Barak Moyal Obama 248.88.
(photo credit: Bloomberg )
I'm sure everyone has seen the T-shirts with a few dozen cartoon faces, labeled happy, grumpy, confused, etc. But it may not have occurred to you that these sentiments could be viewed as leading economic indicators.
In fact, Israel's Calcalist economic newspaper conducts a monthly survey of the national mood, and the editors concluded that the good vibes evident in their latest survey may portend the end of the recession.
Surveys of consumer sentiment are nothing new. For example, the Conference Board in the United States has been surveying consumer confidence on a monthly basis for more than 40 years, and similar surveys are now published regularly around the world.
Many studies have been done to evaluate the value of these surveys as an economic indicator; most show that consumer confidence or sentiment is positively correlated with near-term growth. Consumer spending also has predictive power, but the data analysis takes weeks, so the information is only available long after the month has ended.
However, these surveys solicit only economic opinions; for example, "How do you anticipate business conditions and family income for the coming months?"
The Calcalist survey does include conventional measures, including questions such as, "What is your economic mood this month?" and "When do you think the recession will end?" But it also relates to mood generally. It asks people about their overall mood, and in addition about specific emotions that can't be rated on a spectrum or scale. People can reply that their mood is worried, stable, frustrated, angry, enthusiastic, etc. - just like the T-shirt. Each respondent chooses three emotions and then the results are reported.
I have written many times in this column about incorporating subjective survey indicators, including self-assessed life satisfaction, in assessing how well a society is performing in providing a decent life for its members. But I have never considered using such data as a basis for economic forecasts.
The Calcalist editors report that the number of Israelis reporting a positive general mood in July was the highest since February, and they suggest that this portends the end of the recession.
As I have written before, existing studies show that subjective well-being measures tend to track output only weakly and to lag them rather than lead them.
I commend the Calcalist editors for drawing attention to their unique survey data and for contemplating its potential impact on our economy. I continue to believe that these mood surveys are most important for their own sake. the economy's performance is itself of interest primarily for its contribution to our well-being.
One revealing result of the mood survey is that the two dominant moods among survey respondents in the Jewish state are worry and optimism. Although the number of worriers is declining, almost 40 percent of Israelis surveyed mentioned worry as among their top three sentiments, more than six percentage points ahead of the number expressing optimism.
Another T-shirt popular in Israel proclaims, "Don't worry, be happy." But given these findings, perhaps we should introduce a native version expressing our unique Israeli character: "Worry, but be happy."
Asher Meir is research director at the Business Ethics Center of Jerusalem, an independent institute in the Jerusalem College of Technology (Machon Lev).