Economists are paying more attention to our inflation fears
The views of ordinary people should not be dismissed.
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In the context of painfully high price growth, over the past few years there has been a wave of inflation research.
PHOTO: ST FILE
Soumaya Keynes
Ask people what they think will happen to inflation in future, and you will get some pretty funky answers. On average, they predict too much price growth, and also disagree wildly among themselves. This is awkward for economists, who would often rather assume away such complications. Some have responded with denial, doubting that household surveys of inflation are useful at all.
In the context of painfully high price growth, over the past few years there has been a wave of inflation research. It has confirmed that people do have biases, but that their views should not be dismissed. One recent review summarised it tactfully as follows: “These people are the subjects that economists aim to study: maybe they are idiots, but they are our idiots.”
