Dutch Households’ Perceptions of Economic Growth and Inflation
- 116 Downloads
- 4 Citations
Summary
This paper analysis the results of a survey on qualitative and quantitative perceptions and expectations of past, current and future macroeconomic developments among a representative household panel (DNB Household Survey). Perceptions of economic growth and inflation show a large dispersion. For the median respondents, however, the quantitative perceptions were found to be quite accurate. There is some evidence that the concept of economic growth is a more abstract notion for the general public than inflation. Those who have declared themselves more knowledgeable are also more actively involved in dealing with financial issues. The empirical evidence seems to corroborate that individuals with higher self-assessed knowledge levels are better informed indeed and have more accurate quantitative perceptions of economic growth and inflation. At the individual level there is a strong and robust correlation between expected growth and inflation for the next year and the perceptions of the current situation (rule of thumb behavior). But short-term expectations are also influenced by the views individuals hold on longer-term developments.
Keywords
consumer perceptions and expectations economic literacy DNB Household SurveyPreview
Unable to display preview. Download preview PDF.
References
- 1.Ben-Akiva M., McFadden D., Gärling T., Gopinath D., Walker J., Bolduc D., Börsch-Supan A., Delquié P., Larichev O., Morikawa T., Polydoropoulou A., Rao V. (1999), ‘Extended Framework for Modelling Choice Behaviour’. Marketing Letters 10(3): 187–203CrossRefGoogle Scholar
- 3.Fischer S., Huizinga J. (1982), ‘Inflation, Unemployment, and Public Opinion Polls’. Journal of Money, Credit and Banking 14(1): 1–19CrossRefGoogle Scholar
- 2.Gali J., Gertler M. (1999), ‘Inflation Dynamics: A Structural Econometric Approach’. Journal of Monetary Economics 44(2): 195–222CrossRefGoogle Scholar
- 4.Hilgert, M.A., J.M. Hogarth and S.G. Beverly, (2003), ‘Household Financial Management: The Connection between Knowledge and Behavior’, Federal Reserve Bulletin, pp. 309–322.Google Scholar
- 5.Kotlikoff, L.J. and B.D. Bernheim (2001), Household Financial Planning and Financial Literacy, in Essays on Saving, Bequests, Altruism, and Life-cycle planning, Cambridge University Press.Google Scholar
- 6.Lusardi, A. and O. S. Mitchell (2005), ‘Financial Literacy and Planning: Implications for Retirement Wellbeing, Paper presented at the 8th Annual Research Conference on Pensions in an Ageing Society’, De Nederlandsche Bank, November 2005.Google Scholar
- 7.McFadden D. (1999), ‘Rationality for Economists?’. Journal of Risk and Uncertainty 19(1–3): 73–105CrossRefGoogle Scholar
- 8.McFadden D. (2001), ‘Economic choices’. American Economic Review 91(3): 351–378CrossRefGoogle Scholar
- 9.Shiller, R.J. (1996), ‘Why do people dislike inflation’, NBER Working Paper 5539.Google Scholar