# Are people bad at finances because they're generally bad at math?



## lightcycle (Mar 24, 2012)

Just saw this online:










So surprised that many got this wrong. More people got this wrong than right. 

Is this the reason why people are so bad with their finances?


----------



## heyjude (May 16, 2009)

A mathematician's answer:

https://youtu.be/TJyC77k8d54


----------



## cashinstinct (Apr 4, 2009)

$30 given back in change + the cost of the item + the margin lost on the item that could have been sold to someone else = $100 ?


----------



## lightcycle (Mar 24, 2012)

Margin and true cost of the item isn't the point, it's the fact that so many got it wrong from a pure arithmetic standpoint.

Just wondering how and why could this happen on such a large scale?


----------



## sags (May 15, 2010)

Grifters used to do a "cash for cash money exchange" all the time. Some bank procedures, such as the teller laying out cash on the counter were implemented because of it.

On a sad note........a teenage friend of my son's worked at a gas bar/variety store in the evenings.

At the end of the day, the cash register comes up short. The only oddity the kid can think of when questioned by his parents, is of one guy coming in and making several transactions of cash for cash.

The store owner doesn't believe him. The police don't believe him. The crown attorney didn't believe him. He ends up in court and the judge didn't believe him.

I believed him, because I don't think the kid was old or savvy enough enough to know anything about the cash for cash money exchanging grift and likely didn't make it up as an excuse for the missing money. My experience with teenagers is if they were guilty of stealing the money, they would simply feign innocence and leave it at that.

He got probation, but it shows that store owners, police, crown attorneys and judges don't believe such things are possible.

P.S. I got the puzzle wrong. I thought it was a loss of $130. I wouldn't make a very good grifter............:smug:


----------



## twa2w (Mar 5, 2016)

Well I have always said there are 3 kinds of people in this world. Those that can add and those that can't.


----------



## Mechanic (Oct 29, 2013)

The loss is $100. You could make it more complicated, I suppose, by saying that he loss was less than $100 because of the profit the owner made on the $70 sale of goods ?? I'll go with $100 though.


----------



## Userkare (Nov 17, 2014)

I don't know why it isn't obvious to everyone that the arithmetic loss was $100. The thief simply exchanged the stolen $100 for $70 in goods, and $30 in cash. I thought that right away, but then wondered if it was a trick question related more to accounting principles than simple arithmetic....

Sure, we can say that the cost of the goods payed by the owner was less than $70, so he didn't really lose the whole $70. But then again, those goods would have probably been sold, so the owner did lose the full $70 potential of those goods. O.K. that's where it can get confusing. 

It reminds me of the argument why taking free TV from an Android box doesn't deprive anybody of anything tangible... _"The price of the traditional TV services are too expensive, I would never pay that. So if I was never going to pay it anyway, it doesn't deprive the content owner of any revenue if I just take it for free" _ irate:


----------



## Userkare (Nov 17, 2014)

sags said:


> On a sad note........a teenage friend of my son's worked at a gas bar/variety store in the evenings.
> At the end of the day, the cash register comes up short. The only oddity the kid can think of when questioned by his parents, is of one guy coming in and making several transactions of cash for cash.


I once had a part-time job in a food store on the cash register... the old fashioned ones that didn't calculate change! I'm not sure what the "cash for cash" scam is, but I had people hand me a $10 bill and say "from $20". Also after handing me cash, change their mind, and wanted to replace parts of it with different denominations looking like they're attempting to get a different denomination in their change. It was almost like a shell game, and hard to follow sometimes. 

If the register was short at the end of day, even in S&H Green stamps, the clerk had to make up the difference. If the cash or stamps were higher than the register total, the store kept the difference. Nobody was ever accused of stealing, but were liable for the shortages, and could not benefit from the overages. 

Luckily, I only ever got dinged for small sub-$1 coin amounts. If someone didn't want their Green Stamps, I would put them aside to back-fill any future shortage.


