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Good news, bad news, consumer sentiment and consumption behavior

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  • Nguyen, Viet Hoang
  • Claus, Edda

Abstract

We explore the reaction of heterogenous consumers to a range of financial and economic news and find asymmetry in the response to news where consumers react to bad news but not to good news. This asymmetry holds uniformly across heterogeneous consumer groups and is consistent with the popular negativity bias in psychology. We find asymmetric mapping from news to consumer sentiment and from consumer sentiment to aggregate consumption that supports the notion of asymmetric consumption behavior.

Suggested Citation

  • Nguyen, Viet Hoang & Claus, Edda, 2013. "Good news, bad news, consumer sentiment and consumption behavior," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 426-438.
  • Handle: RePEc:eee:joepsy:v:39:y:2013:i:c:p:426-438 DOI: 10.1016/j.joep.2013.10.001
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    References listed on IDEAS

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    Cited by:

    1. Baghestani, Hamid, 2016. "Do gasoline prices asymmetrically affect US consumers’ economic outlook?," Energy Economics, Elsevier, vol. 55(C), pages 247-252.
    2. James A Wilcox, 2015. "The Home Purchase Sentiment Index: A New Housing Indicator," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 50(4), pages 178-190, October.
    3. repec:eee:joepsy:v:63:y:2017:i:c:p:1-16 is not listed on IDEAS
    4. S. Heravi & J. Easaw & R. Golinelli, 2016. "Generalized State-Dependent Models: A Multivariate Approach," Working Papers wp1067, Dipartimento Scienze Economiche, Universita' di Bologna.

    More about this item

    Keywords

    News; Consumer sentiment; Consumption; Negativity bias;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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