The influence of financial and economic literacy on policy preferences in Italy

As populist and protectionist sentiments across the world increase, this paper explores the role that financial and economic literacy plays in shaping individual economic policy preferences. Analyzing original survey data collected in Italy, this study shows that financially and economically literate individuals, regardless of their economic self‐interest, are more likely to prefer remaining in the Eurozone, to favor free trade, EU immigration, non‐EU immigration, and the Fornero pension reform. The author provides preliminary evidence that the lack of differential effects between financially and economically literate winners and losers from globalization and pension reform is driven by longer time horizons. Finally, the author examines different ways to measure financial and economic literacy and finds that there is no evidence of a similar effect when looking at general education, suggesting that financial and economic literacy has distinctive features that more closely capture an individual's ability to evaluate policies.