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Consumer Survey: Methodological Description

1. Introduction

The use of consumer surveys for the measurement of consumer sentiment and intentions is based on the theory of psychological economics as advanced by the Hungarian Georg Katona. Katona moved to the United States in the 1930s to become a professor of economics and psychology at the University of Michigan, where he was centrally involved in developing qualitative methods for measuring consumer behaviour.

Empirical measurements of household attitudes and behaviour date back over half a century. The first regular barometer-type survey was launched in the United States in 1939. The Netherlands (1946), Germany (1952), France (1958) and England (1961) were the first European countries to follow suit. Today, consumer surveys are carried out in all EU countries and numerous other countries around the world.

Statistics Finland introduced the Consumer (Barometer) Survey in November 1987. Until 1991, data were collected twice a year, and from 1992 on quarterly. And finally, from October 1995, data have been collected monthly in accordance with the harmonised EU data collection method.

The experience so far is that the more frequent data collection has helped to improve the adequacy and timeliness of information on consumer attitudes. At the same time, a great deal of effort has been put into improving technical data processing so as to speed up publication.

Many international studies have shown that consumer survey data can provide a fairly accurate prediction of consumers' economic behaviour. For analysts and market researchers, the data serve as an important indicator for forecasting household consumption expenditure, consumer behaviour in general and the country's economic situation. The data are also used in political decision making.

2. Sample design and data collection

Until December 1999, the data for the Consumer Survey were collected together with the data of the Labour Force Survey. Six rotating panels were then used in the Consumer Survey. The same person was asked the same questions three separate times at six-month intervals, and each month a third of target persons were new. Statistics Finland's field interviewers conducted the telephone interviews around the country.

From January 2000 on, the Consumer Survey has a totally new individual sample each month. The same sample is used for the data collection of the Finnish Travel Survey and some other surveys, as well. All the interviews are conducted centrally from Statistics Finland's Telephone Interview Centre (CATI), by about 35 interviewers. The target area is the whole country, and the respondents represent the 15 to 84-year-old population in Finland, according to age, gender, region, and native language. The change in the data collection method had some effect on the results and non-response of the survey.

The population of the Consumer Survey comprises 4.5 million persons and 2.6 million households in Finland. The population was extended to persons aged 75 to 84 starting from January 2012. The gross size of the monthly sample of the Survey is 2,350 persons (previously 2,200 persons). Systematic random sampling (SYS) is used to extract the sample from the updated Total Population Database. The sorting of the sampling frame is based on domicile code and thus yields implicit stratification according to geographical population density. The sampling method can be compared to the use of simple random sampling with the addition that the sample is geographically self-weighting.

A couple of days before the contact by phone, Statistics Finland sends out an advance letter to each interviewee, telling him or her briefly the contents and the meaning of the survey. The phone numbers are mainly searched by means of a special paid service provided by a private company, but the interviewers complete it finally. Generally, no more than five per cent of the phone numbers remain unknown. In the advance letter, persons without a telephone (number) are kindly asked to first contact Statistics Finland themselves by phone or e-mail.

Non-response being nowadays over 45 per cent, more than 1,200 persons respond to the survey each month. The non-response rate includes those who refused from the survey or were otherwise prevented from participating, as well as those who could not be contacted.

Before starting the interviews, the interviewers of the CATI Centre were trained with the help of lectures concerning interviewing technique and the contents of the Consumer Survey, and by going through the survey questionnaire. As a support for their work, the interviewers have an instruction leaflet of the survey and on-line instructions are available as well. Furthermore, whenever they have a problem, interviewers can contact the CATI Centre supervisors and the researchers of the Consumer Survey. Occasionally, interviewers provide feedback on different items, which is useful for ongoing work to improve the questionnaire.

The interviews begin on the first working day of each month, and they take approximately two and a half weeks. The completed Blaise material is checked, edited and weighted immediately by means of SAS, Excel and Calmar softwares. The results are sent off to the EU Commission by e-mail no later than about ten days before the end of the survey month. Statistics Finland prints and publishes the results in Finland on the 27th day of the survey month (in case of a weekend or religious holiday, on the next working day). The process thus continues almost uninterrupted: new interviews get started soon after the results of the previous survey have been published.

Other stages of the Consumer Survey, i.e. sampling, questionnaire planning, further processing of data, analysis and reporting, preparation of documents and information service, involve one full-time and one part-time employee.

