Estimating the public's social preference function between inflation and unemployment using survey data: The survey research center versus Gallup

Susan W. Taylor (), David J. Smyth () and Pami Dua
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Susan W. Taylor: Department of Economics, Millsaps College, Jackson, Mississippi 39210, USA
David J. Smyth: Middlesex University Business School, London NW4, United Kingdom

Empirical Economics, 1999, vol. 24, issue 3, 372 pages

Abstract: Economists often use Gallup Poll data on presidential performance to analyze the interaction between politics and the state of the macroeconomy. The household survey undertaken by the Survey Research Center (SRC) of the University of Michigan provides an alternative data base. The SRC asks respondents about the government's performance specifically with respect to inflation and unemployment. We compare whether the Gallup or SRC data are the more useful for estimating the public's social preference function between inflation and unemployment for the Carter, Reagan, Bush and Clinton presidencies. The estimates that use Gallup Poll data are unsatisfactory because for two of the periods the coefficients of inflation and unemployment are not well estimated and for one period there is serial correlation of the residuals. The estimates using the SRC data set are satisfactory and the results are consistent with economic theory. We conclude that a researcher using survey data to estimate the public's reaction to varying rates of inflation and unemployment should prefer the SRC series when it is available.

Keywords: Estimating; the; Social; Preference; Function (search for similar items in EconPapers)
JEL-codes: H00 (search for similar items in EconPapers)
Date: 1999-08-16
Note: received: October 1995/final version received: July 1998
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Citations: View citations in EconPapers (8)

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