Working Paper: NBER ID: w9926
Authors: Jeff Dominitz; Charles F. Manski
Abstract: The Michigan Index of Consumer Sentiment (ICS) and other indices of consumer confidence are prominent in public discourse on the economy but have little presence in modern economic research. The sparsity of modern research follows an earlier period when economists scrutinized in some depth the methods and data used to produce consumer confidence indices. The literature to date has focused on the predictive power of the survey data used to form the indices; there has been very little study of their micro foundations. This paper analyzes the responses to eight expectations questions that have appeared on the Michigan Survey of Consumers in the period June 2002 through May 2003. Four questions elicit micro and macroeconomic expectations in the traditional qualitative manner; two are components of the ICS. Four questions use a percent chance' format to elicit subjective probabilities of micro and macroeconomic events; versions of these questions have previously appeared in the Survey of Economic Expectations.
Keywords: Consumer Confidence; Sentiment Analysis; Michigan Survey
JEL Codes: D1; D8; E2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Michigan Survey of Consumers responses (D12) | durable goods expenditures (E20) |
| Michigan Survey of Consumers responses (D12) | family finances (D14) |
| Michigan Survey of Consumers responses (D12) | business conditions (E66) |
| vague question wording (C83) | consumer sentiment biases (D12) |
| inability to express uncertainty (D81) | consumer sentiment biases (D12) |