3. Survey contents

The following 17 EU harmonised questions are included in the Consumer Survey each month (approximate translations from Finnish):

1. What is your present economic situation like compared to 12 months ago?
2. What will your own economic situation be like in 12 months' time compared to present?
3. What is Finland's present economic situation like compared to 12 months ago?
4. What will Finland's economic situation be like in 12 months' time compared to present?
5. What are the consumer prices like now compared to 12 months ago?
6. By how many per cent have the consumer prices changed during the last 12 months?
7. How will consumer prices change within the next 12 months?
8. By how many per cent will the consumer prices change during the next 12 months?
9. What will be the number of the unemployed in Finland in 12 months' time compared to present?
10. Is it now a favourable or unfavourable time to purchase consumer durables?
11. Are you going to spend more or less money on consumer durables over the next 12 months compared to the last 12 months?
12. Is this a favourable time to save money?
13. How likely are you to be able to save money within the next 12 months?
14. What is your household's present financial situation?
15. How likely is your household to purchase a car within the next 12 months?
16. Is your household going to purchase or build a dwelling within the next 12 months?
17. How likely is your household to spend a large amount of money on basic repairs to your dwelling in the next 12 months?

Besides the EU harmonised questions, some Statistics Finland's own questions are made monthly or quarterly. They are the following:

1. Is your household planning to buy a new or used car?
2. How are you going to finance the purchase of the car (two main modes of financing)? (quarterly)
3. How are you going to finance the purchase of the dwelling (two main modes of financing)? (quarterly)
4. Is your household going to use money on the following items within the next 6 months: dwelling repair and maintenance, home furnishing, holiday home, entertainment electronics, household appliances, hobby and sports equipment, vehicles (excl. car), holiday travel in Finland, holiday travel abroad?
5. For what purpose are you saving money? (quarterly)
6. How are you going to invest your savings? (quarterly)
7. Is this a favourable time to raise a loan?
8. Is your household planning to raise a loan within the next 12 months?
9. For which purpose are you going to raise a loan? (quarterly)
10. How has your personal threat of becoming unemployed developed during the last 12 months?
11. Which of the following equipment does your household have (25 equipment: entertainment electronics, information technology, telephones, car)? (quarterly)

Classification items, which characterise the respondent and his or her household, are also included in the questionnaire (monthly):

1. How many members belong to your household?
2. How many adults/children (4 age groups) are there in your household?
3. How many of the members of your household go to work regularly?
4. Which is your municipality of domicile at present?
5. How does your household live (form of tenure of dwelling)?
6. What is your primary activity at present?
7. What is your occupation?
8. Have you had occupational training for your (present) job?
9. What is the gross income of your household?

The basic information of the respondent, e.g. age, gender and sample municipality, are always found in the original sampling data. In addition, each person's education code is drawn from the Register of Completed Education and Degrees. Different regional classifications can be formed with the help of the municipality code.

 

4. Weighting and estimation of the results

 All the results of the Consumer Survey are weighted against the total population by means of sample weights. Weighting corrects the effects of non-response and improves the accuracy of the data. The weights are established by using the probability of each observation to be included in the sample.

Most of the indicators of the Consumer Survey describe individuals. The results for these indicators are always estimated by means of individual weights. Individual weights are computed by Calmar software, so that the estimated marginal distributions of certain background variables (region, person's age group and gender) correspond to the marginal distributions in the whole population, i.e. the population structure. The weights are formed as a ratio between the estimated frequencies in population cells and the known sample frequencies. Small or even zero cell frequencies are disregarded in this procedure. Thus, the method can be considered an "incomplete post-stratification". The weights are obtained more or less "automatically" by SAS programs used in processing the results.

However, some of the items of the Consumer Survey measure household behaviour and sentiment, e.g. the financial situation of the household, possession of equipment, intentions to purchase consumer durables, save money and raise a loan. For the estimation of these results, weights are also calculated for households. Benchmarking is made with reference to Statistics Finland's income distribution statistics. The actual weights are obtained by post-stratification and finally by calibrating (region and number of household members in different age groups as background variables).

Weighting generally has only a minor effect on the actual values of the sentiment scales. There are several reasons for this. Firstly, the sample design (systematic random sampling) produces a self-weighting sample. Secondly, non-response has been relatively constant in different population groups and has therefore not caused very much bias in the material. And thirdly, questions concerning opinions and the extracted indicators have shown only a weak correlation with the variables used in weighting. Opinions tend to vary quite considerably in different population groups. However, regarding household data there appear more obvious differences between weighted and non-weighted results.

