Perception v reality

January 5th, 2013 at 10:00 am by David Farrar

Stuff reports:

Kiwis who did it tough in 2012 will find no comfort over the next year as financial anxiety rises with the climbing cost of living.

A survey by The Dominion Post paints a gloomy picture for many households: two-thirds of respondents said the cost of living is becoming too high.

And that bleakly held view is backed by various experts, who confirm that prices are likely to climb further over the next 12 months.

The survey polled more than 600 readers and found rates, petrol, food and house prices all among the most pressing financial woes. Taxes, medical and dental expenses, and the exchange rate were also prime concerns.

A reader survey, while interesting, is not a scientific random poll. And nowhere in the article do they mention what the actual rate is, or that interest rates are at a record low. Here’s what Stats NZ found:

  • Annual inflation at 0.8%, the lowest it has been since 1999.
  • Food is 0.9% cheaper than a year ago
  • Clothing and footwear is 1.0% cheaper

I’m also fascinated by the fact the exchange rate was listed as a worry for prices, as the higher the exchange rate, the cheaper most things cost (a high rate is bad for exporters but good for consumers generally).

If you are going to do a story based on perceptions, it would be good to actually include some facts in the story – even ones that don’t agree with the perceptions.

 

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16 Responses to “Perception v reality”

  1. Paulus (2,298 comments) says:

    Another unscientific poll – typical media – Fairfax today, Feral Herald yesterday.
    Must print anything to keep jobs.
    Fact or fiction really does not matter.

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  2. adamsmith1922 (879 comments) says:

    Really David, this is Fairfax

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  3. Redbaiter (6,481 comments) says:

    Seems that some polls get “scientifically analysed” and others don’t.

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  4. Reid (15,593 comments) says:

    Perception is reality not just in politics but also in economics.

    The economy stands or falls on consumer confidence. Nothing else. What those 600 readers are reflecting whether they know it or not, is not the domestic conditions but the international collective consciousness as it exists in the western nations, which at the moment, is full of fear and uncertainty.

    And this will get worse, much, much worse as 2013 progresses. And this will generate a self-fulfilling prophecy at home, as consumers continue to retrench (due to their subconscious fear) which causes businesses to react accordingly.

    It’s a fact of life that we create our own reality. The thoughts we have manifest themselves in the world as things – objects, circumstances, events that happen.

    Man is made or unmade by himself; in the armory of thought he forges the weapons by which he destroys himself. He also fashions the tools with which he builds for himself heavenly mansions of joy and strength and peace. By the right choice and true application of thought, man ascends to the Divine Perfection; by the abuse and wrong application of thought, he descends below the level of the beast. Between these two extremes are all the grades of character, and man is their maker and master.

    Most people don’t get this, and in that ignorance, their actions become as pointless as those of the lefty who tries to solve poverty by boiling the ocean. If Joyce and Key and English for example, started talking about ways to beat the fear that is driving this lack of consumer confidence which in turn is manifesting itself in the retail figures and the salary figures and in every other economic activity indicator, they would start to see a change. But they don’t, because they like most people, have failed utterly to recognise what really drives human behaviour. And consequently, they continue to munt pointlessly about the inflation rate and interest rates, hallucinating in their profound ignorance, that by doing so then people will “realise” that things really aren’t that bad and they’ll start spending again. Which as I said, will never work, because circumstances do not drive behaviour, behaviour drives circumstances, and thoughts drive behaviour.

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  5. dime (8,778 comments) says:

    Dimes quality imported wares will become a bit cheaper this year. Remember, when you’re out shopping – Buy Dime :D chances are, you already have muhahaha

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  6. bhudson (4,720 comments) says:

    Domestic Energy Users Network analyst Molly Melhuish said electricity and gas bills would keep growing because the five state-owned power companies were being primed for sale.

    All to generate more interest in the shares apparently.

    Helps to frame the credibility of the entire article really.

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  7. beautox (408 comments) says:

    reid : although perception is important, it’s not *everything* as you try to make out. There is such a thing as the underlying economic reality. And this reality is that many countries have spent way way more than they should – to the extent that they are having real problems paying the interest on the debt even with tricks like pushing the interest rates to almost zero.

    Just as a family that’s in the shit due to massive overspending on consumption, they cannot magic away their overdraft and credit card bills (the underlying economic reality), neither can the USA or Europe magic away the mess they have created over the past years of mismanagement.

    Of course we create our own reality, but that’s not via perception but by the actions we take and have taken in the past.

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  8. thedavincimode (6,130 comments) says:

    The cost of lattes, crunchy crappos, petrol for the 3 car families and SKY TV must be must be soaring which is putting pressure on people despite the decline in data plan costs. At least KFC and MacDs appear to be holding their costs.

