Numeracy is the ability to understand, reason with, and to apply simple numerical concepts. The charity National Numeracy states: "Numeracy means understanding how mathematics is used in the real world and being able to apply it to make the best possible decisions...It’s as much about thinking and reasoning as about 'doing sums'". Basic numeracy skills consist of comprehending fundamental arithmetical operations like addition, subtraction, multiplication, and division. For example, if one can understand simple mathematical equations such as 2 + 2 = 4, then one would be considered to possess at least basic numeric knowledge. Substantial aspects of numeracy also include number sense, operation sense, computation, measurement, geometry, probability and statistics. A numerically literate person can manage and respond to the mathematical demands of life.
By contrast, innumeracy (the lack of numeracy) can have a negative impact. Numeracy has an influence on healthy behaviors, financial literacy, and career decisions. Therefore, innumeracy may negatively affect economic choices, financial outcomes, health outcomes, and life satisfaction. It also may distort risk perception in health decisions. Greater numeracy has been associated with reduced susceptibility to framing effects, less influence of nonnumerical information such as mood states, and greater sensitivity to different levels of numerical risk. Ellen Peters and her colleagues argue that achieving the benefits of numeric literacy, however, may depend on one's numeric self-efficacy or confidence in one's skills.
Humans have evolved to mentally represent numbers in two major ways from observation (not formal math). These representations are often thought to be innate (see Numerical cognition), to be shared across human cultures, to be common to multiple species, and not to be the result of individual learning or cultural transmission. They are:
Approximate representation of numerical magnitude, and
Precise representation of the quantity of individual items.