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Is discrepancy between confidence and spending driven by pessimism or by high aspriations? — Review of the discrepancy between the admitted financial situation and actual spending in Hungary

Hajdu, Csongor (2017) Is discrepancy between confidence and spending driven by pessimism or by high aspriations? — Review of the discrepancy between the admitted financial situation and actual spending in Hungary. Society and Economy, 39 (2). pp. 233-250. DOI https://doi.org/10.1556/204.2017.39.2.4

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Official URL: https://doi.org/10.1556/204.2017.39.2.4


Abstract

The opinions of people are expected to forecast their actions, and even major economic institutions rely on this correlation. This research paper examines a case when the opinion of people about their financial situation contradicts their financial-related actions. In 2012 in Hungary the general opinion of people about their financial situation was showing the lowest confidence in the world, with a significant declining trend, reaching an extremely low level. Although the general expectation would be that this pessimism triggers a set-back in consumer spending, figures show that Hungarians were on the other end of the scale regarding their expenditures and were greatly increasing their spending. This raises the question: why do people say they are in such a tough financial situation yet instead of saving they increase their spending? This paper presents a cross-country analysis that reviews the severity of this discrepancy, as well as proves the validity of the question by excluding several alternative explanations, followed by a recommendation and hypotheses for a detailed research to explain the phenomenon.

Item Type:Article
Uncontrolled Keywords:income, spending, savings, confidence, benchmarks
JEL classification:D12 - Consumer Economics: Empirical Analysis
E21 - Macroeconomics: Consumption; Saving; Wealth
H30 - Fiscal Policies and Behavior of Economic Agents: General
Subjects:Sociology
DOI:https://doi.org/10.1556/204.2017.39.2.4
ID Code:3044
Deposited By: Ádám Hoffmann
Deposited On:14 Sep 2017 08:13
Last Modified:14 Sep 2017 08:13

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