Important results from the project
The project achieved its objective. Through a follow-up survey of 2,388 bank customers from a previous randomized study, combined with bank data, households´ marginal propensity to consume was estimated in response to changes in inflation, GDP and unemployment. The gap between households´ plans and actions is explained by inflation knowledge, shocks and mental frames of reference. The results were presented at AEA 2025 and have led to two follow-up projects on inflation-indexed mortgages.
Expected long term effects
The results provide a basis for assessing how inflation and cyclical shocks affect different types of households. The fact that the gap between plan and action is mostly explained by shocks and mental frames of reference, in addition to inflation knowledge, suggests that information and advice alone will have a limited impact. Alternative measures, such as a broader product offering, should be explored and evaluated ideally in an RCT.
Approach and implementation
The project built on a previous randomized study with 5,631 bank customers. In September–October 2024, a follow-up survey was conducted with 2,388 of the participants, in collaboration with the Icelandic bank, CBS and Michigan State University. The survey responses were combined with bank data and analyzed using econometric methods and AI-based categorization of open-ended responses. The project followed the schedule and the collaboration worked well.
The project description has been provided by the project members themselves and the text has not been looked at by our editors.
