In addition to providing a measure of individual forecast uncertainty, these density forecasts yield richer information about how expectations vary across people and over time than do single-value forecasts, or “point predictions.” The SCE is the outcome of a five-year collaborative research project involving economists, psychologists, and survey design experts. During this period, we conducted a large number of experimental surveys to assess the information elicited with existing survey questions and to develop new questions, including those for measuring forecast uncertainty. This preliminary work and the probabilistic format of the new survey questions represent an important innovation that builds on academic work over the past 20 years by economist Charles Manski, as well as some early pioneering survey work conducted by the Bank of Italy. Creating the CCP and SCE has yielded some important lessons. First, data innovation requires an ability to think outside the box, and it benefits from the collaboration of people with diverse skills and backgrounds – academic economists, but also representatives of other academic disciplines and individuals with business and public policy experience. Skills in identifying valuable but underutilized data, the creation of data linkages, the development of appropriate sampling procedures, and survey methodology and questionnaire design experience are all particularly valuable. In this respect, our experiences mirror those at the many new interdisciplinary data and social research centers and numerous “Big Data” university centers being created across the country.
And both loan-level data and aggregates like the Flow of Funds miss an important dimension of borrower behavior that became very important during the crisis and recovery – the relationship between different kinds of credit use by individual borrowers or households. The creation of the Consumer Credit Panel is an example of the use of pre-existing commercial data in an innovative way that had not previously been pursued. The panel is based on credit report data collected by Equifax (one of the three credit bureaus in the United States) and it contains information on all outstanding loans – including mortgages, auto and student loans, and credit card debt – at the individual consumer level. While credit records are primarily used by lenders to evaluate a potential borrower’s creditworthiness and ability to repay, they can also provide a comprehensive picture of outstanding balances and delinquencies and how they interact. Of course, all the data are completely anonymous – the dataset has been stripped of all personally identifiable information. The CCP was created by our research group using an innovative sampling procedure, based on the randomness of the last four digits of social security numbers. The resulting panel allows one to track individuals over time and across different locations within the nation, starting in the quarter in which they establish their credit report when taking out their first loan.