The "Beliefs Lab": Understanding the Evolution and Impact of Beliefs on the Economy

Abstract:

Citizens’ beliefs about the economy, their own future prospects, and government policy, are key channels affecting individual decisions and nations' welfare. Yet, we have limited knowledge about the role beliefs play for the economy because  we lack data linking people's beliefs to their actual experienced economic outcomes. Such data would allow us to expand existing macroeconomic models using behavioral evidence in disciplined ways. We will fill this gap by collecting monthly panel data for two years on Danish citizens’ forecasts about macroeconomic and personal outcomes, as well as data on their knowledge about policies and beliefs about their effectiveness. We will then link this individual data with Danish register data. We will also run field experiments to investigate the role of inattention and psychological biases for macroeconomics and policy. Our project lies at the intersection of behavioral and experimental economics, macroeconomics, and public economics.