Information and Macroeconomic Expectations: Global Evidence

Unique global data on 47,000 consumers across 47 countries representing 90% of world GDP reveal universal patterns in macroeconomic belief formation. Most consumers form beliefs based on local information sources (utility bills, shopping, and acquaintances) that provide signals not representative for the overall consumption bundle, so that seeking information leads to forming biased macroeconomic expectations. Distrust in governments and central banks, the producers of aggregate economic information, helps explain reliance on local sources and the lack of learning from aggregate realizations. Observed macroeconomic volatility fuels distrust. In the cross-section, we confirm that certain demographics correlate with expectation biases but mostly due to different sorting into information sources, rather than different processing of the same economic information. These globally established facts inform advances of theories of belief formation and the design of communication strategies as a macroeconomic policy tool.