Working Paper: CEPR ID: DP5851
Authors: Thomas Dohmen; Armin Falk; David Huffman; Uwe Sunde
Abstract: Prominent economic theories have emphasized the role of commonly held perceptions and expectations for determining macroeconomic outcomes. A key empirical question is how such collectively held beliefs are formed. We use the FIFA World Cup 2006 as a natural experiment. We provide direct evidence that seemingly irrelevant events (the outcomes of soccer matches) can systematically affect individual perceptions about economic prospects, both on a personal and economy-wide level.
Keywords: Expectation formation; Macroeconomic outcomes; Psychology; Soccer; World Cup; Sunspots
JEL Codes: D0; D8; E0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| FIFA World Cup 2006 outcomes (F53) | individuals' economic perceptions and expectations (D84) |
| positive performance of German national team (O52) | improved perceptions regarding current economic situation in Germany (E66) |
| positive performance of German national team (O52) | improved personal economic situations (P46) |
| group matches and subsequent rounds (C78) | perceptions of economic conditions (E66) |
| quarterfinal victory against Argentina (Z28) | perceptions of economic conditions (E66) |
| consolation match against Portugal (Z29) | perceptions of economic conditions (E66) |
| semifinal loss to Italy (Z29) | perceptions of economic conditions (E66) |