The election of Donald Trump as the next president of the U.S. is another proof that what people say in response to surveys does not necessarily match how they feel about the issue. Polls taken close to the Election Day indicated a slight lead for Hilary Clinton in the presidential elections, but that was not the case.
In June of 2016, polls in the United Kingdom indicated that more people are going to reject a departure from the European Union. In reality, more people voted to leave the EU, thus initiating the Brexit. Here again, what people in the U.K. told pollsters was not necessarily how they actually felt about the issue.
Similarly, the disparity between what people say in response to confidence surveys and the way they actually behave with their money is a known phenomenon in behavioral finance. One of the reasons consumer confidence indices were late to report on the looming recession in 2007 was because consumers remained optimistic in reporting to surveys, but acted contrary in real life.
A true measurement of financial confidence among consumers is achieved by measuring what consumers actually do with their money (objective) rather than ask them how they feel, which is subjective. The Money Anxiety Index measures consumer financial confidence by observing actual financial behavior.
The Money Anxiety Index is produced by Dr. Dan Geller, a behavioral finance scientist and the author of the book Money Anxiety. The index measures the level of consumers’ financial worry and stress based on their spending and savings pattern. Historically, the Money Anxiety Index fluctuated from a high of 135.3 during the recession of the early 1980s, to a low of 38.7 in the mid 1960s.