Financial Literacy

Financial Literacy: Fluid and Crystallized Intelligence Video

Financial LiteracyFinancial literacy is the topic of discussion. I’m not sure these are the best terms to use but in the following video Eric Johnson does make some interesting observations.   

Fluid intelligence or fluid reasoning is the capacity to think logically and solve problems in novel situations, independent of acquired knowledge. It is the ability to analyze novel problems, identify patterns and relationships that underpin these problems and the extrapolation of these using logic. It is necessary for all logical problem solving, e.g., in scientific, mathematical, and technical problem solving. Fluid reasoning includes inductive reasoning and deductive reasoning.

Crystallized intelligence is the ability to use skills, knowledge, and experience. It does not equate to memory, but it does rely on accessing information from long-term memory. Crystallized intelligence is one’s lifetime of intellectual achievement, as demonstrated largely through one’s vocabulary and general knowledge. This improves somewhat with age, as experiences tend to expand one’s knowledge.

The terms are somewhat misleading because one is not a “crystallized” form or the other. Rather, they are believed to be separate neural and mental systems. Crystallized intelligence is indicated by a person’s depth and breadth of general knowledge, vocabulary, and the ability toreason using words and numbers. It is the product of educational and cultural experience in interaction with fluid intelligence.

Fluid and crystallized intelligence are thus correlated with each other, and most IQ tests attempt to measure both varieties. (Fluid and crystallized intelligence, Wikipedia, 8/13/2014)


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