Context effects in inflation surveys: The influence of additional information and prior questions

Context effects are known to affect responses to surveys. We report effects of information and task contexts in surveys of inflation expectations. Information context refers to contextual information about earlier inflation rates or other economic indicators. Task context refers to judgement tasks performed prior to the inflation judgement task under consideration. In three experiments, we show that contextual information improves judgement accuracy. As this information is given in expert, but not in lay surveys, its provision may partly explain why expert judgements are superior to those of lay people. In both expert and lay surveys, respondents make inflation judgements in the context of already having made other inflation judgements. We show that when different groups of people make inflation judgements either for the current or for the upcoming year, their judgements do not differ. However, when the same people make judgements for both the current and the upcoming years, the latter are significantly higher than the former, perhaps because people expect inflation to increase over time.