Direct Elicitation of Parametric Belief Distributions: An application to inflation expectations

Pedro Gonzalez-Fernandez, Ciril Bosch-Rosa and Thomas Meissner

No 48, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: We introduce a novel method to elicit belief distributions and apply it to elicit inflation expectations in a representative US sample through a pre-registered survey experiment. Our approach elicits beta belief distributions directly in a two-step process. First, participants specify their minimum and maximum expected inflation. They then use a graphical interface with two sliders to adjust the mean and variance of their inflation belief distribution. We benchmark our method against the “Bins” method, popularized by the New York Fed’s Survey of Consumer Expectations (SCE). Our findings reveal significant variations in elicited belief distributions depending on the method used. Specifically, our approach yields higher mean inflation estimates and substantially reduces the standard deviations of the distributions. Respondents report that our method is easier to use, more engaging, and better allows them to express their beliefs. Furthermore, the resulting distributions more accurately reflect participants’ beliefs across several dimensions and show stronger correlations with their point predictions.

Keywords: Belief Elicitation; Inflation Expectations; Macroeconomic Survey (search for similar items in EconPapers)
Pages: 49 pages
Date: 2024-09-16
New Economics Papers: this item is included in nep-exp and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0048

DOI: 10.48462/opus4-5604

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