Empirical study relating macroeconomic literacy and rational thinking

We analyze macroeconomic literacy by insights from behavioral economics, while incor- porating individual differences in gender, cognitive ability and academic institution. Our sample consists of economic students from two academic institutions in Israel. For statis- tical analysis, we used Generalized Estimating Equations (GEE). Our main finding is that high-level male students who are prone toward mental accounting have very accurate ex- pectations of inflation, interest rate and unemployment, i.e. they are highly macroeconomic literate. Yet, we found no indication that rational thinkers are more literate than others.