Israelis Score Low on Money Smarts

A survey released Sunday found that 28% of Israeli adults could define 'inflation.'

Israel may have two Nobel prizes in economics to its credit, but average Israelis know considerably less about finance and economics than do their peers in developed nations.

So shows a survey released Sunday by the Central Bureau of Statistics, which found that 28% of adult Israelis could define the meaning of inflation and only two thirds knew that a rise in the consumer price index raises the cost of living. Just over half failed to answer correctly whether "investments with high returns generally carry a higher degree of risk."

Some 55% couldn't correctly answer the question, "Does a diversified portfolio of investments reduce risk?" No more than 40% could calculate the cost of a NIS 1,000 loan at 2%.

Among countries belonging to the Organization for Economic Cooperation and Development 82% could calculate the cost of a loan and 80% could define inflation.

The CBS survey also found that 28% of the public has neither a pension plan nor managers insurance.

The survey also found that only 57% of all Israelis have savings in their bank account, 35% a provident fund and 37% an advanced-training fund (keren hishtalmut ). Only 8% of the public has investments in a mutual fund or exchanger-traded fund (teudot sal ) although a larger percentage own stocks and bonds directly.