Empirical study relating macroeconomic literacy and rational thinking

Rachel Lipshits, Sagit Barel-Shaked and Uri Ben-Zion

Research in Economics, 2019, vol. 73, issue 3, 209-215

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.

Keywords: Behavioral economics; Prospect theory; Loss aversion; Mental accounting; Macroeconomic literacy; Generalized estimating equations (search for similar items in EconPapers)
JEL-codes: C13 D91 E71 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:73:y:2019:i:3:p:209-215

DOI: 10.1016/j.rie.2019.07.001

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