5. Analysis and presentation of the data

In most Survey items consumers are presented with a choice of five alternative responses (++, +, =, -, --). In opinion items a characteristic value index (or balance figure) is derived from the percentage distribution of the responses. The balance figure is calculated by weighting the percentage shares of the different responses by +1, +0.5, 0, -0.5 and -1, accordingly. The figure describes the respondents' average opinion at any given time. Analysis of the balance figures as a time series describes the patterns of change in sentiment over time. The arithmetic mean of the four most important balance figures (EU harmonised questions 2, 4, 9 and 13 above) is called the Consumer Confidence Indicator (CCI).

Consumption, saving and borrowing intentions are measured by summing up the percentages of households intending certainly or possibly to buy, save or borrow money within a certain space of time. The absolute number of households intending (e.g. to buy a new car, to save money for a new house, to raise a loan) can be calculated from the data on the percentages and total numbers of households. Analysis of time series will show the patterns of change in intentions over time.

Cross-tabulation of the results with classification data provides more detailed information on sentiments and intentions in different types of households. Thus, variation in the CCI can be studied by the respondent's age, gender or occupation. Data are also obtained on how intentions to buy a dwelling vary by the size or structure of the household, incomes or place of residence.

The Consumer Survey also measures consumers' knowledge of prices. The respondents are asked how much they think consumer prices have changed during the past 12 months and how much they expect the prices to change over the next 12 months to the nearest decimal. The mean of consumer estimates is calculated. Only estimates with an absolute value less than 15 per cent are included in the calculations.

Finally, possession of different equipment in households is also measured with the Consumer Survey. These results are published as percentages of households.

6. Dissemination of the results

Statistics Finland publishes the results of the Consumer Survey monthly through the Internet: http://stat.fi/index_en.html. The press releases and pdf publications are available in Finnish, Swedish and English:

1. Within one week after the interviews (27th to 29th day), a monthly press release and publication plus database tables (StatFin), including results (time series) for whole country and major areas.
2. Table Publication, providing more detailed information on the breakdowns of responses according to different background variables; published monthly.
3. Quarterly, database table (time series) for possession of modern appliances in households.

The Consumer Survey receives good coverage in the mass media. In the newspapers, for instance, the Consumer Survey ranks among Statistics Finland's top products in terms of media coverage. Business and financial correspondents are often provided additional information if they intend to write a longer piece on the results. Television and radio newsrooms, both national and local, regard the Consumer Survey as a good, newsworthy item.

The Consumer Survey provides important information for use in many sectors of society. Consumer expectations and intentions are a matter of considerable interest to the authorities responsible for economic policy, to trade and industry organisations, research institutes and many others. Universities, other educational institutions and libraries frequently use the Consumer Survey as reference material. Financial institutions, banking houses and many others are interested in following consumers' saving and borrowing intentions as well as their interest in the stock market. The advertising sector, trade and industry organisations, federations of estate agents, car dealers, domestic appliance retailers and so on, as well as individual companies are keen to follow changes in demand in their respective fields on the basis of the Survey.

The information the users need is usually to be found in the statistical publications or in standard files not included in these publications. Often, to meet individual information needs, Statistics Finland is requested to supply tailored products, or sometimes presentations.

7. Reliability of consumer survey data

Assessment of the reliability of sentiment indicators is no easy task. Researchers at various conferences have debated their relevance, although there is, of course, a broad consensus regarding the importance of information about expectations in general. In any event, consumer sentiment indicators have long been integrated in many leading instruments and forecast models.

Consumer confidence is widely used in Finland for forecasting consumer behaviour. The CCI, especially its micro components have shown a strong correlation with changes in private consumption. Furthermore, the CCI has shown predictive power over the changes in gross domestic product (GDP). Direct questions on purchasing, saving and borrowing intentions have also provided a reliable measure of households' actual investment decisions. Consumers' estimates and expectations on inflation have proved to be quite accurate.

