Freshwater Strategy congratulates Sarah Gall and Mike Turner on their research being peer reviewed and published in the International Journal of Market Research.
Drawing on data from The Australian Financial Review and Freshwater Strategy, Sarah and Mike have developed an innovative and rigorous new index for measuring consumer confidence in Australia.
Paper co-author, Sarah Gall, said:
“the ILOI changes the game for tracking consumer sentiment in Australia. It dives deeper than Australia’s two major macro-level indices, Westpac-Melbourne Institute Consumer Sentiment Index and ANZ-Roy Morgan Consumer Confidence Rating, using established methods to provide granular-level data on how different demographic groups — like age, income, and political affiliations — feel about the economy.
Most notably, analysis of our index shows that political affiliations can act as a barometer for economic engagement, affecting consumer spending based on electoral results. These insights could enable businesses to better tailor their strategies, adopting cautious approaches in areas with strong opposition support where voters often feel pessimistic after elections, or increasing inventory in regions with high government support where voters tend to be more optimistic.”
Paper abstract:
The study introduces an Individual-Level Outlook Index (ILOI), a novel consumer sentiment index that enhances the granularity of economic insights beyond traditional macro-level measures. Traditional consumer sentiment indices, such as the Westpac-Melbourne Institute Consumer Sentiment Index and ANZ-Roy Morgan Consumer Confidence Rating, primarily offer aggregated data that may mask important variation in consumer sentiment across different demographic groups.
To address this limitation, the ILOI was developed by incorporating elements of the Fiscal Confidence Index (FCI) method, developed by the Peterson Foundation, while innovating in variable selection and analysis. The data were sourced from monthly surveys of Australian voters and analysed to provide macro, demographic, and individual-level insights. Our findings indicate that the ILOI aligns with traditional macro-level indices in tracking economic sentiment at an aggregate level but also reveals important variations across demographic groups including age, housing tenure, and political affiliation, offering a more detailed and instructive analysis of what might be driving changes in consumer sentiment.
The granularity provided by the ILOI method could better help policymakers and business leaders tailor their strategies than macro-level measures, making it a more valuable tool for policy development, communications and decision-making.
The approach provides deeper insights into the underlying drivers of changes in consumer confidence, offering a more nuanced view than existing measures.
ENDS
In recognition of the work by Gall and Turner, the team at Freshwater have nicknamed it the “G&T Index.”
Congratulations Sarah and Mike on this outstanding achievement.
You can find their work here: https://journals.sagepub.com/doi/10.1177/14707853251362961
