Asymmetrical Information - Megan McArdle

11.16.12

Women Notice Inflation More than Men

Why are ladies more sensitive to the price level?

Inflation perceptions are systematically biased upwards; everyone thinks that inflation is higher than the CPI is higher than it is.  Presumably that's because we're primed to notice price increases, but less sensitive to price decreases; the decreases are a nice surprise, but the increases trigger something akin to indignation.  I'd also point out that what deflation we've had tends to be in big-ticket items, like televisions, that people don't buy that often.  You're more likely to notice the cost of gas, which you buy once a week.  

More interesting is that these results are biased by gender.  Both men and women overestimate inflation, but women tend to overestimate it much more.  Tyler Cowen wonders why that would be.   

Is it possible that a high perception of inflation is largely the result of a relatively low real income, perhaps mixed in with a slight unwillingness to blame oneself for imperfect labor market prospects?  Does this help explain why tight money and stagnant median income have come together?

I have a hypothesis, though I'm afraid no way to prove it:  women are the ones who do the grocery shopping.