The role of social effects in shaping beliefs about the economy.

This article investigates how individuals' perceptions of aggregate economic outcomes, specifically national homeownership and unemployment rates, are influenced by the characteristics of their social environment or peer groups. Using survey data from Austria, the study compares two approaches: constructed peer groups based on socio-demographic factors (location, age, education) and self-assessed peer groups reported directly by respondents. Results show that both measures significantly affect subjective estimates, with self-assessed peer groups providing stronger and more robust predictions. The influence of peer groups is more pronounced for homeownership—a less publicly discussed variable—than for unemployment, which is more frequently covered in the media; additionally, individuals with greater economic knowledge rely less on peer group information. The findings highlight the importance of social context in shaping economic perceptions and suggest that survey-based expectations partly reflect local social environments.