🆕 Policy Paper 🚨
The Demand for Economic Narratives 📘
w/ Sebastian Blesse, Klaus Gründler & Philipp Heil
🧠 Do people actually value economic narratives — or just numbers?
💸 Turns out: households are willing to pay for narratives.
1/4
#Narratives #BehavioralEconomics
@ifoeducation.bsky.social
New paper: @philippheil.bsky.social and Niklas Potrafke introduce "The Economic Experts Survey", the most comprehensive global survey of economic experts established at the ifo Institute.
www.degruyterbrill.com/document/doi...
@cesifo.org @cepr.org @econmunich.bsky.social @unikassel.bsky.social @unileipzig.bsky.social @zew.de
@manuelmenkhoff.bsky.social @apeichl.bsky.social @intmon.bsky.social @kaigehring.bsky.social @jopieboy.bsky.social @tilmanfries.bsky.social @kaibarron.bsky.social
Maybe of interest for @ygorodnichenko.bsky.social @s-stantcheva.bsky.social @woessmann.bsky.social @clemensfuest.bsky.social @johanneswohlfart.bsky.social @lergetporer.bsky.social @ihaal.bsky.social
10/10
Takeaway:
Households place real economic value on expert narratives.
Narratives:
✅ are in high demand
✅ improve understanding
✅ shape beliefs
✅ complement, not substitute, numerical forecasts
Policy communication should use clear explanations, not just numbers.
9/10
Narratives also affect spending beliefs:
They make people less likely to say “now is a good time to spend,” especially on durable goods.
Effects are amplified when combined with Fed forecasts.
But: no effect on personal spending plans or policy preferences.
8/10
Narratives shape beliefs — but not numeric expectations.
Narratives do not change recession probability estimates.
But they strongly shift qualitative beliefs about recession drivers.
They also increase understanding of macroeconomic mechanisms.
7/10
When given a choice between narratives:
Most pick the consensus narrative, but pessimistic narratives also attract attention.
Most people prefer the narrative they believe to be most informative — not the one that simply confirms their priors.
6/10
Who pays for economic narratives?
• Higher income → higher WTP
• Women & more patient respondents → higher WTP
• Older & more uncertain individuals → lower WTP
Motives for acquisition are mainly intrinsic: people want to understand the economy, not just make money.
5/10
Main Finding: People are willing to pay a lot for narratives.
Average WTP for an expert narrative = $4.23
WTP for a numerical Fed recession forecast = $3.61
That’s roughly the price of a Financial Times newspaper.
Narratives are valued at least as much or even more than hard numbers.
4/10
We first collected recession narratives from experts: why they think recession risk is high.
The dominant narrative: tight monetary policy.
Other narratives: geopolitical risks, low consumer spending, etc.
These expert narratives are then offered to households for real money.
3/10
We combine:
1. A comprehensive expert survey (160 U.S.-based academic economists)
2. A large-scale, nationally representative household survey (9,123 respondents)
3. An incentivized willingness-to-pay experiment
The context: historically high U.S. recession probabilities in late 2023.
2/10
Economic narratives — explanations of economic phenomena — are everywhere in media and public debate.
But: Most research so far focuses on the effects of narratives once people receive them.
We ask a more fundamental question:
Do households actually want to pay for such narratives?
🔔 New working paper: “The Demand for Economic Narratives” with Sebastian Blesse, Klaus Gründler & @henninghermes.com
We study whether households actually demand and value economic narratives — and how these narratives shape beliefs and understanding.
Thread following below👇 1/10
What is behind tax elasticities? Often we think firms move when taxes increase. Asked directly, they indeed complain but experimental evidence shows they will not act. Instead tax cuts attract investments. Tax policy works like a ratchet due to home bias: dx.doi.org/10.2139/ssrn...