Some evaluations have been made to test the reliability of the Consumer Survey in Finland. In the initial stages of the survey in 1989 and 1990, accuracy comparisons of certain items on purchasing intentions against macro-economic indicators were carried out. The accuracy of inflation forecasts has been tested at the Bank of Finland a few times (Kuismanen & Spolander 1995, Pursiainen 1999, Kangassalo & Takala 2005). In the 1997 CIRET conference, Djerf and Takala (1997) presented a comprehensive reliability study concerning the indicators of the Consumer Survey. This work was partly updated and also extended by Kangasniemi, Kangassalo and Takala for the 2010 CIRET conference. Later, Tara Junes (2014) carried out comparisons between the CCI and private consumption in Finland and some other EU countries.

After the introduction of the centralised data collection method, Kangassalo and Notkola (2002) analysed the structure of non-response between the old and the new method. Further work was done for testing the effects of the changeover to the centralised data collection (Kangassalo & Heiskanen 2001).

In 2013, by the order of the EU Commission (Task force on quality of BCS data), the response rates of consumer surveys for all EU countries and factors affecting the rates were studied (Junes & Kangassalo).

In the data obtained by a sample survey there always appears statistical inaccuracy that can, however, be diminished afterwards by weighting (see above Section 4).

8. Concluding remarks

In Finland consumer (barometer) surveys are widely recognised as an important tool for forecasting consumer behaviour as well as cyclical movements. Several factors lie behind the growing use of and demand for barometer materials. Firstly, the availability of longer time series has provided a more solid basis for historical comparisons and made it possible to ascertain the reliability of this kind of information. Secondly, the international harmonisation of barometer surveys, publishing the results on the Internet (https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/business-and-consumer-surveys_en), improved publications and the higher frequency of surveys have all increased the use of qualitative data.

The increasing demand is no doubt also an indication of growing user satisfaction. Consumer surveys provide a useful addition to the supply of traditional quantitative statistics. Certain structural changes in the demand for statistical data (such as the ever-stricter demands on timeliness) have increased the use of qualitative data.

In general, consumer expectation and sentiment factors have become increasingly important determinants of economic development. It is not possible to define or measure accurately the confidence or sentiment of consumers. However, the barometer technique has certainly demonstrated its capability to provide a reasonable approximation of these expectation factors.

Finland's experiences of consumer surveys are consistent with experiences elsewhere: this is a tool capable of tracing and forecasting all major cyclical movements in output and consumption, as well as most minor cyclical ones.

 

References

Djerf K. and Takala K. (1997): Macroeconomy and Consumer Sentiment: Performance of the Finnish Consumer Barometer after Ten Years, Bank of Finland Discussion Papers 20/1997, Helsinki. Also published in Oppenländer K.H., Poser G. and Weller S. (eds., 1998): Selected Papers Submitted to the 23^rd CIRET Conference in Helsinki, Aldershot: Ashgate.

European Commission, DG ECFIN (2017): The Joint Harmonised EU Programme of Business and Consumer Surveys - User Guide (updated February 2017). https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/business-and-consumer-surveys/methodology-business-and-consumer-surveys/methodological-guidelines-and-other-documents_en

Junes T. (2014): Kuluttajien luottamus ja epäluottamus ennakoivat tulevaa (Consumer Confidence and Lack of Confidence Predict the Future). Hyvinvointikatsaus 4/2014, Statistics Finland. (in Finnish only)

Junes T. and Kangassalo P. (2013): Task force on quality of BCS data: Analysis of response rates. Statistics Finland, October 2013.

Kangasniemi J., Kangassalo P. and Takala K. (2010): What Affects the Views about the Economic Sentiment? Evidence from the Consumer and Manufacturing Surveys in Finland. Paper presented at the 30^thCIRET Conference, New York, October 2010.

Kangassalo P. and Heiskanen M. (2001): Testing the Mode Effects in the Finnish Consumer Survey, Proceedings of Statistics Canada Symposium 2001, Ottawa.

Kangassalo P. and Notkola V. (2002): Centralised CATI Method in the Finnish Consumer Survey - Testing the Effects of Nonresponse, in Poser G. (ed., in co-op. with D. Bloesch): Economic Surveys and Data Analysis, CIRET Conference Proceedings, Paris 2000, OECD, Paris.

Kangassalo P. and Takala K. (2005): Measuring the Usefulness of Consumers' Inflation Expectations in Finland, Statistics in Transition - Journal of the Polish Statistical Association, Volume 7, Number 2, September 2005, Warsaw.

Statistics Finland (1987-): Consumer Survey publications and working papers (mostly in Finnish only).

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Last updated 8.5.2017