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Do students understand inflation?

Söderström, Björn LU (2017) NEKH02 20171
Department of Economics
Abstract
Money illusion was for a long time believed by most economists to be non-existent, despite previous large support for it, because it did not fit the neo-classical model of the rational individual. Using a survey to test students’ understanding of inflation as proxy for money illusion, this thesis aims to establish the existence of money illusion and develop an understanding of why some students exhibit better understanding of inflation than others. Based on a sample of 275 university students, most of them on their first year, I find strong support for the hypothesis that students in general do not understand inflation beyond its definition. Knowing the definition of inflation is not enough to exhibit a deeper understanding. I find that... (More)
Money illusion was for a long time believed by most economists to be non-existent, despite previous large support for it, because it did not fit the neo-classical model of the rational individual. Using a survey to test students’ understanding of inflation as proxy for money illusion, this thesis aims to establish the existence of money illusion and develop an understanding of why some students exhibit better understanding of inflation than others. Based on a sample of 275 university students, most of them on their first year, I find strong support for the hypothesis that students in general do not understand inflation beyond its definition. Knowing the definition of inflation is not enough to exhibit a deeper understanding. I find that studying economics or having previously taken courses in national economics at a university introductory level is not enough to significantly improve students’ understanding of inflation. My results also confirm the existence of money illusion in support of previous studies on the topic. (Less)
Please use this url to cite or link to this publication:
author
Söderström, Björn LU
supervisor
organization
course
NEKH02 20171
year
type
M2 - Bachelor Degree
subject
keywords
Inflation, money illusion, student understanding of economics
language
English
id
8925133
date added to LUP
2017-09-12 11:56:35
date last changed
2017-09-12 11:56:35
@misc{8925133,
  abstract     = {Money illusion was for a long time believed by most economists to be non-existent, despite previous large support for it, because it did not fit the neo-classical model of the rational individual. Using a survey to test students’ understanding of inflation as proxy for money illusion, this thesis aims to establish the existence of money illusion and develop an understanding of why some students exhibit better understanding of inflation than others. Based on a sample of 275 university students, most of them on their first year, I find strong support for the hypothesis that students in general do not understand inflation beyond its definition. Knowing the definition of inflation is not enough to exhibit a deeper understanding. I find that studying economics or having previously taken courses in national economics at a university introductory level is not enough to significantly improve students’ understanding of inflation. My results also confirm the existence of money illusion in support of previous studies on the topic.},
  author       = {Söderström, Björn},
  keyword      = {Inflation,money illusion,student understanding of economics},
  language     = {eng},
  note         = {Student Paper},
  title        = {Do students understand inflation?},
  year         = {2017},
}