New research by Professor Stephan Meier at Columbia Business School shows that sub-prime mortgage defaulters are also more likely than the rest of us to have low numeracy and financial planning skills. Borrowers with low scores in a basic, five-point financial capability test are twice as likely to be in trouble with their mortgage repayments (24% vs. 12% of respondents with the best scores), and three times as likely to be facing repossession (21% vs. 7%).

Here are the questions Prof. Meier asked:

“1. In a sale, a shop is selling all items at half price. Before the sale, a sofa costs $300. How much will it cost in the sale?

2. If the chance of getting a disease is 10 per cent, how many people out of 1,000 would be expected to get the disease?

3. A second hand car dealer is selling a car for $6,000. This is two-thirds of what it cost new. How much did the car cost new?

4. If 5 people all have the winning numbers in the lottery and the prize is $2 million, how much will each of them get?

5. Let’s say you have $200 in a savings account. The account earns ten per cent interest per year. How much will you have in the account at the end of two years?”

This is not simply a matter of poor people with limited educations getting in over their heads. When Maier’s study corrected for factors like social class, education and type of loan agreement it made very little difference: poor budgeting skills still predicted higher rates of default. As he says on the Columbia web site: “Yes, there’s a much lower probability that a person with a college degree can’t divide 300 by two … But even people with college degrees can have difficulty dealing with numbers.”

BBC Radio 4 presenter Winifred Robinson illustrated this point charmingly on air when she nervously tried to answer Maier’s five questions on Wednesday’s (26 May) edition of You and Yours . All went well until number four – 20% of two million? “I need a piece of paper” she wailed (before coming up with the right answer). Bless.

The gap between the economic and financial understanding of even a well-educated person like Winifred Robinson and the demands of informed citizenship in the modern world – and perhaps especially, but by no means exclusively, participation in the personal financial market – is larger than public policy has so far found the courage to admit. That surely hands a crucial advantage to those who actively seek to defraud us or to profit from our confusion.