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Our @NIESRorg @ESCoEorg report, published today, also summarises the existing literature on “Public Understanding of Economics and Economic Statistics”. It’s a fairly small but fascinating literature. Here are some key points – LONG (geeky) THREAD. https://www.escoe.ac.uk/publications/public-understanding-of-economics-and-economic-statistics-escoe-op-03/
1/ Survey studies test people’s knowledge through multiple-choice questions, e.g. can people define GDP, inflation etc? It typically finds that the average person lacks basic knowledge of key economic concepts. This varies by demographics.
2/ Criticism: this explores to what extent public knowledge conforms with how economic concepts are defined by economists (Boyer & Petersen, 2018). This is a “top-down approach” (Killick, 2017, 2018). Basically: does the public have the same understanding as economists?
3/ When public perceptions are “false”, it must be due to public misperceptions, which are seen as outcome of biases, fallacies and ignorance. But it provides little insights about what people actually know, and how they actually think (Haldane, 2017).
4/ Economics is not only a theoretical discipline, but something that matters to people’s everyday lives. Economic terms, e.g. “unemployment”, “consumption” & “economic crisis” have popular meanings, used every day by average citizens (Darriet & Bourgeois-Gironde, 2015)
5/ It can be argued that the public at large have defined a “new economy reality with its own logic and definition of the economy” (Darriet & Bourgeois-Gironde, 2015). This is not necessarily wrong or incorrect – but can be seen as a parallel view to that of economists.
6/ In contrast to many other academic disciplines, normal people are expected to understand and form opinions on the economy (Leiser and Shemesh, 2018). About the government’s economic performance, the impact of Brexit, the impact of the furlough scheme etc.
7/ “Faced with the assumption that they can – and ought to – understand [economic] issues, they try to make sense of them the best they can” (Leiser and Shemesh, 2018). It is crucial to understand this “parallel understanding” and recognise that it exists.
8/ Public understanding should also be explored through a “bottom-up approach” (Killick, 2018), asking questions “as open and unpolluted as possible by experts’ priors and prejudices” (Haldane, 2017; Boyer & Petersen, 2018). Let people articulate their views in their own words.
9/ In UK context, big shouts to @killick_anna, @EconomyAsks and @NEF who have all done recent qualitative studies on how people view “the economy”, using interviews & ethnography:
Killick: https://bit.ly/KillickRigged
Ecnmy: https://bit.ly/EcnmyReport
NEF: https://bit.ly/NEFreport
Killick: https://bit.ly/KillickRigged
Ecnmy: https://bit.ly/EcnmyReport
NEF: https://bit.ly/NEFreport
10/ This literature finds that people’s views are nuanced, complex and varied. Such studies tend to demonstrate that people have a very “thin” knowledge of economic concepts, in the sense it is often very simplistic and hollow (Ecnmy, 2018; NEF, 2018; Killick, 2018).
11/ It often reveals “contradictory, fleeting and unstable views” (Williamson and Wearing, 1996). People’s views are not always internally consistent, no one-size-fits-all theory (Boyer and Petersen, 2018).
12/ People use metaphors or social representations to make sense of the economy, creating a sense of familiarity with an otherwise complicated topic – though this can lead to misunderstandings or biases, and inspire unjustified confidence (Shemesh, 2018; Landau et al., 2014)
13/ People view economy through a lens that include “psychological, social and moral values”, i.e. they integrate political, social and moral beliefs into their views of economic issues - in contrast to how economists make economic judgements based on efficiency considerations.
14/ Described in work by @Professologue: public adopts “conspiratorial style of economics”, focus on individual motivations, controllable actions, and looking at people as responsible for the state of affairs. I can really recommend his book: https://www.amazon.com/How-Misunderstand-Economics-Why-Matters/dp/1138938939
15/ It is more natural for people to think about outcomes and processes as a result of “intentional actions”, rather than a result of “abstract and invisible interactions”. E.g. can judge economic phenomena based on fairness and social justice (Haferkamp et al. 2009).
16/ E.g. prices go up because companies manipulate them to increase profits. Systems are rigged by elites in government, businesses and media. Financial crises are outcomes of economic actors’ stupidity, negligence and greed. Etc.
17/ Though, people sometimes also hold exactly the opposite view: that the economy is inherently volatile, unpredictable, and uncontrollable. Self-governing instead of actively shaped by humans (NEF, 2018; Leiser and Shemesh, 2018; Killick, 2017).
18/ There is one more thing I want to highlight from our review: what are the possible explanations that the public understand economic concepts in different ways to economists? 1) Ignorance, caused by lack of information or failure to understand information given to them.
18/ 2) Economic concepts are complicated and not intuitive, and no incentive for public to invest the time in being trained in these. 3) Lack of statistical and numerical literacy required to understand and interpret figures.
19/ 4) Get their information from different sources, or trust different sources in providing them with accurate information. Most immediate problem is the lack of trust in economists themselves (YouGov, 2017; ING-Economics Network, 2017, 2019 etc.).
20/ Haldane, chief economists at Bank of England, argues that economics suffer from a “twin deficit” – the public lacks both knowledge and trust in the discipline.
21/ Much more in the full report. END https://www.escoe.ac.uk/publications/public-understanding-of-economics-and-economic-statistics-escoe-op-03/
