Numerical ability (NA) and mortgage default. Simple relationship (solid line) along with two regression-adjusted relationships between the NA index (1 is bottom and 4 top group in terms of NA) and measure of mortgage default is shown. The dashed line shows the regression-adjusted relationship controlling for borrower characteristics [age, sex, ethnicity, education, marital status, the size of the household, time and risk preference parameters, labor market status over the previous 5 y, the household’s income, the subjective measure of income volatility, FICO score, and dummy variables for whether the borrower is an investor (owner occupant as the reference group), as well as whether the mortgage is for a home purchase]. The dotted line shows the regression-adjusted relationship controlling for borrower characteristics and mortgage characteristics (fixed-rate mortgage vs. adjustable-rate mortgage, mortgage amount, presence of prepayment penalties, documentation status, initial interest rate, loan-to-value ratio, debt-to-income ratio). SEs (gray) overlap for the three models. A shows the probability of delinquency, and B shows the incidence of foreclosure. Source: own calculations.