Consumers Sentiment and Cognitive Macroeconometrics Paradoxes and Explanations

Maurizio Bovi
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Maurizio Bovi: ISAE

Macroeconomics from University Library of Munich, Germany

Abstract: Using data from the Business Surveys Unit of the European Commission, this paper examines how, and how accurately, people assess economic systems. As expected, respondents demonstrate to know their own situation better than the system wide one, and the past better than the future. Also, correctly, perceptions accumulate towards the long run “stationarity” of the economic stance. In contrast, the presence of a long-run bias in the “forecast” error is detected. Evidence shows that it is due to people’s tendency to judge over-pessimistically and/or to forecast over-optimistically. Finally, individuals seem to believe that their own situation may consistently drift apart from the general one. I interpret commonsense behaviors as supporting the reliability of survey data. Puzzling results are assessed in the light of cognitive economics.

Keywords: Beliefs; survey research; consumer sentiment; cognitive economics (search for similar items in EconPapers)
JEL-codes: C42 C82 D12 D84 (search for similar items in EconPapers)
Date: 2005-12-05
New Economics Papers: this item is included in nep-cbe
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0512002

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