ENBIS: European Network for Business and Industrial Statistics

Reliability of the Visual Analog Scale as a Measurement Method of Economic Expectations

Abstract

Submitted by

Anna Stangl

Authors

Anna Stangl

Affiliation

Ifo Institute for Economic Research

Abstract

Economic expectations are playing a central role in contemporary economic theory as determinants of economic activity of agents. The measurement of economic expectations continues to be of particular interest to economists and statisticians in various fields.
The paper introduces a new measurement method of economic expectations – the Visual Analog Scale (VAS) – and compares its reliability to the traditional three-category scale. Visual analog scale has not yet been applied to the measurement of economic expectations, although it is an attractive alternative to coarse category-rating scales and to the elicitation of quantitative responses. On VAS respondents can express their expectations on a continuum, which allows for a subtle distinction of their preferences.
In the literature on economic expectations and their measurement, the main focus has been placed on validity criteria, particularly rationality and forecasting properties of economic expectations. The key research issue has been to link qualitative expectations data to the real quantitative outcomes. This paper adds to the literature of the measurement of economic expectations a comprehensive analysis of scale reliability. Four classes of reliability are examined: Parallel-forms reliability, test-retest reliability, internal consistency and inter-rater reliability.
There are further arguments making this study interesting: (1) Previously VAS was merely applied in personal interviews in medical settings. In the present study VAS is applied in a sizeable self-administered Web-survey in an economic tendency survey. (2) The study tests an entirely new measurement method of economic expectations, which so far are measured qualitatively (with category-rating scales), quantitatively (by eliciting point estimates) or by subjective probabilities. (3) The data of the study are based on a real panel survey of economists, containing 2,470 observations from eight consecutive quarterly survey waves in the years 2005-2007, which makes possible to observe long-time effects in VAS response behavior.
VAS was found to be a reliable measurement method of economic expectations and in several reliability classes even better than the three-category scale that is traditionally used in business surveys.

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