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Many Germans know little about economics

In a representative survey, briq and DIE ZEIT tested the knowledge of the German population about basic economic concepts and facts. The results reveal a blatant lack of knowledge.

For example, only 28% of Germans have a firm grasp of inflation or economic growth rates, and 42% are familiar with such basic economic concepts as compound interest or supply and demand. When it comes to the tax burden and the distribution of wealth in Germany, only 32% of respondents gave a correct answer.

Some of the estimates were off the mark by a huge margin, with inflation and growth estimates ranging up to annual rates of 60%. This suggests that many Germans are far detached from economic reality.

Across the entire population, men have better knowledge of economic facts than women, but education plays a key role. For example, 49% of higher secondary school graduates know the current unemployment rate, compared to 35% of the less educated. The education gap is even larger (73% vs. 40%) with respect to understanding the concept of compound interest, which is important for making smart investment and saving decisions. Given that better education is generally associated with higher income and wealth, this gap may reinforce social inequality as basic economic knowledge helps people get ahead.

Read more in German:

Learning about job search

Brochure for job seekers

To investigate how information provision affects job seekers’ employment prospects and labor market outcomes, Steffen Altmann (University of Copenhagen), Armin Falk (briq and University of Bonn), Simon Jäger (MIT) and Florian Zimmermann (briq and University of Bonn) conducted a large-scale field experiment in the German labor market.

Individuals assigned to the treatment group of the experiment received a brochure that informed them about job search strategies and the consequences of unemployment, and motivated them to actively look for new employment.

The authors studied the causal impact of the brochure by comparing labor market outcomes of treated and untreated job seekers in administrative data containing comprehensive information on individuals’ employment status and earnings.

While the treatment yields overall positive effects, these tend to be concentrated among job seekers who are at risk of being unemployed for an extended period of time. Specifically, the treatment effects in the overall sample are moderately positive but mostly insignificant.

At the same time, the researchers do observe pronounced and statistically significant effects for individuals who exhibit an increased risk of long-term unemployment. For this group, the brochure increases employment and earnings in the year after the intervention by roughly 4%.

Given the low cost of the intervention, our findings indicate that targeted information provision can be a highly effective policy tool in the labor market, the authors conclude.

[Read the press release in German]

Impressions from the briq opening ceremony

During a grand opening ceremony with more than 80 invited guests from science and society, briq was officially introduced to the public on September 27, 2017. After welcoming remarks by Dr. Klaus Zumwinkel (President of the Deutsche Post Foundation) and Professor Michael Hoch (Rector of the University of Bonn), Professor Armin Falk (CEO of briq) explained the institute’s mission and strategy.

Among the highlights of the event were the opening address by Nobel laureate Professor James J. Heckman (University of Chicago) and a panel discussion on briq’s key topics – behavioral economics and (social) inequality – with prominent scholars in the field. The audience also had a chance to look behind the scenes of the research institute and engage in discussions with briq researchers.

Photos: Kay Herschelmann