Framing Effects in Consumer Expectations Surveys

47 Pages Posted: 7 Jun 2024

See all articles by Lora Pavlova

Lora Pavlova

ZEW – Leibniz Centre for European Economic Research

Date Written: 2024

Abstract

In a randomized experiment embedded in a survey, I test the effects of variationsin question wording and format on consumer response behavior and the correspondinginflation expectations. To this end, survey participants from a representative sampleof German consumers are broken down into four treatment groups and presented withdifferent versions of a question asking for their subjective distribution for inflation overthe next 12 months. As part of the experiment, two competing wordings, previouslyknown from leading consumer surveys, are considered: (i) the change in prices ingeneral or (ii) the inflation rate. In addition, I compare the responses to a question asking for consumers’ probabilistic beliefs about future inflation, to those from simpler one asking for the expected minimum, maximum, and most likely inflation rate over the short term. I find that response behavior varies strongly with framing.Simpler wording such as ‘prices in general’ and a less restrictive format lead to higher mean expected inflation, on average. While simpler wording increases individual uncertainty derived from the subjective histograms, asking for minimum, maximum and mode leads to lower uncertainty about expected inflation.

Keywords: probabilistic expectations, survey design, household inflation expectations

JEL Classification: C83, D84, E31

Suggested Citation

Pavlova, Lora, Framing Effects in Consumer Expectations Surveys ( 2024). ZEW - Centre for European Economic Research Discussion Paper No. 24-036, Available at SSRN: https://ssrn.com/abstract=4856010 or http://dx.doi.org/10.2139/ssrn.4856010

Lora Pavlova (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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