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Empirical study relating macroeconomic literacy and rational thinking

Author

Listed:
  • Lipshits, Rachel
  • Barel-Shaked, Sagit
  • Ben-Zion, Uri

Abstract

We analyze macroeconomic literacy by insights from behavioral economics, while incorporating individual differences in gender, cognitive ability and academic institution. Our sample consists of economic students from two academic institutions in Israel. For statistical analysis, we used Generalized Estimating Equations (GEE). Our main finding is that high-level male students who are prone toward mental accounting have very accurate expectations of inflation, interest rate and unemployment, i.e. they are highly macroeconomic literate. Yet, we found no indication that rational thinkers are more literate than others.

Suggested Citation

  • Lipshits, Rachel & Barel-Shaked, Sagit & Ben-Zion, Uri, 2019. "Empirical study relating macroeconomic literacy and rational thinking," Research in Economics, Elsevier, vol. 73(3), pages 209-215.
    • Handle: RePEc:eee:reecon:v:73:y:2019:i:3:p:209-215
    DOI: 10.1016/j.rie.2019.07.001
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Behavioral economics; Prospect theory; Loss aversion; Mental accounting; Macroeconomic literacy; Generalized estimating equations;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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