I'm sure everyone has seen the T-shirts with a fewdozen cartoon faces, labeled happy, grumpy, confused, etc. But it maynot have occurred to you that these sentiments could be viewed asleading economic indicators.
In fact, Israel's Calcalist economicnewspaper conducts a monthly survey of the national mood, and theeditors concluded that the good vibes evident in their latest surveymay portend the end of the recession.
Surveys of consumer sentiment are nothing new. For example, theConference Board in the United States has been surveying consumerconfidence on a monthly basis for more than 40 years, and similarsurveys are now published regularly around the world.
Many studies have been done to evaluate the value of thesesurveys as an economic indicator; most show that consumer confidence orsentiment is positively correlated with near-term growth. Consumerspending 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 economicopinions; for example, "How do you anticipate business conditions andfamily 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 tomood generally. It asks people about their overall mood, and inaddition about specific emotions that can't be rated on a spectrum orscale. People can reply that their mood is worried, stable, frustrated,angry, enthusiastic, etc. - just like the T-shirt. Each respondentchooses three emotions and then the results are reported.
I have written many times in this column aboutincorporating subjective survey indicators, including self-assessedlife satisfaction, in assessing how well a society is performing inproviding a decent life for its members. But I have never consideredusing such data as a basis for economic forecasts.
The Calcalist editors report that the number of Israelisreporting a positive general mood in July was the highest sinceFebruary, and they suggest that this portends the end of the recession.
As I have written before, existing studies show that subjectivewell-being measures tend to track output only weakly and to lag themrather than lead them.
I commend the Calcalist editors for drawing attention totheir unique survey data and for contemplating its potential impact onour economy. I continue to believe that these mood surveys are mostimportant for their own sake. the economy's performance is itself ofinterest primarily for its contribution to our well-being.
One revealing result of the mood survey is that the twodominant moods among survey respondents in the Jewish state are worryand optimism. Although the number of worriers is declining, almost 40percent of Israelis surveyed mentioned worry as among their top threesentiments, more than six percentage points ahead of the numberexpressing optimism.
Another T-shirt popular in Israel proclaims, "Don't worry, behappy." But given these findings, perhaps we should introduce a nativeversion expressing our unique Israeli character: "Worry, but be happy."
Asher Meir is research director at the Business Ethics Centerof Jerusalem, an independent institute in the Jerusalem College ofTechnology (Machon Lev).