Overcoming Measurement Error Problems in the use of Survey Data on Expectations

Kalvinder Shields and Kevin Lee ()

No 107, Econometric Society 2004 Australasian Meetings from Econometric Society

Abstract: Survey data frequently requires conversion from qualitative responses to quantitative series. A commonly cited criticism of the use of the survey data is that the conversion procedures incorporate measurement errors which render the series unusable. In this paper, we provide a novel contribution to the literature by paying attention to the nature of, and the treatment of, the measurement error that arises when such a conversion takes place. Such an error is frequently ignored or assumed to be orthogonal to known information. The contributions of this paper are three-fold. Firstly, simulation experiments show that the conversion error is systematic in it's relation to known information and show that need for the adequate treatment of conversion errors is essential. Secondly, this paper formally shows that the procedure proposed by Lee (1994), which employs a relatively weak assumption, is extremely successful in circumventing the problems. Finally, in contrast to previous findings, these results provide strong support for the view that expectations are formed rationally in the case of Australian total manufacturing output

Keywords: Measurement Error; Survey-based Expectations; Rationality; Conversion Procedures (search for similar items in EconPapers)
JEL-codes: C42 D84 (search for similar items in EconPapers)
Date: 2004-08-11
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Overcoming Measurement Error Problems in the Use of Survey Data on Expectations (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecm:ausm04:107

Access Statistics for this paper

More papers in Econometric Society 2004 Australasian Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().