Finance and Economics Discussion Series (FEDS)
May 1999
The Measurement of Consumer Expectations Using Survey Data
Martha Starr-McCluer
Abstract:
Surveys of consumers collect considerable information on consumer expectations. However, the simple categorical structure of the questions -- such as "Do you expect your income to rise, fall, or stay the same?" -- makes their value for research uncertain. This paper analyzes the information content of the survey measures. I draw on Manski's finding that, while categorical questions do not identify the probability of an event occurring, they do provide information on probability bounds. I analyze data from two well-known surveys, showing that, although the bounds are often wide, for some measures they move closely with the series they are intended to track or predict.
Keywords: Consumption, household behavior, expectations
PDF: Full Paper
Disclaimer: The economic research that is linked from this page represents the views of the authors and does not indicate concurrence either by other members of the Board's staff or by the Board of Governors. The economic research and their conclusions are often preliminary and are circulated to stimulate discussion and critical comment. The Board values having a staff that conducts research on a wide range of economic topics and that explores a diverse array of perspectives on those topics. The resulting conversations in academia, the economic policy community, and the broader public are important to sharpening our collective thinking.