Collective Sentiment in Qualitative Business Surveys∗

Aggregated qualitative survey data provide timely, but often imperfect, macroeconomic indicators. Exploiting a unique panel dataset for the UK, which contains matched firm-level responses from both qualitative and quantitative surveys, we find that firms’ responses are influenced not only by their own current and past output and lagged qualitative responses but also by an indicator of aggregate response. We interpret the latter as showing that firms’ answers reflect collective sentiment as well as individual experience. Collective sentiment is shown to have a substantial impact on the summary statistics conventionally used to represent the results of the survey. JEL Codes C01, C23, C81