From this weeks “The Economist” magazine, referencing a Fed StudyIN AMERICA'S subprime-mortgage meltdown, why did some borrowers manage to struggle on, keeping up with their payments, while others defaulted? Subprime borrowers were all, by definition, people with poor credit histories, prone to financial problems, yet their ability to repay differed widely. A study from the Federal Reserve Bank of Atlanta has found that what makes the difference is the borrower's basic numeracy. They gave a simple quiz to a group of subprime borrowers who had similar personal circumstances and had taken out the same type of loan. They found that those who flunked the test were much more prone to defaulting than the numerate, who were much more likely to manage to keep paying.
Fed link here Working Paper 2010-10
The Economist story here http://www.economist.com/business-finance/displaystory.cfm?story_id=16121350
The quiz is only 5 questions. Lots of possible opinions can be drawn. I wonder how to improve the financial literacy of a country.