Perils of perception - the reality is that we get a lot wrong


The key issue with any expectations market is that investors are often driven by what is perceived and not what is true. The misperceptions of what we belief to be fact but in reality is false will clearly drive markets. If you don't believe we have perception problems, look at the survey of the Perils of Perceptions from Ipsos Mori, the British research and survey group.

The fourteen country survey asks very simple questions on simple facts that should be easily answered by most individuals. It is not that the questions are always easy, but they do represent facts of what people should know. You can take the test yourself. Generally, the perceptions of individuals around the world show significant differences with reality. If individuals cannot anchor basic facts, then it is likely they will have a problem assessing new information. 

Take, for example, the perception on unemployment. The numbers suggest that most individuals, regardless of country, think unemployment is higher than it actually is. No wonder there is a problem with confidence in the economies around the world. Being blind to reality will mean that assessing new information will not be easy. You cannot effectively change expectations if you don't know the starting point for discussion. Take the survey and check your misperceptions.