Households’ inflation perceptions and expectations: survey evidence from New Zealand

Abstract

In this paper, we study how inflation is viewed by the general population of New Zealand. Based on unique representative survey data collected in 2016 and using descriptive statistics and multivariate regressions, we explore various aspects of how laypersons perceive inflation and form inflation expectations. We focus on how an individual’s economic situation, information search and interest in inflation, economic knowledge, and attitudes and values are related to inflation perception and expectation, as well as the individual’s reaction to them. We interpret our findings as a clear indication that laypersons’ knowledge about inflation is much better described by the imperfect information view prevailing in social psychology than by the rational actor view typically assumed in economics.

From “Switzerland” to “Venezuela” of the Middle East: who is harmed the most by inflation in Lebanon?

“…The online survey approach was chosen as the primary data collection tool, and the survey questions were inspired by previous empirical works on the topic (Central Bank of Nigeria, 2017; The University of Michigan, 2015; Diamond et al. , 2020; Hayo and Neumeier, 2022) to come up with questions that fit the study and the Lebanese situation. The survey provided anonymity and confidentiality assurance to participants and explained the research's purpose and time needed to complete it.…”

Perceptions of Increases in Cost of Living and Psychological Distress Among Older Adults

“…People are highly attuned to inflation because inflation is related to common activities of obtaining needs and wants. Nevertheless, differences in social positions and experiences may affect personal experiences of inflation ( Hayo & Neumeier, 2022 ; Ranyard et al, 2008 ). Particularly relevant to the current research is that expenditure patterns and emphases vary with age ( Basu, 2005 ; Bernicke, 2005 ; Blanchett, 2014 ), leading to inflation experiences in later-life that may vary from the official inflation rate and between different households ( Basu, 2011 ; Kalwij et al, 2018 ; Nie & Gautam, 2020 ).…”

“…Anticipatory stress may also lead individuals to begin preparation for future hardships ( Scott et al, 2019 ). Consequently, perceptions of increases in cost of living may also create changes in savings and spending behaviors ( Hayo & Neumeier, 2022 ), and curbs on future plans and desired acquisitions can contribute to emotional upset. Similarly, the potential for financial shortfalls may lead to desistence in engagement in leisure activities ( Silva, 2022 ), which, in addition to being distressing in and of itself, may also lead to a loss of social connection and loneliness that is associated with greater psychological distress ( Park et al, 2013 ).…”