Factors Shaping Macroeconomic Expectations: Follow-Up

Last registered on October 18, 2024
View Trial History

Pre-Trial

Trial Information

General Information

Title
Factors Shaping Macroeconomic Expectations: Follow-Up
RCT ID
AEARCTR-0014544
Initial registration date
October 09, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
October 18, 2024, 4:44 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Netherlands
Region

Primary Investigator

Name
Simon G. Schröder
Affiliation
Harvard University
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Pedro Bordalo
PI Affiliation
University of Oxford
PI Name
Nicola Gennaioli
PI Affiliation
Bocconi University
PI Name
Florencio Lopez-de-Silanes
PI Affiliation
SKEMA Business School
PI Name
Andrei Shleifer
PI Affiliation
Harvard University
PI Name
Maarten van Rooij
PI Affiliation
De Nederlandsche Bank

Additional Trial Information

Status
In development
Start date
2024-10-10
End date
2024-11-10
Keywords
Behavior
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
Abstract
This project aims to understand how people form beliefs about the macroeconomy, particularly developments in inflation and house prices. We propose that memories of past experiences, both relevant and potentially irrelevant, shape these beliefs. Suppose an individual is forecasting whether the inflation rate over the next twelve months will be high (i.e., above a certain threshold). We argue that the individual will rely, in part, on past experiences that have some similarity to the hypothesis they are trying to imagine (elevated levels of inflation). Our theory proposes that individuals who have personal experience with very similar things – for instance, financial struggles – will have an easier time imagining a future with higher levels of inflation, boosting their estimates of the likelihood of it occurring. We will run a controlled experiment that investigates these memory mechanisms, exploring how exogenously varying which past (similar but objectively irrelevant) experiences “come to mind” impacts beliefs about the likelihood of future macroeconomic events. We are also interested in whether elicited similarity ranks are stable over time, both at the individual and aggregate levels. Moreover, we want to analyze whether priming the same experience in this second survey complements (reinforces) or substitutes (weakens) the original intervention on beliefs. This will shed light on the relative strength of different memory forces. We will also examine recall errors by comparing recollections of primed experiences in the second survey with their corresponding recollections from the first survey.
External Link(s)

Registration Citation

Citation
Bordalo, Pedro et al. 2024. "Factors Shaping Macroeconomic Expectations: Follow-Up." AEA RCT Registry. October 18. https://doi.org/10.1257/rct.14544-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention (Hidden)
We previously conducted a similar survey (AEARCTR-0013773) but, due to mistakes by the survey provider, similarity judgments for primed experiences were not elicited, which prevented us from cleanly testing several predictions of our model. This current survey is a follow-up, conducted with the same participants, to test both previous and new hypotheses, contingent on the quality of the data being sufficiently high. Data quality will be assessed based on various factors, including subjects’ response times, effort exerted in open-response text questions, and reading speeds. If these standards are not adequately met, we will primarily rely on the data from the previous survey.

Participants were previously randomly assigned to one of three treatments:
- Health prime
- Financial struggles prime
- Control

In this follow-up survey, participants are part of the same treatment group as in the initial survey.

For individuals in the health prime group, participants will be reminded whether they previously reported a personal experience with a serious or chronic illness, or the consequences of a serious accident in the first survey. If they did, they will be prompted to recall and reflect on that experience, with the option to add to their previous responses. If they had not reported such an experience, they will be asked if they have since experienced any serious illness or accident consequences. They will then write a few sentences summarizing their reflections.

For individuals in the financial struggles prime, the process will be the same. Participants will be reminded of their previous response regarding financial difficulties. If they had reported such an experience, they will reflect on it and have the option to add to their previous answers. If they had not experienced financial struggles, they will be asked if any new financial difficulties have arisen. They will then write a few sentences reflecting on their experience.

Individuals in the control treatment do not see an experience prompt of this form.

After this part of the survey, we ask participants about their inflation forecast over the next twelve months. We then also ask them how likely they deem a scenario in which inflation is high.

Subsequently, we ask respondents about their forecasts on changes in house prices over the next twelve months. We then also ask them how likely they deem a scenario in which there is a significant increase in house prices.

Then, we ask all participants about whether they have had each of a series of life experiences (just yes/no), including the two possible primed experiences, and how similar they feel these experiences are to a scenario with high inflation and large increases in house prices, respectively.

Finally, we will ask participants if they have had any other significant experiences that have profoundly impacted their lives since they last took this survey.
Intervention Start Date
2024-10-10
Intervention End Date
2024-11-10

Primary Outcomes

Primary Outcomes (end points)
Our key outcome variables are respondents’ forecasts on inflation and changes in house prices. Namely, we have the following questions:

(i) What do you expect inflation in the Netherlands to be in the next twelve months, i.e., what will the percentage change in consumer prices be over the next twelve months?

(ii) How likely do you think inflation is to be 7% or higher a year from now? You can answer on a scale of 0 to 10, where 0 indicates that there is ‘no chance at all’ that inflation will be 7% or higher, and 10 indicates that inflation will ‘absolutely, for sure’ be 7% or higher.

(iii) What do you expect to be the percentage change in house prices in the Netherlands in the next twelve months?

(iv) How likely do you think it is that house prices will rise by 10% or more over the next twelve months? You can answer on a scale of 0 to 10, where 0 indicates that there is 'no chance at all' that house prices will rise by 10% or more and 10 indicates that house prices will 'absolutely, for sure' rise by 10% or more.

We will analyze all outcome measures independently. In addition, we will construct an index outcome for each participant by constructing a z-score for each of the two individual outcome questions and averaging them, separately for inflation and house prices.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Participants are recruited through Centerdata. They will be asked to complete a 15 minute survey.

Participants were previously randomly assigned to one of three treatments:
- Health prime
- Financial struggles prime
- Control

In this follow-up survey, participants are part of the same treatment group as in the initial survey.

For individuals in the health prime group, participants will be reminded whether they previously reported a personal experience with a serious or chronic illness, or the consequences of a serious accident in the first survey. If they did, they will be prompted to recall and reflect on that experience, with the option to add to their previous responses. If they had not reported such an experience, they will be asked if they have since experienced any serious illness or accident consequences. They will then write a few sentences summarizing their reflections.

For individuals in the financial struggles prime, the process will be the same. Participants will be reminded of their previous response regarding financial difficulties. If they had reported such an experience, they will reflect on it and have the option to add to their previous answers. If they had not experienced financial struggles, they will be asked if any new financial difficulties have arisen. They will then write a few sentences reflecting on their experience.

Individuals in the control treatment do not see an experience prompt of this form.

After this part of the survey, we ask participants about their inflation forecast over the next twelve months. We then also ask them how likely they deem a scenario in which inflation is high.

Subsequently, we ask respondents about their forecasts on changes in house prices over the next twelve months. We then also ask them how likely they deem a scenario in which there is a significant increase in house prices.

Then, we ask all participants about whether they have had each of a series of life experiences (just yes/no), including the two possible primed experiences, and how similar they feel these experiences are to a scenario with high inflation and large increases in house prices, respectively.

Finally, we will ask participants if they have had any other significant experiences that have profoundly impacted their lives since they last took this survey.
Experimental Design Details
Randomization Method
Randomization by Centerdata program
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
6000 individuals
Sample size: planned number of observations
6000 individuals
Sample size (or number of clusters) by treatment arms
2000 individuals for each treatment arm
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Harvard Human Research Protection Program
IRB Approval Date
2024-02-21
IRB Approval Number
IRB24-0054
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials