How well-informed are people in Germany about economics and how can existing knowledge gaps be closed? Researchers from ZEW Mannheim examined these questions, which are particularly relevant in view of the federal elections taking place this year. In their analysis, they also shed light on the connection between economic knowledge and a state’s ability to reform. They found that states with economically well-informed voters are more likely to have greater economic freedom, i.e. a functioning legal system, a high degree of market openness or efficient state regulation. Economic policy issues are also judged in a more balanced way when more detailed information is made available. For example, openness towards tuition fees increases when information on the income advantage of university graduates is made available. Moreover, a better level of information goes hand in hand with a greater awareness of the negative consequences taxes have on growth and performance.
In order to identify possible the causes for poor economic knowledge, the study looks more closely at the role of the general level of education and the use of social media. International country comparisons show that a low level of education and heavy use of social media are associated with poorer knowledge of facts.
In addition to analysing the population’s level of economic knowledge, the ZEW researchers have developed a catalogue of new ideas for improving economic education. “In Germany, the great economic competence available at the many research institutions is not sufficiently used for knowledge transfer,” says head of the study Professor Friedrich Heinemann. “Young researchers currently have too little incentive to carry their expertise into schools or offer themselves as discussion partners for interested non-experts.” This is where ‘credit points for transfer’, which young researchers obtain for participating in transfer activities during their doctorate, could help. Moreover, the ZEW researchers recommend the introduction of so-called ‘electoral programme referees’ and ‘impact checks’. Via election programme referees who independently examine the election programmes of the various parties, people could see, for example, what the financial consequences of the individual election outcomes would be for them.
Aside from that, fact checks, which are already widely used in the media, should be complemented by impact checks. The difference is that impact checks also look at the indirect repercussions of a political measure, which are often not so easily recognisable. One example is the proposal for a rent cap. The impact check would show, on the basis of available scientific studies, what consequences such a market intervention can have for investments in housing and the availability of housing. Only with this knowledge will a truly informed decision on such a regulatory intervention be possible. ‘Internet driving licences’ could also provide new incentives in schools for acquiring greater competences in dealing with digital information sources. “A country’s economic policy can only be as good as the economic literacy of its voters,” says Friedrich Heinemann, explaining the study’s call for taking comprehensive efforts in the fight against economic information deficits and rampant disinformation in times of fake news.