Non-response Bias in Household Inflation Expectations Surveys

Vol: 
28/2023
Author name: 
Chadwick M
Cherry R
Galimberti JK
Year: 
2023
Month: 
June
Abstract: 

This paper uses micro-data from the Reserve Bank of New Zealand’s Household Inflation Expectations survey to obtain a more accurate read of households’ true inflation expectations by understanding how different demographic groups respond (or do not respond) to specific questions in the survey. Using a Heckman selection model, we assess whether there is item non-response bias in the survey by comparing the demographic characteristics of responders and non-responders. We quantify and demonstrate how to adjust for bias in aggregate (mean) measures of inflation expectations caused by item non-response. We show that there is a positive bias, and the aggregate inflation expectation series shifts down after the adjustment.

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