Does customer satisfaction have directional predictability for U.S. discretionary spending?

Document Type

Article

Source of Publication

Applied Economics

Publication Date

11-20-2017

Abstract

© 2017 Informa UK Limited, trading as Taylor & Francis Group. Research indicates that past growth in customer satisfaction is an important factor in explaining the in-sample behaviour of growth in discretionary spending. Motivated by such evidence, we take an out-of-sample forecasting approach to examine whether customer satisfaction has directional predictability for two types of discretionary spending. These include spending on motor vehicles and spending on recreation services, which display frequent negative growth for the period 1995–2015. Our results indicate that customer satisfaction accurately predicts the direction of change in both types of spending under symmetric loss. To augment, we further show that the widely reported consumer sentiment has no directional predictability for either types of discretionary spending.

ISSN

0003-6846

Publisher

Routledge

Volume

49

Issue

54

First Page

5504

Last Page

5511

Disciplines

Social and Behavioral Sciences

Keywords

consumer sentiment, Customer satisfaction, directional change, symmetric loss

Scopus ID

85017227381

Indexed in Scopus

yes

Open Access

no

Link to Full Text

Share

COinS