Former Sderot Mayor Eli Moyal presents a T-shirt to Obama as Barak looks on at the local police station in 2008.Former Sderot Mayor Eli Moyal presents a T-shirt to Obama as Barak looks on at the local police station in 2008..
(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?"
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
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).