Gillian Tett is the Financial Times’ US Managing Editor, a very frequent writer, and an anthropologist.
Her column this week unconventionally argues for on-the-ground ethnographic research on people’s expectations on inflation:
What we need is not just economic analysis of price trends but on-the-ground ethnographic analysis of how consumer perceptions of prices operate. Scandinavian central bankers have looked at the social context of price trends, while last year the Fed published an intriguing paper on “Consumers’ Attitudes and Their Inflation Expectations”. This suggested consumers predict higher inflation when their household finances are under pressure and when they read media discussions about inflation.
If the Fed, or any central bank, wants an illustration of why ethnographic research matters, they need only look at the last credit bubble, when most economists missed the subprime mortgage boom because they shunned on-the-ground research.
Fed officials need to get into consumers’ lives. Or else hire a few anthropologists to work with those office-bound, and baffled, economists.