Psychological factors of consumers' sentiment, the alternative proposal of measurement

Abstract

This paper proposes a well-being index based upon psychological research and official qualitative statistics. The main economic factors that influence the consumer confidence are: inflation, employment, and income. The way people perceive these economic categories is crucial in estimating the consumer confidence. For consumer confidence, the changes in economic categories are more important than their overall levels. People do not perceive the short term changes. The impact of change in the economic categories on consumer confidence is asymmetrical. Specifically, the same value of economic change has a different impact depending on whether the change is positive or negative. These conclusions lead to the construction of well-being indexes, which were tested for Poland, US and Germany. (original abstract)