Download This PaperA New Metric of Consensus for Likert Scales
IREA Working Papers 2018/21. Research Institute of Applied Economics, University of Barcelona
AQR Working Papers 2018/10. Regional Quantitative Analysis Research Group, University of Barcelona
8 Pages Posted: 18 Oct 2018 Last revised: 3 Jun 2021
Date Written: September 26, 2018
Abstract
In this study we present a metric of consensus for Likert-type scales. The measure gives the level of agreement as the percentage of consensus among respondents. The proposed framework allows to design a positional indicator that gives the degree of agreement for each item independently of the number of reply options. In order to assess the performance of the proposed metric of consensus, in an iterated one-period ahead forecasting experiment we test whether the inclusion of the degree of agreement in consumers’ expectations regarding the evolution of unemployment improves out-of-sample forecast accuracy in eight European countries. We find that this is the case in five countries (Finland, France, Ireland, Italy and Spain). These results show that the degree of agreement in consumers’ expectations contains useful information to predict unemployment rates and underline the usefulness of consensus-based metrics to track the evolution of economic variables.
Keywords: Likert scales, consensus, geometry, economic tendency surveys, consumer expectations, unemployment
JEL Classification: C14, C51, C52, C53, D12, E24
Suggested Citation: Suggested Citation