----------



## lightcycle (Mar 24, 2012)

Okay, after some thought, I take it back. I don't think it's the math that people are bad at, it's the wording of the problem. All the monetary exchanges are described using "steal" "buy" "give", which seems to confuse a lot of people. Better if the problem was stated as such:

Storeowner (S) gives Lady (L) $100
S gives L $70
L gives S $100
S gives L $30

What is the net amount of all the transactions for S?


----------



## heyjude (May 16, 2009)

Another way to look at it:

If the customer had entered the store and bought the item with her own money, there would have been a fair exchange. 

The customer stole $100. Therefore, that is the merchant's loss.


----------



## Mukhang pera (Feb 26, 2016)

lightcycle said:


> Okay, after some thought, I take it back. I don't think it's the math that people are bad at, it's the wording of the problem. All the monetary exchanges are described using "steal" "buy" "give", which seems to confuse a lot of people.


Don't take it back. The wording of the problem is not all that opaque. Anyone confused by that simple wording would also likely be bad with finances. Having financial smarts requires more than one skill set. Being handy with arithmetic won't count for much to one easily baffled by everyday language. 





heyjude said:


> A mathematician's answer:
> 
> https://youtu.be/TJyC77k8d54



Hard to believe that anyone could spend almost 6 minutes explaining what can readily be explained in about 30 seconds. When I saw that the video had a duration of 5:50, I killed it. Has anyone actually watched the whole thing?


----------



## heyjude (May 16, 2009)

Mukhang pera said:


> Hard to believe that anyone could spend almost 6 minutes explaining what can readily be explained in about 30 seconds. When I saw that the video had a duration of 5:50, I killed it. Has anyone actually watched the whole thing?


I watched the whole video. I subscribe to that channel for some intellectual stimulation. Most of the problems are considerably more complex, and I usually don't figure them out. But I enjoy the process of playing with numbers. I know, call me a nerd!


----------



## Mukhang pera (Feb 26, 2016)

heyjude said:


> I watched the whole video. I subscribe to that channel for some intellectual stimulation. Most of the problems are considerably more complex, and I usually don't figure them out. But I enjoy the process of playing with numbers. I know, call me a nerd!


If being a nerd is your greatest sin, there's hope! I would say that having a modicum of nerdiness is a common trait of CMF members.


----------



## lightcycle (Mar 24, 2012)

Mukhang pera said:


> Hard to believe that anyone could spend almost 6 minutes explaining what can readily be explained in about 30 seconds. When I saw that the video had a duration of 5:50, I killed it. Has anyone actually watched the whole thing?


I didn't watch the whole thing, but fast forwarded through a minute of him explaining the problem, another minute detailing the solution, then another minute going through the accounting-based solution (cost/margin etc). The final two minutes is the part that heyjude was referencing which explains where people commonly go wrong.



heyjude said:


> I watched the whole video. I subscribe to that channel for some intellectual stimulation. Most of the problems are considerably more complex, and I usually don't figure them out. But I enjoy the process of playing with numbers. I know, call me a nerd!


Thank you for the link! It led me to this problem, which I found very stimulating:

https://www.youtube.com/watch?v=kaLiagYuYPc

For L=50 feet, my calculus is non-existent, so I went the trig route. But I didn't know the formulas for calculating area of a sector (yeah, I could have Googled it, but that would have been cheating), so I gave up. I watched the entire 16 minute video for the answer and found the calculus explanation riveting! Had to pause and rewind that section more than a couple of times so I could follow...

So, fellow math nerd here.


----------



## My Own Advisor (Sep 24, 2012)

I would have answered it this way....

$100 gone from owner (loss, no goods exchanged).
$70 back to owner (partial loss since goods purchased). Value of goods = $70. The owner is still down $30. 

No?


----------



## dotnet_nerd (Jul 1, 2009)

Mukhang pera said:


> If being a nerd is your greatest sin, there's hope! I would say that having a modicum of nerdiness is a common trait of CMF members.


