Abstract
In this paper, we investigate the link between the formal definition of confidence in tendency surveys and its measurement. We advocate for the use of reflective measures in an assessment of the confidence level in both consumer and industrial indicators. Based on the data from Poland’s tendency survey research, we use a multi-group confirmatory factor analytical approach to demonstrate that the set of indicators proposed by the European Commission methodology that is currently used might be not appropriate to measure the concept of confidence consistently, both within and between periods. The conclusion is true for the confidence indicator in the area of consumer tendency surveys and for the tendency survey in the manufacturing industry. We search for possible amendments that help either to find the sources of instability for the indicators proposed by the guidelines of the European Commission or to select a different set of indicators for the concept of confidence. However, we determine that the differences between the newly proposed indicator that describe industrial confidence and the indicators based on the European Commission methodology are small in terms of correlations and predictive validity.
Highlights
The results of tendency surveys are usually summarised every period in a single number— the confidence index
We evaluated the current approach to measurement of industrial and consumer confidence
With application of Poland’s tendency survey data, we showed first that confidence indicators in the two most important tendency surveys—consumer and industrial—should not be treated as unidimensional
Summary
The results of tendency surveys are usually summarised every period in a single number— the confidence index. The aggregate information is obtained without investigating interactions between answers to questions on an individual (household, company) level With such an approach, a few crucial questions concerning validity and reliability of consumer confidence are left unanswered: 1. It is the first approach to search for inconsistencies and provide amendments in the confidence indicators used in industrial and consumer tendency surveys. 2, we describe the concept of confidence and develop an approach to its measurement in both consumer and industrial tendency surveys. 4, we describe our data and verify whether the confidence indices for the consumer and manufacturing (industrial) sectors based on the results of surveys conducted at the Research Institute for Economic Development in Poland can be presented as a single factor with a standard set of items.
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