Does culture matter for consumer confidence?

Abstract

In this paper, we explore whether the diversity of consumer confidence indicators across different countries can be explained by diverse cultures in those countries. For this purpose, we consider the OECD consumer confidence indicators and macroeconomic indicators of 37 countries. In particular, we analyse the consumer confidence indicator levels in January of 2007 and 2009, that is before and during the financial crisis, and also in January of 2020 and 2021, which is before and during the Covid-19 crisis. For measuring culture, we use the two-dimensional models of Kaasa and Minkov (2022), Inglehart and Welzel (2021), Minkov and Kaasa (2022) and Beugelsdijk and Welzel (2018). We employ forward and backward stepwise regressions and principal components regressions for analysis. Our results show that in bad times consumer confidence is lower in cultures that are characterised by individualism (vs collectivism), responsibility (vs faith), secularism (vs traditionalism), and flexibility (vs monumentalism) compared to cultures characterised by the opposite. We have also found that the extent of the decline in consumer confidence during the crises, especially the Covid-19 crisis, was smaller in cultures characterised by freedom (vs concern), self-expression (vs survival), and joy (vs duty) than in countries on the opposite side of the spectrum. Finally, we conclude that culture has clearly been more relevant for the change in consumer confidence during the Covid-19 crisis, as opposed to the financial crisis.