Financial literacy and support for free trade in the UK

Abstract

AbstractRecent events in Europe and the United States suggest that open economies are increasingly under stress as nationalist, protectionist and populist political entrepreneurs are gaining significant ground across the Western world. Many theories have been formulated as to which factors are more likely to explain such policy preferences. The hypothesis tested in this paper is that financial literacy affects economic policy preferences. I analyse data from the British Election Study and test my theory on support for free trade in the United Kingdom. Findings suggest that financial literacy does affect economic policy preferences. On average, financially literate individuals are more likely to think that free trade is good for the British economy. Furthermore, this is true regardless of economic self‐interest, as both financially literate winners and losers from globalisation are more likely to support free trade than their illiterate counterparts.