Evaluating Qualitative Expectational Data on Investments from Business Surveys

This paper assesses the properties of qualitative expectations on investment collected through business sample surveys conducted by the Bank of Italy. Non-parametric tests for the rationality of qualitative data are verified under three scenarios, namely in the case firms report their qualitative expectation as the mode, the median, or the mean of their subjective density. Under the first two scenarios, expectations result mostly rational, while, under the scenario assuming that firms have in mind the mean of their subjective density, rationality is not satisfied with the thresholds of response options defined in the qualitative questions. However, qualitative expectations result being not just noise but contain some signal of the quantitative outcome data provided by the same sample. Moreover, the analysis reveals that both qualitative forecasts and outcomes are coherent with their corresponding quantitative data.