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Is Discrepancy between Confidence and Spending Driven by Pessimism or by High Aspriations? – Review of the Discrepancy between the Admitted Financial Situation and Actual Spending in Hungary

Author

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  • Csongor Hajdu

    (Faculty of Social Sciences, Corvinus University of Budapest, Budapest)

Abstract

The opinions of people are expected to forecast their actions, and even major economic institutions rely on this correlation. This research paper examines a case when the opinion of people about their financial situation contradicts their financial-related actions. In 2012 in Hungary the general opinion of people about their financial situation was showing the lowest confidence in the world, with a significant declining trend, reaching an extremely low level. Although the general expectation would be that this pessimism triggers a set-back in consumer spending, figures show that Hungarians were on the other end of the scale regarding their expenditures and were greatly increasing their spending. This raises the question: why do people say they are in such a tough financial situation yet instead of saving they increase their spending? This paper presents a cross-country analysis that reviews the severity of this discrepancy, as well as proves the validity of the question by excluding several alternative explanations, followed by a recommendation and hypotheses for a detailed research to explain the phenomenon.

Suggested Citation

  • Csongor Hajdu, 2017. "Is Discrepancy between Confidence and Spending Driven by Pessimism or by High Aspriations? – Review of the Discrepancy between the Admitted Financial Situation and Actual Spending in Hungary," Society and Economy, Akadémiai Kiadó, Hungary, vol. 39(2), pages 233-250, June.
    • Handle: RePEc:aka:soceco:v:39:y:2017:i:2:p:233-250
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    File URL: http://www.akademiai.com/doi/pdf/10.1556/204.2017.39.2.4
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    Cited by:

    1. Marina Matosec & Zdenka Obuljen Zoricic, 2019. "Identifying the Interdependence between Consumer Confidence and Macroeconomic Developments in Croatia," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 17(2-B), pages 345-354.

    More about this item

    Keywords

    income; spending; savings; confi dence; benchmarks;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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