We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exogenously generated variation in inflation expectations is used to assess how expectations affect subsequent monthly consumption decisions relative to those in a control group. The causal effects of elevated inflation expectations on non-durable spending are imprecisely estimated but there is a sharp negative effect on durable spending. We provide evidence that this is likely driven by the fact that Dutch households seem to become more pessimistic about their real income as well as aggregate spending when they increase their inflation expectations. There is little evidence to support the idea that the degree to which respondents change their beliefs or their spending in response to information treatments depends on their level of cognitive or financial constraints.
External Link(s)
Citation
Coibion, Olivier et al. 2019. "HOW DOES CONSUMPTION RESPOND TO NEWS ABOUT INFLATION? FIELD EVIDENCE FROM A RANDOMIZED CONTROL TRIAL
." AEA RCT Registry. July 19. https://doi.org/10.1257/rct.4462-1.0.
Expectations about individual and aggregate outcomes
Secondary Outcomes (explanation)
Experimental Design
We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exogenously generated variation in inflation expectations is used to assess how expectations affect subsequent monthly consumption decisions relative to those in a control group.
Experimental Design Details
Randomization Method
Randomization by computer.
Randomization Unit
Individual
Was the treatment clustered?
No
Sample size: planned number of clusters
~2000 individuals
Sample size: planned number of observations
~2000 individuals
Sample size (or number of clusters) by treatment arms
700
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)