Hehehe, "nerd" is part of my name.

Actually, the loss is less than $100. The store owner made a profit (P) on the sale of those items

Net loss is therefore (P - 100)


----------



## lightcycle (Mar 24, 2012)

My Own Advisor said:


> I would have answered it this way....
> 
> $100 gone from owner (loss, no goods exchanged).
> $70 back to owner (partial loss since goods purchased). Value of goods = $70. The owner is still down $30.
> ...


Not sure I follow that line of reasoning...


----------



## lightcycle (Mar 24, 2012)

dotnet_nerd said:


> Hehehe, "nerd" is part of my name.
> 
> Actually, the loss is less than $100. The store owner made a profit (P) on the sale of those items
> 
> Net loss is therefore (P - 100)


Yeah, that point was already addressed earlier about ignoring cost/margin/profit and just focusing on why people were getting the arithmetic wrong. Why were $200 and $30 such popular answers?



cashinstinct said:


> $30 given back in change + the cost of the item + the margin lost on the item that could have been sold to someone else = $100 ?





lightcycle said:


> Margin and true cost of the item isn't the point, it's the fact that so many got it wrong from a pure arithmetic standpoint.
> 
> Just wondering how and why could this happen on such a large scale?


----------



## Mukhang pera (Feb 26, 2016)

dotnet_nerd said:


> Hehehe, "nerd" is part of my name.
> 
> Actually, the loss is less than $100. The store owner made a profit (P) on the sale of those items
> 
> Net loss is therefore (P - 100)


Mechanic alluded to the same notion, I think, thus:




Mechanic said:


> The loss is $100. You could make it more complicated, I suppose, by saying that he loss was less than $100 because of the profit the owner made on the $70 sale of goods ?? I'll go with $100 though.


I think most of us recognize that the goods "sold" for $70 likely had a cost to the store owner of less than $70. Presumably he bought at a price lower than $70 and his selling price was marked up to $70 to allow him to make a profit. With no information given on that score, we cannot come up with a precise figure as to his loss and the problem, as posed, requires one to choose one from a list of exact numbers. I think most of us see that number as $100. 

So, the owner has $100 taken, but then returned. In exchange for that return he gives up $30 and goods worth something less than $70. I would express his loss as $30 + cost of goods sold, which should come in at less than $100 in total. But that kind of analysis goes beyond what the original question contemplates.

If we really want to “over think” as the written problem admonishes not to do, we can come up with all kinds of variables. One choice - “D” - was $130. I know how to arrive at that figure:

• The owner loses $100 to a thief.
• The thief returns the $100.
• The owner hands over to the thief goods priced at $70. But the owner had paid $100 for said goods. They were dogs that sat in inventory, not selling, so he decided to sell at a loss to clear some warehouse space. So now he is out $100.
• The owner also hands over “change” of $30.
• Net loss is $130.

We can have fun all day with endless possibilities, such as the $100 was counterfeit, made by the owner in his basement. The $30 was also fake money. The goods sold were "hot"; the owner was a fence. How to value the goods? Maybe I'll whip up some videos to post online.


----------



## heyjude (May 16, 2009)

dotnet_nerd said:


> Hehehe, "nerd" is part of my name.
> 
> Actually, the loss is less than $100. The store owner made a profit (P) on the sale of those items
> 
> Net loss is therefore (P - 100)


My mental model was that the merchant had chosen a price of $70 for the item. We don't know what his profit margin would be on that price. For all we know, the item might have been a loss leader to draw customers into the store. I think of $70, the price, as the opportunity associated with selling the item.


----------



## My Own Advisor (Sep 24, 2012)

Probably because...I take $100 from you. I give back $70 from your $100. How much are you out?

The wording is confusing...but good!


----------



## lightcycle (Mar 24, 2012)

My Own Advisor said:


> Probably because...I take $100 from you. I give back $70 from your $100. How much are you out?


Ok, I understand now. You're not counting the value of the item the lady purchased. Just the currency. Interesting interpretation.


----------



## My Own Advisor (Sep 24, 2012)

Correct...focused on the transaction...my head was buried in work when I did your test but that's not an excuse! Keep them coming


----------



## indexxx (Oct 31, 2011)

$100- he got the initial $100 back, so he is out $30 in change + $70 in goods.

You can effectively ignore the initial theft, as he receives it back into the till. He then gives away $70 in goods and $30 cash.

I also initially considered the owner's cost of those goods, but then ignored it because we do not know what his cost was (he could have found the items, grown them from free seed, or paid exactly $70 as his cost and they were on clearance to get rid of them and break even) therefore, the real loss on those goods is the $70 he would have received from a legit purchase. 

So he is out $70+30= $100.


----------



## indexxx (Oct 31, 2011)

sags said:


> Grifters used to do a "cash for cash money exchange" all the time. Some bank procedures, such as the teller laying out cash on the counter were implemented because of it.
> 
> On a sad note........a teenage friend of my son's worked at a gas bar/variety store in the evenings.
> 
> ...


Interesting. I was actually victim of this once while working as a bartender. A person came in with a $50, asked for change, made a small purchase, then asked for change again (something like that- it was over 20 yard ago.) They had timed it so I was at a busy point in my day, and I even stopped her a couple of times because something seemed fishy. I slowly went through her request, counted things over a couple of times, and concluded it was OK. But as she was leaving, I couldn't help but feel that I had been scammed. At the end of my shift, I was short $50. I have to hand it to her- I'm a sharp guy, and deal with hundreds of cash transactions a day and am always accurate and she still managed to pull it off. Here's exactly how it works:

*"Change raising, also known as a quick-change artist, is a common short con and involves an offer to change an amount of money with someone, while at the same time taking change or bills back and forth to confuse the person as to how much money is actually being changed. The most common form, "the Short Count", has been featured prominently in several movies about grifting, notably The Grifters, Criminal, Nine Queens, and Paper Moon. For example, a con artist shopping at a gas station pays for a cheap item (under a dollar) and gives the clerk a ten dollar bill. The con gets back nine ones and the change and then tells the clerk he has a one and will exchange ten ones for a ten. This is what the scam artist is doing: getting the clerk to hand over the $10 before handing over the $1 bills. Then the scam artist hands over nine ones and the $10. The clerk will assume there has been a mistake and offer to swap the ten for a one. Then the con will probably just say: "Here's another one, give me a $20 and we're even." Notice that the scam artist just swapped $10 for $20. The $10 was the store's money, not the con's. To avoid this con, clerks should keep each transaction separate and never permit the customer to handle the original ten before handing over the ten ones."*

I've also had numerous people try the dry-cleaning scam and other cons to try and get money out of the bar when I've been working- always called them on it and it's always been a scam.


----------



## coptzr (Jan 18, 2013)

The change game can be done easily at a restaurant with a food bill of just over $10, you give them a $20 and the bill, as they hand coins you ask them to for a couple 5's, than hand back some change to feel like they are getting a tip and/or breaking the $20 into $10 + 2-$5. Normally walk out with 2-$5 in your pocket. If you can do it with a group of people all paying at the same time, this will become much easier.

To answer the original title question, the answer is yes. These type of sales is what makes a $28k car into a $38k invoice. People don't take the time to compare options vs different package models.

To answer the question about the store owner the answer from beginning to end is $100. Doesn't matter how you look at it. If it was any other way, the world of responsibility and consequences would be obsolete. In a real world, the thief has now committed theft and in possession of stolen goods/proceeds of crime.


----------



## sags (May 15, 2010)

When I retired, I delivered for restaurants for awhile.

I quickly learned there are a lot of dishonest people out there.

Common scams..........

People meet the driver at the locked front door of an apartment lobby. They open the door, take the food and shut the door which locks. They take off running and disappear into the hallways.

