Economic Literacy: Does It Matter for Policy Understanding?

Abstract

The quality of human capital is indispensable for economic growth and sustainability. The developed nations have shown evidence of a positive relationship between education and economic development. In all respects, a better understanding of economics among citizens has led to more efficiency in implementing economic policies. In this paper, we explore a possible relationship between economic literacy and policy understanding. Policy knowledge, interest and explanation are measured through policy understanding. This study used the students’ teachers as a sample and found that economic literacy was below 50 per cent. Meanwhile, the level of policy understanding was moderate. Interestingly, our findings showed that economic literacy is not strongly associated with economic policy understanding. Policy interest appeared as an important element for policy understanding among the sample. In a volatile economic environment, the level of economic knowledge among the population is a vital factor for the implementation of economic policies. A further investigation must be conducted to assess this issue.