Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina
When forming expectations, households may be influenced by perceived bias in the information they receive. In this paper, we study how individuals learn from potentially biased statistics using data from both a natural experiment and a survey experiment during a period (2007–15) when the government...
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| Format: | Article |
| Language: | en_US |
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Brookings Institution Press
2017
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| Online Access: | http://hdl.handle.net/1721.1/106293 https://orcid.org/0000-0002-9701-3507 |
| _version_ | 1811071037249421312 |
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| author | Cavallo, Alberto F. Cruces, Guillermo Perez-Truglia, Ricardo |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Cavallo, Alberto F. Cruces, Guillermo Perez-Truglia, Ricardo |
| author_sort | Cavallo, Alberto F. |
| collection | MIT |
| description | When forming expectations, households may be influenced by perceived bias in the information they receive. In this paper, we study how individuals learn from potentially biased statistics using data from both a natural experiment and a survey experiment during a period (2007–15) when the government of Argentina was manipulating official inflation statistics. This period is interesting because attention was being given to inflation information and both official and unofficial statistics were available. Our evidence suggests that, rather than ignoring biased statistics or naively accepting them, households react in a sophisticated way, as predicted by a Bayesian learning model. We also find evidence of an asymmetric reaction to inflation signals, with expectations changing more when the inflation rate rises than when it falls. These results could also be useful for understanding the formation of inflation expectations in less extreme contexts than Argentina, such as the United States and Europe, where experts may agree that statistics are unbiased but households are not. |
| first_indexed | 2024-09-23T08:45:09Z |
| format | Article |
| id | mit-1721.1/106293 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T08:45:09Z |
| publishDate | 2017 |
| publisher | Brookings Institution Press |
| record_format | dspace |
| spelling | mit-1721.1/1062932022-09-23T14:19:57Z Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina Learning from Potentially Biased Statistics Cavallo, Alberto F. Cruces, Guillermo Perez-Truglia, Ricardo Sloan School of Management Cavallo, Alberto F. Cavallo, Alberto F. When forming expectations, households may be influenced by perceived bias in the information they receive. In this paper, we study how individuals learn from potentially biased statistics using data from both a natural experiment and a survey experiment during a period (2007–15) when the government of Argentina was manipulating official inflation statistics. This period is interesting because attention was being given to inflation information and both official and unofficial statistics were available. Our evidence suggests that, rather than ignoring biased statistics or naively accepting them, households react in a sophisticated way, as predicted by a Bayesian learning model. We also find evidence of an asymmetric reaction to inflation signals, with expectations changing more when the inflation rate rises than when it falls. These results could also be useful for understanding the formation of inflation expectations in less extreme contexts than Argentina, such as the United States and Europe, where experts may agree that statistics are unbiased but households are not. Sloan School of Management National University of La Plata School of Economics. Center for Distributive, Labor, and Social Studies (CEDLAS-FCE-UNLP) 2017-01-09T16:57:10Z 2017-01-09T16:57:10Z 2016-03 2016-04 Article http://purl.org/eprint/type/JournalArticle 0007-2303 1533-4465 http://hdl.handle.net/1721.1/106293 Cavallo, Alberto F., Guillermo Cruces, and Ricardo Perez-Truglia. "Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina." Brookings Papers on Economic Activity, Spring 2016, pp. 59-108. https://orcid.org/0000-0002-9701-3507 en_US https://doi.org/10.1353/eca.2016.0013 Brookings Papers on Economic Activity Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/ application/pdf Brookings Institution Press Cavallo |
| spellingShingle | Cavallo, Alberto F. Cruces, Guillermo Perez-Truglia, Ricardo Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina |
| title | Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina |
| title_full | Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina |
| title_fullStr | Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina |
| title_full_unstemmed | Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina |
| title_short | Learning from potentially-biased statistics: Household inflation perceptions and expectations in Argentina |
| title_sort | learning from potentially biased statistics household inflation perceptions and expectations in argentina |
| url | http://hdl.handle.net/1721.1/106293 https://orcid.org/0000-0002-9701-3507 |
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