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

14 Pages Posted: 18 Sep 2007

See all articles by Kevin Lee

Kevin Lee

University of Leicester - Department of Economics

Kalvinder Shields

University of Melbourne - Department of Economics

Abstract

Survey data frequently requires conversion from qualitative responses to quantitative series and it is often asserted that the conversion procedures introduce measurement errors that render the series unusable in structural modelling. We investigate the nature and treatment of the measurement error that arises when conversion procedures are used to obtain direct measures of expectations. We use simulation experiments to demonstrate the need for the adequate treatment of conversion errors and show that a procedure proposed to 'purge' the series of conversion error is extremely successful in circumventing the problems. We illustrate the procedures in empirical applications using business survey data.

Suggested Citation

Lee, Kevin C. and Shields, Kalvinder, Overcoming Measurement Error Problems in the Use of Survey Data on Expectations. Economic Record, Vol. 83, No. 262, pp. 303-316, September 2007, Available at SSRN: https://ssrn.com/abstract=1014705 or http://dx.doi.org/10.1111/j.1475-4932.2007.00416.x

Kevin C. Lee

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom
0116 252 5348 (Phone)

Kalvinder Shields (Contact Author)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

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