Economic Literacy in a Multidimensional Individualistic Perspective: Evidence from Pakistan’s Economy

Abstract

Analyzing individual behavior has become a central theme in modern day
economic literature. Understanding subjective behavior of individuals helps
researchers to unfold many important phenomena and critical concepts. This
study attempts to explore one such concept “Economic literacy”, which is of
practical and theoretical relevance. Economic literacy is among those concepts
which on larger part explain the economic subset of individual’s life. The study
utilizes survey responses to explore the extent of economic literacy among
salaried, self-employed and entrepreneurs and finds considerable
heterogeneity among these groups. Economic literacy has been assessed on
multidimensional basis whereby the dimensions are characterized by policy
awareness, theoretical understanding, institutional awareness and selfaptitude of subjects involved in the survey. Utilizing ordinal levels of economic
literacy, the study also offers an empirical investigation of some demographic
determinants of this key variable within an ordinal logistic framework. The
results reveal that demographics including age, income, education, family
background, occupational classification significantly explains differential in
ordinal levels of economic literacy. Our study is suggestive of some awareness
campaigns and training sessions to be launched to make people more aware
about state of the economy, policy making and its covariates.