed on when overconfidence is beneficial/harmful for financial behavior, and which underlying psychological mechanisms can help to explain why.…”

“…Underconfidence may also influence financial behavior negatively if, for example, individuals become increasingly reluctant to make necessary active financial choices. Peters et al (2019) showed that people who exhibit "mismatched" levels of objective and subjective numeric ability self-report worse financial and medical outcomes. In addition to confidence, it is therefore important to assess the link between under-and overconfidence and financial behavior.…”

Understanding Health Risk Comprehension: The Role of Math Anxiety, Subjective Numeracy, and Objective Numeracy

“…Such efforts may be particularly important to health when good outcomes depend on numeric ability but also persistence over time. 46 The current findings imply a multifaceted nature of numerical competencies underlying risk comprehension. Subjective numeracy scales have often been used as a proxy for actual numerical abilities, 11,14 despite offering a poor diagnostic tool for assessing objective numeracy.…”

“…Such efforts may be particularly important to health when good outcomes depend on numeric ability but also persistence over time. 46…”

Developmental Dyscalculia: Nosological Status and Cognitive Underpinnings

“…Living in today's society requires well-developed mathematical competencies. As more cliché as this statement may sound, there is a robust scientific literature indicating that higher mathematical competencies are associated with higher employability and incomes [1][2][3], profitable financial decisions [4], and even better health outcomes [5]. Despite this well-established body of evidence, many adults and children, even from developed countries, struggle to perform simple arithmetic [6].…”