Consumer Confidence Index Surveys : a New Indicator From Pakistan

Date

2020-08

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Abstract

The primary goal of this study is to analyze the Consumer Confidence Index survey of Pakistan and evaluate whether the index constructed using the Michigan Consumer Sentiments Index methodology is consistent with the underlying structure of the survey responses. In this regard, the study first employed exploratory factor analysis on individual waves of data collection and evaluated each period separately. The waves were then split into two sub-samples. The first sub-sample was used to conduct a final exploratory factor analysis and the second one was used to evaluate reliability and validity of the measurement model. The analysis resulted in a threefactor model that comprised of the following latent factors; prices, household financial position and general economic conditions, and time to purchase durable goods. The findings indicate that the scale construction of the Pakistani consumer confidence index does not conform to the results of factor analysis. The factor model indicates that the survey makes little distinction based on whether a question pertains to current sentiments or future expectations. Instead, it specifies dimensions based on themes or subject matters of specific items.

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Keywords

Consumer confidence, Consumer behavior, Rational expectations (Economic theory), Exploratory factor analysis, Confirmatory factor analysis, Pakistan

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©2020 Salma Mirza. All rights reserved.

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