How Should We Measure Consumer Confidence (Sentiment)? Evidence from the Michigan Survey of Consumers

45 Pages Posted: 29 Aug 2003 Last revised: 4 Nov 2010

See all articles by Jeff Dominitz

Jeff Dominitz

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; RAND Corporation

Charles F. Manski

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2003

Abstract

The Michigan Index of Consumer Sentiment (ICS) and other indices of consumer confidence are prominent in public discourse on the economy but have little presence in modern economic research. The sparsity of modern research follows an earlier period when economists scrutinized in some depth the methods and data used to produce consumer confidence indices. The literature to date has focused on the predictive power of the survey data used to form the indices; there has been very little study of their micro foundations. This paper analyzes the responses to eight expectations questions that have appeared on the Michigan Survey of Consumers in the period June 2002 through May 2003. Four questions elicit micro and macroeconomic expectations in the traditional qualitative manner; two are components of the ICS. Four questions use a percent chance' format to elicit subjective probabilities of micro and macroeconomic events; versions of these questions have previously appeared in the Survey of Economic Expectations.

Suggested Citation

Dominitz, Jeff and Manski, Charles F., How Should We Measure Consumer Confidence (Sentiment)? Evidence from the Michigan Survey of Consumers (August 2003). NBER Working Paper No. w9926, Available at SSRN: https://ssrn.com/abstract=437495

Jeff Dominitz

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Charles F. Manski (Contact Author)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States
847-491-8223 (Phone)
847-491-7001 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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