A simple instruction and visual tool showing a running total as probabilities are assigned to bins leads to a negligible number of cases in which probabilities do not add up to 100 percent. 24  Following the approach described in Engelberg, Manski, and Williams (2009), we fit a generalized beta distribution to the bin responses of each individual respondent whenever the respondent assigns positive probability to three or more bins. When respondents only assign positive probability to one or two bins, we fit a uniform or a triangular distribution, respectively. BIS central bankers’ speeches  7  such as the mean, are less prone to outliers than are one-off answers to point expectations, resulting in smaller cross-sectional dispersion.25 Eliciting probabilistic beliefs and density forecasts presents a number of challenges: much research is still needed on the best way to elicit such beliefs – for example, with regard to the format of the questions; the number, width, and location of bins; whether to tailor bins to individual respondents; and how to estimate the underlying continuous densities. The elicitation of such beliefs involves many survey design choices, and the extent to which the findings depend on the way in which the information is collected is not yet fully known. In line with earlier findings in the literature, our research shows that survey respondents are able and willing to provide density forecasts.26 In our experimental surveys, fielded as part of RAND’s American Life Panel, we observe negligible non- response rates to the bin probability questions.

10 Some of these questions ask respondents to assign probabilities to various ranges of outcome – so-called density forecasts.11 Generally, people across a wide range of countries and walks of life appear to be able to answer probabilistic questions, and their expectations are found to be useful in forming predictions of future economic outcomes. The survey of consumer expectations Turning now to the development and use of expectations surveys at the New York Fed, let me first discuss our Survey of Consumer Expectations (SCE). Over the last ten years, we extensively tested and eventually implemented a new survey of households, with the goal of collecting timely and accurate information at high frequency on U.S. consumers’ expectations and decisions on a broad variety of topics. The SCE, launched in June 2013, was designed to fill gaps in existing data collections about consumer expectations and outcomes, to provide a more integrated data approach, and to take advantage of state-of-the-art survey techniques. The SCE is implemented as a monthly, nationally representative survey of about 1,300 household heads.12 Recently the Bank of Canada implemented its own version of the SCE, fielded at a quarterly frequency. The SCE has various components, which are outlined on Slide 2. First, respondents are asked a core monthly module of questions concerning their expectations about various macroeconomic and household-level variables. These questions cover inflation expectations and expectations regarding changes in home prices and the prices of various specific goods and services, such as gasoline, food, rent, medical care, and a college education.