financial literacy and inspiring students to broaden their horizons. we know our contribution depends on the support of teachers and influencers. that ’ s why we ’ re so grateful for your help in informing, educating and inspiring your students. one was along the lines of : if a litre of cola costs £3. 15, how much would a third of a litre cost? around 60 % of adults in england and northern ireland were able to answer this correctly ( see bhutoria et al, 2018 ). disney and gathergood ( 2011 ). ing – economics network ( 2017 ). haldane ( 2017 ). all speeches are available online at www. bankofengland. co. uk / news / speeches references bhutoria, a., jerrim, j. and vignoles, a. 2018. “ the financial skills of adults across the world. new estimates from piaac ”, available at : https : / / johnjerrim. files. wordpress. com / 2018 / 03 / piaac _ working _ report _ march _ 2018. docx. disney, r. and gathergood, j. 2011. “ financial literacy and indebtedness : new evidence for uk consumers ”. available at : https : / / www. nottingham. ac. uk / cfcm / documents / papers / 11 - 05. pdf. gathergood, j. 2013. “ personal debt and psychological health ”, the new palgrave dictionary of economics, palgrave macmillan. haldane, a. 2017. “ everyday economics ”. speech given nishkam high school, birmingham. available at https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2017 / everyday - economics. ing – economics network. 2017. “ ing - economics network survey of the public understanding of economics ”. available at : https : / / www. economicsnetwork. ac. uk / research / understandingecon. laibson, d. 1997. “ golden eggs and hyperbolic discounting ”, quarterly journal of economics, vol. 112, pp. 443 - 477. mullainathan, s. and shafir, e. 2013. “ scarcity ”. allen lane. all speeches are available online at www. bankofengland. co. uk / news / speeches

suggest that people focus excessively on the present. it ’ s not just that they generally place higher value on getting something sooner rather than later : people seem to put a particularly high weight on current outcomes. they seem to discount the importance of what comes tomorrow, relative to today, more heavily than they do any two successive days further into the future. this is referred to in the economic jargon as “ hyperbolic discounting ” and by psychologists as “ present bias ”. it helps to explain why we often put things off right until the last minute, even if the cost of doing it is much higher by that time. it means it can be advantageous to commit to things that are good for you over the longer term – regular saving, or signing up to a gym programme – but that, when the time comes, you might be tempted to avoid. 2 and it can also explain why people borrow money, and roll over those debts, even at very high interest rates. this borrowing can take many forms, including foregoing opportunities to reduce the longer - term cost of something. in their recent book “ scarcity ”, economist sendhil mullainathan and psychologist eldar shafir give the example of rag collectors in india – people who rely on collecting discarded clothes and selling them on. it is an ardous job with very little reward. but it is, at least, a job that requires very little investment in training or equipment : the only “ capital ” a rag collector will need is a pushcart, which might sell for $ 30. yet, despite saying they ’ d very much like to own their own, nearly all these rag collectors instead rent their pushcarts, at a cost of $ 5 - $ 10 a month. they therefore spend in a matter of 3 - 6 months what it would cost to own the thing outright. this is an enormous, and self - imposed, effective rate of interest – an annual rate of somewhere between 200 and 400 per cent. 3 gathergood ( 2013 ). laibson ( 1997 ). this would cover any depreciation costs, which the owner of the cart would have to bear. but these are likely to be only a small part of the rental cost. all speeches are available online at www. bankofengland. co. uk / news / speeches mullainathan and shafir document many such examples. and they go further : they claim, supported by the result of interesting experiments, that