Expensive
Teuro is a suitcase word in German-speaking countries , made up of expensive and euro , which is colloquially used for the euro currency . Since there was a widespread perception after the introduction of euro cash on January 1, 2002 that the prices of goods and services had increased significantly, the term was able to manifest itself through various media in linguistic usage.
Surveys of the perceived inflation showed for the entire newly created euro area , but especially in Germany, a sharp increase since 2001/02, which only slowly subsided again around 2005. On the other hand, there are numerous studies on the real price development , which in some cases show considerable price increases in the period immediately after the introduction of the euro, but which cannot detect any unusual price increases over longer periods of time. In relation to the entire euro area, inflation remained almost constant, in Germany and Austria it was even lower in 2002 than in 2001.
Perceived inflation and reactions
Immediately after the introduction of the euro, the perception was widespread in the euro countries that prices had risen considerably as a result of the currency changeover. The monthly surveys of the European Commission with 21,000 respondents show a strong change of opinion in these countries. While in December 2001 only 17% stated that prices were rising faster than before, in September 2002 it was already 44%. Perceived inflation is often higher than statistically measured, but the discrepancy grew significantly over this period. Only around 2005 did the values slowly level off again.
Germany
In Germany, the mood was very critical towards the new currency even before the introduction of the euro. A survey carried out in March 1992, shortly after the adoption of the Maastricht Treaty , which among other things also established the introduction of the euro, showed that 42% rejected the treaty, with no significant difference between East and West Germany. Another poll from January 1992 also showed great skepticism about the stability of the currency. 62% were of the opinion that the future currency could not be kept stable. This opinion was even widespread to 69% among executives from business, politics and administration.
The critical attitude was also present at the time the cash was introduced. According to a survey by the news magazine Focus among 2004 Germans in 2001, 56.4% of those questioned were against the new currency. 65% of the women were against the euro, the men only 45%. In East Germany around 70% were in favor of staying with the Mark. Broken down by occupational group, civil servants and the self-employed were 54% in favor of the euro, while blue-collar workers and pensioners were against in two thirds of the cases. Only in Sweden, Finland, Denmark and Great Britain were people more negative about the euro. The same survey also found that a clear majority suspected that companies would use the currency conversion to raise prices.
The German government at the time announced in advance of the introduction of the euro that nobody would have to “pay more than before through the introduction of the euro”. Early on after the introduction of cash, the media reported about the new currency as a price driver. In the spring of 2002, the news magazine Focus carried out a so-called “expensive memo campaign”, in which readers were asked to send in examples of extreme price increases. Over 600 reports were received.
It soon became apparent that the perceived increased inflation in Germany was one of the largest in all of Europe. Only in the Netherlands was the feeling similarly widespread. Federal Finance Minister Hans Eichel called for a boycott in the spring of 2002. Federal Consumer Protection Minister Renate Künast organized an “Anti-Teuro Summit” and Federal Chancellor Schröder made the same point.
The debate was accompanied by complaints from various industries about the difficult situation, in particular about falling sales and reluctance to consume. In the taxi industry, a 15 to 30% drop in sales has been reported. In the electronics sector, sales fell by 10% and in furniture and shoes by 7%.
Austria
In Austria, authorities and the private sector are legally obliged to round off in favor of the customer. A commission monitored price developments and the Minister of Economic Affairs would have been entitled to fix prices for up to six months if necessary.
Nevertheless, there is a similar perception of price increases in Austria. A survey by the Austrian Society for European Politics (ÖGfE) showed that almost 60% of those questioned perceived a negative currency impact. 45% said the introduction of the euro had a major impact on price increases.
Spread of the made-up word
“Teuro” is a word created by the satirical magazine Titanic , which used the term back in February 1997, shortly after the decision on the final name of the new currency.
The made-up word has been voted Word of the Year for 2002 in both Germany and Austria .
The Spanish equivalent for Teuro is Redondeuro and comes from redondear = round up .
Development of actual inflation
| month | Germany | Austria | Luxembourg | Belgium |
|---|---|---|---|---|
| Jan. 2001 | 1.4% | 3.0% | 2.9% | 2.2% |
| Feb 2001 | 1.8% | 2.6% | 2.9% | 2.3% |
| March 2001 | 1.8% | 2.7% | 2.9% | 2.1% |
| Apr 2001 | 2.2% | 3.0% | 2.8% | 2.8% |
| May 2001 | 2.7% | 3.4% | 3.3% | 3.1% |
| Jun. 2001 | 2.5% | 2.8% | 2.9% | 2.9% |
| Jul 2001 | 2.2% | 2.8% | 3.0% | 2.7% |
| Aug 2001 | 2.2% | 2.5% | 2.8% | 2.7% |
| Sep 2001 | 2.0% | 2.6% | 2.4% | 2.3% |
| Oct 2001 | 1.8% | 2.5% | 2.3% | 2.4% |
| Nov 2001 | 1.5% | 2.1% | 2.1% | 2.1% |
| Dec 2001 | 1.6% | 1.9% | 1.7% | 2.2% |
| Jan. 2002 | 2.1% | 2.1% | 2.3% | 2.9% |
| Feb. 2002 | 1.8% | 1.9% | 2.3% | 2.6% |
| March 2002 | 2.0% | 1.9% | 2.1% | 2.7% |
| Apr. 2002 | 1.5% | 1.8% | 2.1% | 1.8% |
| May 2002 | 1.2% | 1.9% | 1.9% | 1.3% |
| Jun. 2002 | 1.0% | 1.7% | 1.7% | 0.9% |
| Jul. 2002 | 1.2% | 1.6% | 2.0% | 1.3% |
| Aug 2002 | 1.2% | 1.9% | 1.8% | 1.3% |
| Sep 2002 | 1.1% | 1.6% | 2.0% | 1.3% |
| Oct 2002 | 1.3% | 1.7% | 2.2% | 1.3% |
| Nov. 2002 | 1.2% | 1.7% | 2.2% | 1.1% |
| Dec 2002 | 1.2% | 1.8% | 2.2% | 1.4% |
Germany
In contrast to the general mood in Germany, there are various studies on price developments, both from official sources and from independent institutes. These do not show any strong price increases in the medium term. However, some surveys show a considerable price increase in the first half of 2002, which was largely offset in the following months. An investigation commissioned by the news magazine Focus also came to the conclusion that retailers had already increased prices in the run-up to the currency changeover.
