Academic journal article Journal of Economics and Economic Education Research

Recent Trends and New Evidence in Economics Literacy among Adults

Academic journal article Journal of Economics and Economic Education Research

Recent Trends and New Evidence in Economics Literacy among Adults

Article excerpt

INTRODUCTION

It is essential for citizens to have a reasonable level of knowledge about the functioning of the economy lato sensu, or relative to markets of goods and services, work, and capital, in a society that intends more active citizen participation. An understanding of market functioning will make it possible for citizens to evaluate political decisions and their consequences in a more fundamental manner, as well as make better decisions that maximise their well being (Koshal, Gupta, Goyal, & Choudhary, 2008). Huston (2010) and Remund (2010) concludes that it is extremely important to increase the general level of the population's economic knowledge so that people can better understand and settle the decisions with which they are currently confronted. Economics literacy has received growing attention in the academic literature and even more in the context of the present economic and financial crisis.

Not surprisingly, economics literacy, which encompasses both real and financial aspects, has received growing attention in the academic literature (Clark, Shung & Harrison, 2009), and even more in the context of the present economic and financial crisis. In this context, it becomes relevant to further investigate the citizens' level of economic knowledge, as well as to explore variables that permit explanations of differentiation between individuals' economic knowledge.

In this work we develop a sound and novel empirical work, analysing the level and determinants of economic literacy of a sample of adults in Portugal, being unique in this respect. A good evaluation of economic literacy allows one to distinguish the existing deficiencies and thus define education according to these deficiencies. It also permits identification of the more critical groups (Huston, 2010). The vast majority of this theoretical and empirical literature focuses on the USA case and emphasises financial aspects, but interest in this subject continues to gain interest and attention from researchers, teachers, institutions and political decision-makers in other parts of the world. This study analysis new data for an European economy, Portugal. It is expected that this work will contribute to an increased interest in "education in economics" on the part of researchers and that their results will allow for the expansion of knowledge about the Portuguese reality, being possible to compare the results to others obtained internationally. The developed questionnaire can also be applied by other researchers in the future.

BACKGROUND

Economic literacy consists of the set of knowledge and competencies that permit the improvement of personal and social decisions about various economic problems encountered in daily life, whether as consumers, vendors, producers, investors, workers or voters. An important component of economic literacy involves knowledge of financial aspects or financial literacy. Financial literacy is understood as the comprehension of a set of economic concepts that can be used to evaluate financial situations and make good financial decisions (Pang, 2010).

It becomes relevant to investigate the citizens' level of economic knowledge, as well as to explore variables that permit explanations of differentiation between individuals' economic knowledge. On this regard, studies in the literature reveal the importance of the education level. Gleason & Scyoc (1995), Wood & Doyle (2002) and Walstad & Rebeck (2002) verified that the education level of individuals had a statistically significant positive effect on their economic literacy, such that the greater the level of education, the greater the level of correct responses on a test on economics. More recently, Monticone (2010) verified that the highest education levels are generally associated with higher levels of financial knowledge. Individuals with more education experience fewer difficulties when acquiring financial knowledge and therefore incur fewer learning costs. …

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