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Turns Out People Are Different, Say Economists

At a conference last week, Peter Praet, a member of the executive board of the European Central Bank, said something so breathtakingly obvious that, after a second, you begin to wonder what had been going on that he felt he had to state it: “… individual households are heterogeneous in many respects,” he said. Then, “… it is important to measure and analyse this heterogeneity because it can have important implications for aggregate figures.”

Families differ from each other, he meant, and we need to know how, because it could affect the way we measure the economy. He needed to say it because the idea that different families respond differently to the same event—that households are heterogeneous—is a relatively new way of looking at the economy.