As Donald Trump and other seemingly unsuited and inappropriate people were elected into office over the past few years, a growing concern has risen about the health of democracy.  Recent research from the Vienna University of Economics and Business (WU) makes the case for a more educated populace, and how this helps not only the individuals themselves, but society more broadly.

The researchers wanted to test whether an understanding of things like politics and economics helps us to understand how markets work, to make better and more informed decisions, which in turn benefits all of society in the end.

“We’ve all been there: you’re a tourist on vacation in a foreign country. You’re unfamiliar with the pricing policies of the restaurants and bars at your destination, so you’re likely to end up paying way too much for your pizza. The well-informed locals, in contrast, choose restaurants where they know they’ll get better value for their money. Having more information is clearly an advantage for the local population in this scenario,” the researchers say.

Competitive markets

They go on to explain that in competitive markets, the way prices are set is often following a similar pattern.  A lack of information or even a lack of transparency in the market itself, often results in companies being able to charge much higher prices (and to get away with it).

The argument is that better information and a growing number of well-informed people means that companies are more likely to offer better value for money, which will drive market prices down.

“In the scenario we discussed above, the markets don’t work particularly well. Government interventions aiming to provide better information or increase transparency – for example in the form of consumer, competition, and regulation policies – can help to improve the situation,” the researchers conclude.