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Finance and Economics Discussion Series
The Finance and Economics Discussion Series logo links to FEDS home page 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

Full paper (2177 KB PDF)

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Last update: May 14, 1999