What is it about?

In this study we present a novel approach to measure the level of consensus among agents’ expectations. The proposed framework allows us to design a positional indicator that gives the percentage of agreement between survey expectations. In order to assess the performance of the proposed measure of consensus, we compare its ability to track the evolution of the unemployment rate to that of the balance in eight European countries. We find that the consensus-based unemployment indicator outperforms the balance in all countries except Denmark and Sweden, which suggests that the level of agreement among agents’ expectations is a good predictor of unemployment.

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Why is it important?

While other aggregation methods such as the balance, which is constructed as the difference between the percentages of respondents giving positive and negative replies, explicitly omit the neutral information, the proposed metric allows synthesizing the information coming from all response categories, including the percentage of respondents who do not expect any change. The proposed consensus-based indicator is directly interpretable as it gives the percentage of agreement among consumers' expectations. We find that the consensus-based unemployment indicator provides valuable information for purposes of short-term forecasting of the unemployment rate.


This is a very promising line of research as it allows to optimise the information coming from economic tendency surveys, synthesizing the information coming from all reply options. The approach can be extended to other survey variables such as production, prices or order books, as well as to other surveys.

Oscar Claveria
AQR-IREA, Univeristy of Barcelona

Read the Original

This page is a summary of: A new consensus-based unemployment indicator, Applied Economics Letters, July 2018, Taylor & Francis,
DOI: 10.1080/13504851.2018.1497846.
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