Wednesday, March 4, 2009

A trillion here, a trillion there, and soon you're talking about real money

At a White House press briefing last week, OMB Director Peter Orzag repeatedly cited estimates that the budget deficit would run $9 trillion over the next decade--that's almost a trillion dollars a year.

How Many Millions are in a Trillion? from Econ4U on Vimeo.

The 21% correct response figure cited at the end of the video comes from a multiple choice survey given to a thousand American adults. A monkey throwing darts at the five answer choices they provided in the multiple choice version of their poll would hit the correct answer 20% of the time, so a 21% correct response rate is discouraging.

Search for Intelligent Life points out another video describing the public's bewilderment in the face of large numbers:

Edith Stokey and Richard Zeckhauser have a simple and sensible suggestion for getting a handle on large numbers: long division.

A useful number to keep in mind for back-of-the-envelope calculations is that the US population is roughly 300 million.

So the next time you read that the federal government is considering spending a billion dollars on something, you can think that's over $3 per American. And when the federal government considers spending a trillion dollars on something, that's over $3K per person.

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