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Heterogeneity in Consumers’ Learning about Inflation

Lookup NU author(s): Dr Robert AndersonORCiD



This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0).


This paper provides an empirical analysis of learning by individual consumers in thecontext of US inflation expectations. By exploiting the short panel dimension of theMichigan survey data, the paper demonstrates that agents overall improve the accuracy oftheir forecasts at the second interview compared to the first, and hence demonstrateadaptive learning. Further, the extent of this learning, as measured by the reduction in anindividual’s absolute forecast error for inflation, is associated with their socioeconomicand demographic characteristics. However, heterogeneity in forecast accuracy is lessmarked at reinterview than at the initial interview, implying that heterogeneity is reducedby learning.

Publication metadata

Author(s): Anderson RDJ, Becker R, Osborn DR

Publication type: Conference Proceedings (inc. Abstract)

Publication status: Published

Conference Name: Conference on Consumer Inflation Expectations

Year of Conference: 2010

Online publication date: 19/11/2010

Acceptance date: 01/06/2010

Date deposited: 05/09/2017

Publisher: Federal Reserve Bank of New York