In a 1997 paper for the National Bureau of Economic Research titled Why Do People Dislike Inflation?, Nobel laureate Robert Shiller and a team of graduate assistants interviewed hundreds of people in the US, Germany, and Brazil. While few of those ordinary Joes knew much about the economic term in question, they were all uniformly against it. Even when one researcher told a survey respondent that inflation might help raise his wages, he remained steadfastly opposed. “I suspect that an important difference between economists and laymen is that, to some extent, we speak different languages,” wrote Harvard’s N. Gregory Mankiw in his review of Shiller’s project.
That’s the problem with inflation, which Shiller’s research found to be the most-used economic term in all published news stories in the Nexis database (even ahead of ecospeak staples such as unemployment, productivity, and poverty). Rather than some precisely defined economic truth—say, the decline of a currency’s purchasing power over time, often with nominal income gains failing to keep place with price changes—inflation is a much squishier concept for those of us who are more schooled in home economics than macro policy. We’re not sure about how exactly supply shocks affect monetary policy, yet we innately understand that anything that erodes our living standards in a way that’s completely out of our control is something to fear.