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Psychology, Consumer Sentiment and Household Expenditures: A Disaggregated Analysis

Marco Malgarini^{a b}✉, Patrizia Margani^{a b}

^aISAE, Istituto di Studi e Analisi Economica, Piazza dell' Indipendenza 4, I-00185, Italy
^bISAE, Istituto di Studi e Analisi Economica
✉Corresponding author

SSRN Electronic JournalRELX Group (Netherlands)2006-01-01 12 citations44 references

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Abstract

The aim of the paper is to assess the role of the Italian Consumer Sentiment Index (CSI) as an autonomous driving force of consumption decisions. We test for the presence of "rule of thumb" consumers as originally proposed by Cambell and Mankiw (1991), using sentiment measures distinguished by working condition of the household. Consumption data are disaggregated according to durability. The role of sentiment results to be stronger for service expenditures. Psychological motives of employees are found to have a particularly significant influence on consumption decisions. Moreover, CSI can not be explained by economic fundamentals alone, capturing also the effects of the political cycle and exceptional circumstances.

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Psychology, Consumer Sentiment and Household Expenditures: A Disaggregated Analysis

Abstract

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