What Do People Know About the Economy? A Test of Minimal Economic Knowledge in Germany

Abstract

This research evaluates Minimal Economic Knowledge (MEK) in Germany — that is, basic knowledge of economic facts, concepts, and causal relationships needed for understanding and successfully participating in the economy. It is addressed to gain an understanding of the level of Minimal Economic Knowledge in the German public. To fulfill this goal we conducted three studies: The first study developed a scale for measuring MEK using a Delphi method approach.

The resulting questionnaire comprises 24 questions in four economic domains: finance, labor economics, consumption, and state economics, testing for three kinds of knowledge within each domain — facts, concepts, and causal relationships. Our second study tested the MEK level in a representative sample of German adults (N=1,314), with a mean result of 59.4 (of 100) indicating a considerable lack of economic knowledge. It further analyses the influence of demographic drivers such as gender and age. A third, explorative study (N=243) determined additional drivers for MEK such as a person’s origin, life experience, use of media, and social circumstance.

Keywords: economic literacy, drivers, education, laypersons, minimal economic knowledge

JEL Classification: A29, C42, D83