Public Understanding of Economics and Economic Statistics After the COVID-19 Pandemic

In February 2020, just before the COVID-19 pandemic, we conducted an online YouGov survey, and found that large parts of the UK public have misperceptions about economic figures, including on unemployment, inflation and GDP (Runge and Hudson, 2020). Two and half years later, in August 2022, we conducted a second survey where we repeated many of the questions from the original study and added some new ones. The aim was to explore whether there have been any changes in public understanding of economic statistics over this period, especially in the context of dramatic changes to the UK economy due to the pandemic and cost-of-living crisis. On inflation, our findings show that the UK public have become more confident about their understanding, and by far most people are aware that the inflation rate has increased and is considered high. However, economists and the media should be cautious about reporting a “fall in the inflation rate”, as this is often interpreted by the public as a fall in price levels, which might then fuel mistrust as it does not match what they experience in their daily lives. A better alternative would be to say that “prices are still going up, just not as quickly”. On labour market statistics, the steady rise in “economic inactivity” has been a defining development since the last survey: yet the term is still not widely understood by the public, who still see labour market statistics as binary between those who are in work and those who are out of work. In contrast, many people recognise that there has been a significant increase in job vacancies, though the term “tight labour market” is not widely understood by the public. GDP is still not well understood among the UK public, with less than half of people able to identify the correct definition. The same applies to the term “recession”, with our findings suggesting that public communication should simply refer to falls in economy activity or the size of the economy. The UK public still demonstrate a strong understanding of how interest rates affect personal finances for borrowers and savers, and most people are aware that interest rates have risen since the start of the pandemic. Finally, in the second part of the report, we provide reflections on the challenges in communicating labour market statistics to the wider public, and some of the potential solutions.