News, Mood and Consumer Confidence, 2004-2006

Consumer confidence is measured through regular surveys of consumer expectations because it is seen as a useful predictor of consumption. However, substantial seasonality and shocks in consumer confidence suggest that not just economic expectations are being measured. One possibility is that events occurring when expectations are polled - such as major news or weather extremes - affect general mood, or perhaps specific emotions, and thus influence the surveyed responses. The research investigated the hypothesis that events influence affect, that, in turn, influences economic expectations and subsequent consumption.<br> <br> The hypothesis was tested both through retrospective analyses of the effects of news events on consumer confidence using secondary data, and five empirical studies examining relationships between news, mood, consumer expectations and consumption decisions occurring both at the current time, and in the future. The basic design of the empirical studies was to manipulate mood or specific emotion, then use questionnaires to measure the influence of events and economic (and other) expectations. A couple of the studies relied on naturally occurring mood - which were measured using rating scales - rather than attempting to manipulate it. In one study (designed to investigate the effect of mood and expectations on consumption) one of the dependent variables was the participants' choice between products they wished to have as a gift.<br>