    DPF, you can’t just blandly refer to a decline in food prices. People are now paying far less for products simply because they are in season. My prediction is that next winter the price of fruit ‘n vege will go through the roof. This is unacceptable and the gummint needs to intervene. I want a Commission of Inquiry.

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  9. nasska (9,549 comments) says:

    …”Annual inflation at 0.8%, the lowest it has been since 1999.”…..

    The news heartens me. All that is left to do is to point out to the parasites & incompetents who run Local Bodies that their totally unjustified yearly rates hikes are due to poor management & gross overspending…..not inflation.

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  10. Reid (15,593 comments) says:

    Of course we create our own reality, but that’s not via perception but by the actions we take and have taken in the past.

    The question is beautox what is the source point for everything? What is the ultimate driver? And if you think about it, every single human created artifact that has ever existed on this Earth was once merely a thought in someone’s head. Be that an institution like say, the NZX, a structure like a bridge or a building, an insight into the universe like the Theory of Relativity, a business like say a newspaper or anything else that we now just accept as being merely a piece of the fabric of our daily lives. Every single thing was once nothing more than a thought.

    Economic indicators are mere signposts on a road that has been created by behaviour. The current debt situation is the current reality and as a reality it needs to be recognised and not pretended away, just like gravity shouldn’t be ignored and pretended away. But this doesn’t mean that we have to operate in thought mode restricted by that reality. Just because we have a global debt problem doesn’t mean we should be scared and fearful, in other words. Naturally many will be, but they don’t have to be. Nothing about the debt problem FORCES people to be scared. That’s their choice. Sure, it’s natural to be scared, just like it’s natural to grieve when a loved one dies. But this doesn’t mean the circumstances FORCES that on us. It’s a personal choice. After all, your friends don’t grieve the same way you do, when you lose one of your parents, do they. This demonstrates it’s not the death of your parent that triggers a given reaction, it’s the choice you make within yourself to feel the way do about it the same way your friend makes a choice to feel the way they do about it which illustrates two separate reactions to the exact same event.

    That’s all I’m saying, and the more a person recognises that life does in fact operate the way I’ve described it above, the more they will rise about any particular given circumstance and the more they will achieve freedom because newsflash, a person’s universe – what people call “their lives” – coalesces around that person’s thoughts and conforms to whatever those thoughts might be. And as James Allen said above in that quote, a person can build themselves heavenly mansions of joy and strength and peace, or they can descend below the level of a beast. It’s their choice, and a person’s life, what Allen calls their character, shows what choices they have made. They may not have made them consciously, but they have still made them, and the universe obeys accordingly and shows the rest of us the evidence.

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  11. Manolo (12,637 comments) says:

    We are blessed to live in la-la land under a strong Labour lite government.
    Let the unabated spin continues. Hallelujah.

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  12. SPC (4,675 comments) says:

    One could note that neither rent and house prices are part of the CPI index and many in Auckland and Christchurch are struggling because of this cost.

    More generally the CPI includes everything including items that the poor cannot afford (such as new cars and electronics), a more relevant figure would be cost of necessities index and include in this rent.

    What is the year on change in the cost of food, rent and power?

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  13. hinamanu (2,352 comments) says:

    ‘Annual inflation at 0.8%, the lowest it has been since 1999.’

    Obviously the war against inflation is a huge Reserve Bank fraud

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  14. annie (533 comments) says:

    For my entire working life up until the mortgage was finally paid off and the kids left, finace was a real struggle, including the dreaded what-can-i-cook-with-half-a-pack-of-rice together with the remains of the silver beet scrounged from the garden. We had no holidays for the first 15 years of owning a house, and ate out maybe 3 times a year on birthdays and anniversary.

    So this is news how? It is a struggle, especially with small children and even with two incomes, if you live in a metropolitan area where house prices are high.

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  15. HB (267 comments) says:

    Maybe the impact of high prices (although not currently rising) is starting to hit home with more and more people.
    A lot of us can sustain higher and higher prices for a while but not forever.

    It is ridiculous that a double income family with only 2 kids living in an average house should be having to watch every penny.

    Of course someone with no partner and no kids wouldn’t understand.

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  16. Left Right and Centre (2,397 comments) says:

    HB… I have no partner and no kids. What’s your problem dude? I just don’t understand eh.

    Ridiculosity on a scale of 0-10 (I just made that word up… give me a greencard) depends on you filling in blanks like ‘double income’ ‘average house’ ‘watching every penny’.

    Like…hours worked in total… household income… household expenses… house value etc

    That’s your private life but double income… Bill English and his doctor wife are double income… or it could be two supermarket peons working full and part-time. Yeah? No-one could from an opinion without more juicy bits.

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