What do the CCI numbers mean? If one selects a random sample of 100 Georgians and asks them to assess their personal economic situations and the state of the economy as a whole, there will be some in this group who think that the situation is rather positive, some who consider it to be neutral, and some whose perceptions are negative. When our index has a value of -8 points, this means that on average, in such a sample of 100 people will be 8 less Georgians who have a positive view than Georgians who think that the situation is negative (neutral assessments do not count). A sample of size 100 in which 30 people think that the situation is rather good, 38 think that it is bad, and 32 are neutral, would consistent with such a value. So, if we would base the CCI exclusively on 100 persons, the index would always be an integer number. Yet in fact we base our estimation on a sample of approximately 350 Georgians, and that is why usually we end up with non-integer values.
The consumer confidence indicator is the arithmetic average of the balances (in percentage points) of the answers to the questions on the financial situation of households, the general economic situation, unemployment expectations (with inverted sign) and savings, all over the next 12 months. On the basis of the distribution of the various options for each question, aggregate balances are calculated for each question. Balances are the difference between positive and negative answering options, measured as percentage points of total answers. In particular, if a question has three alternative options: "positive", "neutral" and "negative", and if P, E and M (with P+E+M=100) denote the percentages of respondents having chosen respectively the option positive, neutral, and negative, the balance is calculated as:
B = P - M
In the case of questions with six options, i.e. the three options above plus "very positive", "very negative" and "don’t know", the balances are calculated on the basis of weighted averages. If P, E and M have the same meaning as in the previous paragraph, while PP denotes the percentage of respondents having chosen the option "very positive", MM the percentage of respondents having chosen the option “very negative” and N is the percentage of respondents without any opinion (so that PP+P+E+M+MM+N=100), balances are calculated as:
B = (PP + 0.5P) − (0.5M + MM)
It is clear from the expressions above that balance values range from −100, when all respondents choose the negative option (or the most negative one in the case of five-option questions) to +100, when all respondents choose the positive (or the most positive) option.
