(The) effect of information nudge on consumer confidence under the COVID-19 recession: a survey experiment

Abstract

Under the COVID-19 economic recession, we study how individuals formulate consumer confidence at the micro level. To this end, we conduct a large-scale survey experiment to show information nudge can change consumer confidence. Specifically, we devise three information treatments: (1) COVID-19 recovery rate, (2) positive economic news, and (3) negative economic news. Our main findings are as follows. First, political polarization is prevalent in generating consumer confidence, where liberals constitute significantly higher consumer confidence compared to conservatives. Second, economic news is effective in altering consumer confidence while the COVID-19 recovery rate is not. Especially, positive economic news considerably boosts consumer confidence, outweighing “negativity bias.” Third, economic news can mediate political polarization, enabling partisans to have balanced views. Positive economic news enhances conservatives’ lower consumer confidence while negative economic news dampens liberals’ higher projection. Lastly, people interpret, through their political lens, the same information heterogeneously. Solid consumer confidence is a necessary condition governing the success of fiscal and monetary policy to revitalize the economy from the COVID-19 crisis. Therefore, our study presents clear implication to the media because the information they deliver to the public, in positive or negative tone, can substantially alter peoples’ consumer confidence and dictate upcoming economic pathways.