Funny Money

PUBLISHED: April 25, 2012

For most Americans, a penny at the gas pump has vivid significance but billions of dollars create a meaningless blur. Increasingly, we are unable to fathom the really big numbers in our modern world, a condition known as innumeracy.

In a recent 24-hour period, Facebook paid $1 billion for the photo-sharing service Instagram – a firm with 12 employees that most people had never heard of, and that a week earlier was valued at $500,000; Microsoft gave AOL more than $1 billion for some patents, and Sony said its annual loss was $6.4 billion.

Do these numbers mean anything anymore?

Not long ago people used the term "billion" so infrequently that, for clarity, they spelled the first letter: "That’s billion, with a B." Today, according to Forbes, there are 1,226 billionaires.

Congress spends billions here, billions there and, as the late Sen. Everett Dirksen famously concluded, "pretty soon you're talking about real money."

During the height of Mega Millions fever, NBC News asked ticket buyers what they'd do with $650 million if they won. One woman said, with apparent sincerity, that she would purchase a lifetime supply of Oreo cookies.

That’s classic innumeracy. If the woman lives 60 more years, and is willing to eat 150 Oreos every week, her tab would be roughly $70,000. It’s a lot of money, but as a percentage of $650 million it’s so small – about one-hundredth of one percent – that, for all intents and purposes she could have her Oreos and $650 million.

Try getting a grip numbers like these: Google’s revenue is $20 billion a year! Matt Cain of the San Francisco Giants makes $3,000 per pitch! The U.S. government spends $1.5 million per minute!

Big numbers, right? Well, the real figures are actually double: Google is taking in $40 billion; Cain earns $6,000 every time he throws the ball, and the government’s outflow is $3 million per minute. So what?

The mathematician and scholar Douglas Hofstadter coined the term innumeracy some 30 years ago, back when the National Debt was under $2 trillion. It’s currently $15.6 trillion, but the numbers are so large that a 680% increase has basically no meaning for average Americans, except that we know it’s a lot of money.

According to one estimate, just counting to a trillion takes over 190,000 years. If we paid off the debt at the rate of a dollar per second, we would get the job done in roughly half a million years – without interest.

Many of our elected leaders seem to suffer from what might be called poli-innumeracy – the inability to control the numbers that control us. That’s how we get bridges to nowhere and the military’s infamous thousand-dollar toilet seats.

It's only a matter of time before U.S. politicians start talking about a sextillion of this (21 zeros) or a vigintillion of that (63 zeros).

Travelers used to find it amusing to deal with foreign currencies that required, say, 10,000 whatevers for a cup of coffee. I remember visiting Brazil in the '80s when taxi drivers needed a daily printout to determine how many thousand Cruzeiros to collect per mile.

These were "new" Cruzeiros which differed from the "old" Cruzeiros in that the Brazilian government chopped off a few zeros so that one of the new was worth 1,000 of the old. A few years later they did it again, declaring that 1,000 new Cruzeiros would be worth one Cruzado. Soon they had to drop away three more zeros and Brazilians were given the "new" Cruzados. In 1990, these Cruzados Novos were retired, and the Cruzeiros were back; in 1993, the Cruzeiros lost another three zeros and were turned into "real" Cruzeiros. The numbers ceased to have meaning, although the value of the service or product remained clear.

What divides Americans nowadays is not just that a few people have a lot of money while many have much less, it's that some people understand the really big numbers – or so we assume – but most of us do not. Yet, as our innumeracy worsens, we don't trust bureaucrats who claim to understand huge sums if at the same time they appear clueless about the price of an Oreo.

(c) Peter Funt. This column was originally distributed by the Cagle Syndicate.

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