Trading Economics: A Guide to Economic Statistics for Practitioners and Students

1 Surveys

…our decisions to do something positive …can only be taken as a result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

John Maynard Keynes¹

What Keynes encapsulates in his phrase ‘animal spirits’ is the essence of motivation driving human action. Although a basic tenet of neo-classical economic theory is that human beings are rational and that they evaluate options in a logical and self-interested manner, studies of behavioural economics have since emerged to demonstrate that, in fact, human beings can be very irrational for a very long time under certain circumstances.² We can be perverse.

Surveys help to capture the idiosyncrasies of our behavioural traits that lead to outcomes you would not necessarily expect under ‘normal’ circumstances. They provide us with a timely snapshot of sentiment and opinion, and the perception is that this sentiment and opinion lead to real world events. They are related to the concept that the ‘animal spirits’ of humans drive financial markets.

Let us take an example: human beings often behave essentially like herd animals. This can be likened to the so-called ‘network effect’, where you moderate your actions and responses according to those of your neighbour or someone whom you respect, admire and listen to (i.e. act as they act and, to a certain extent, do as they do). This, then, has an influence ...