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Consumers Sentiment and Cognitive Macroeconometrics Paradoxes and Explanations

Author

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  • Maurizio Bovi

    (ISAE)

Abstract

Using data from the Business Surveys Unit of the European Commission, this paper examines how, and how accurately, people assess economic systems. As expected, respondents demonstrate to know their own situation better than the system wide one, and the past better than the future. Also, correctly, perceptions accumulate towards the long run “stationarity” of the economic stance. In contrast, the presence of a long-run bias in the “forecast” error is detected. Evidence shows that it is due to people’s tendency to judge over-pessimistically and/or to forecast over-optimistically. Finally, individuals seem to believe that their own situation may consistently drift apart from the general one. I interpret commonsense behaviors as supporting the reliability of survey data. Puzzling results are assessed in the light of cognitive economics.

Suggested Citation

  • Maurizio Bovi, 2005. "Consumers Sentiment and Cognitive Macroeconometrics Paradoxes and Explanations," Macroeconomics 0512002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0512002
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    More about this item

    Keywords

    Beliefs; survey research; consumer sentiment; cognitive economics;
    All these keywords.

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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