What do voters know about the economy?: A study of Danish data, 1990–1993

Abstract

Eight questions asked in eight polls analyse what Danes know and expect about the (macro) economy. As people have little interest in being well informed, it would be irrational if they were. However, half the voters know the number of unemployed. Their micro perceptions correspond to the macro figures. Few people have realistic perceptions of inflation. They form largely static inflationary expectations, but guess the direction of change with a prediction bias. People know little about the balance-of-payments and the budget balance. The pattern of knowledge is much as expected, except for a strong gender factor. The poll made just after an election shows an increase in economic knowledge. The increase disappears within a year. The findings correspond to basic facts found about economic voting: voters are myopic. As their expectations are static, voting is retrospective, but knowledge grows at election time. We should hence expect vote and popularity functions to differ.