The manager didn't answer the security buzz, so I went back the next day. He told me the night before was moving night for the people who had been evicted and he had no idea where they went. I had to absorb the loss.

People order just before the restaurant closes at night and only have a $100 bill. They count on you handing in all your receipts to the restaurant and having no change.

They say they are "regular" customers and will drop the money off the next day. The driver has a choice to leave the food or take it home with him and absorb the cost.

They never drop the money off.

The worst one.........snowing heavily on a Friday night at 6 p.m. East Side Marios and it is packed to the rafters. People are waiting in the bar for a table.

East Side Marios had come out with a promotion........get the delivery in 1 hour or the order is free..........a really dumb idea.

The people call in a $150 order and I leave the store already an hour late. 

When I arrive at the social assistance apartment building, I am met by a woman holding a phone and 5 friends of hers.

She says........"you are more than an hour late.......the food is free. Here talk to the guy" and hands me the phone.

Some guy at a call center in Vancouver says........yea, go ahead and give her the food. 

I say......who is paying for it and he says you are late so you have to pay it.

Sorry says I.........that isn't going to happen and hang up. I call the restaurant and talk to the manager. She says to give them the food.

The woman smirks at me as I hand her the food and leave.

If I had arrived within a hour........these people wouldn't have answered the door.

I told the manager that promotion was one big dumb idea and she could expect the same people to call next week.......and likely all their friends will too.

I gave up delivering. Too many hassles for too little pay.......although I enjoyed driving around seeing what is going on.


----------



## coptzr (Jan 18, 2013)

By the time I was 16, I had to repo an MX bike I sold, had 2 grown men vs myself on the raodside load some car parts in their trunk before paying then hammering me on price, well known local homeowners owing me a few hundred dollars each over an entire summer of working, a machine shop owing a couple thousand dollars for work done. Too many people take advantage of a hard working teenager. Delivery is a brutal jobs sometimes, express courier truck is insane sometimes from what I have seen helping a buddy.


----------



## dotnet_nerd (Jul 1, 2009)

Another common scam, in busy diners where you pay the bill at the cash register, not to the waitress.

Order a very expensive meal, and your buddy at a different table orders something light. Maybe a coffee.

Secretly swap bills, pay the cheap tab and leave. Your buddy goes to the cashier and says "hey there's been a mistake, I got the wrong check - I only had coffee"


----------



## Plugging Along (Jan 3, 2011)

The riddle is a good insight why people are bad at finances. It's not the math, but something's the critical thinking, logic, and ability to pick put the important points properly. The math was an easy part?


----------



## hboy54 (Sep 16, 2016)

Plugging Along said:


> The riddle is a good insight why people are bad at finances. It's not the math, but something's the critical thinking, logic, and ability to pick put the important points properly. The math was an easy part?


Exactly. I see this as a reading comprehension problem not a math problem. Everything after "stole $100 bill" is superfluous.

hboy54


----------



## andrewf (Mar 1, 2010)

sags said:


> People order just before the restaurant closes at night and only have a $100 bill. They count on you handing in all your receipts to the restaurant and having no change.
> 
> They say they are "regular" customers and will drop the money off the next day. The driver has a choice to leave the food or take it home with him and absorb the cost.
> 
> They never drop the money off.


Sounds easy enough to deal with: always keep your own float just in case. Worst case you have to give slightly more change, but you should be able to limit the loss to <5$.


----------



## indexxx (Oct 31, 2011)

dotnet_nerd said:


> Another common scam, in busy diners where you pay the bill at the cash register, not to the waitress.
> 
> Order a very expensive meal, and your buddy at a different table orders something light. Maybe a coffee.
> 
> Secretly swap bills, pay the cheap tab and leave. Your buddy goes to the cashier and says "hey there's been a mistake, I got the wrong check - I only had coffee"


You would not believe the scams I've seen in 30 years in the bar/restaurant business. And those are just from the owners. The customers are a whole other story.


----------

