What do consumers know about the economy? : A test of minimal economic knowledge in Germany

This research investigates Minimal Economic Knowledge (MEK) of consumers in Germany—that is, basic economic knowledge needed for understanding and successfully participating in the economy. First we develop a scale for measuring MEK in four economic domains: finance, labour economics, consumption, and public economics, testing for three kinds of knowledge within each domain, namely facts, concepts, and causal relationships. Second, we conduct an empirical study to test MEK level and influence of demographic drivers in a representative sample of German adult consumers (N = 1,314), with a mean result of only 59.4 points (of 100), indicating a considerable lack of even minimal economic knowledge. And third, using a subsample, we study factors that result in differences in the level of MEK showing among others that the choice of “sensationalist” versus “serious” news sources, both on television and in newspapers, is associated with a loss of about 10 MEK points, while, surprisingly, participating in an economics course did not enhance minimal economic knowledge. The article closes with a discussion of implications for consumer policy-making.