When asked about profits as a percentage of sales the median student guessed 30% (actual rate, closer to 4%).Link to study and some comments here. Is there a study of politicians knowledge? as a group they didn't do so well on this test.
When asked about the inflation rate over the last year (survey was in 2009) the median student guessed 11%. Actual rate: much closer to 0%. Note, how important such misconceptions could be to policy.
When asked by how much has income per person in the United States changed since 1950 (after adjusting for inflation) the median student said an increase of 25%. Actual rate an increase of about 248%, thus the median student was off by a factor of 10.
Wednesday, October 13
Summary of common economic misconceptions among economics students. Examples:
at 11:46 AM