Households’ Macroeconomic Beliefs: The Role of Education

We investigate how education shapes households’ macroeconomic beliefs by surveying Dutch households on their perceptions and forecasts of inflation, unemployment, mortgage rates, and stock prices. Our findings unveil significant differences between highly-educated and less-educated households. Highly educated respondents form beliefs consistent with a monetary policy trade-off between inflation and unemployment, whereas less-educated households adopt a "supply-side" perspective. When exposed to vignette-based scenarios simulating monetary policy shocks, highly educated individuals adjust their beliefs and consumption-saving decisions in line with intertemporal substitution and textbook economic models. In contrast, less-educated respondents often retain pre-existing beliefs or revise them using non-standard mental models. Moreover, highly educated households primarily rely on formal education and newspapers for economic information, while less- educated households are more influenced by social media. These findings point to the need to model education-related heterogeneity and communicate policy targets and decisions in a simplified manner to reach different socio-economic groups.