Data from the Federal Statistical Office
In Germany, the official inflation rate in the year the cash euro was introduced (2002) was 1.4%. For goods and services of daily use, the Institut der Deutschen Wirtschaft carried out a detailed study of the data from the Federal Statistical Office in 2002 and determined a price increase of 4.8% in the first quarter. For individual product groups such as vegetables and air travel, significantly above-average price increases were found.
According to the consumer price index of the German Federal Statistical Office , inflation in Germany for the first two and a half years since the introduction of euro cash in January 2002 totaled 3.3%. In the previous two and a half years - the last of the DM - consumer prices rose by a total of 4.3%.
In the middle of 2001 the consumer price index recorded a more marked increase in prices in Germany compared to the previous months. However, this was far below the rates of increase that were recorded in the early 1990s (up to 6.3% increase in the price index compared to the same month last year). The most common inflationary trends were found in fresh produce, cinema tickets, services and restaurants.
Research by the news magazine Focus
The news magazine Focus already dedicated itself in 2001 with a cover story “Caution, expensive!” To the topic of possible increased price increases as a result of the introduction of the euro. It commissioned the market researcher Wolfgang Steinle to monitor prices. This came to the conclusion that the dealers were already raising the prices of numerous products months before the euro was introduced, presumably in order not to be seen as a price driver when changing currency.
Ten years later, the magazine again had Steinle evaluate 10,000 price information compared between September 2001 and September 2011. He states that the first decade of the euro, with the exception of the 2001/02 conversion phase, was characterized by high price stability. Leisure activities and energy have become more expensive.
The magazine clearly criticizes the official statistics. The shopping cart contains numerous products that most Germans did not buy within a year. In addition, various sources of price increases such as income taxes and other state levies are not included in the official statistics.
Other investigations
Price statistics from the Statistical Office of the City of Munich were published in mid-2002. It shows price changes from December 2001 to January 2002 and from January 2002 to July 2002, which were determined during test purchases in 8 to 10 companies in all city districts. For food, the picture is mixed - examples of moderate price increases or decreases to strong fluctuations can be found in the data obtained. Food that had become massively more expensive at the turn of the year - an increase of more than 160% was found for grapes - was subsequently mostly considerably cheaper again, so that the price came close to that before the changeover. However, the prices in restaurants had risen in most cases, even if slight reductions in the spring of 2002 cushioned this somewhat. In all cases, services had become more expensive with the changeover, while the price mostly remained the same in the following six months. Fuels had also become more expensive. For goods of daily use, e.g. B. Personal care products, prices were reduced in most cases.
A study carried out on behalf of the television program Stern TV in 2010 identified price changes in 256 food products. In this case, general inflation was subtracted from the prices in 2010 in order to determine whether food prices have risen more or less than the official inflation rate since 2001. It was found that 110 products have become more expensive, while 146 products have become cheaper. Annual averages derived from all purchases in 10,000 stores, a total of 100 million data records per week, were used as the database.
At the end of 2011, on behalf of the daily newspaper Bild , the “Preiszeiger” portal examined the price difference since 2001 for a number of household products that are offered in stores by discount chains. The average price increase was 5%. The most expensive was vegetable margarine , the price of which had risen by 63%, while mineral water was the most affordable and 46% cheaper.
A further examination of the picture from 2008 compared the prices from 2008 with those from 1998. However, only absolute increases were calculated here without determining the total price of the shopping basket or an annual rate of price increase. Large increases were seen in energy prices, while the picture was mixed for food. Price reductions were observed for electrical appliances and clothing.
In December 2011, the Berliner Kurier repeated a test purchase of 20 products from the food and personal care sectors, which they had already carried out three days before the euro was introduced and eleven months later. In November 2002 there was a price reduction of around 4%. Nine products had become cheaper, eight more expensive and three had remained the same in price. A reader reaction to the test purchase explained the result by saying that prices had already been increased in the summer of 2001. During the test purchase in December 2011, during which some products that had meanwhile been discontinued had to be replaced by similar items, it was surprisingly found that the total price of the shopping cart was identical to that in autumn 2002. The journalists found considerable price increases for coffee, but also for oranges and Chocolate.
A study by the Institute for the German Economy in 2012 compared net wage increases and inflation from 1991 to 2011, although the 1991 values only related to western Germany. The study came to the result that the net wage increased by 45%, but also the prices by 43%, i.e. on average around 1.8% per year. The price structure has shifted. The average worker would have to work considerably less time to buy washing machines and televisions, but much longer for premium gasoline and electricity, while mixed bread and eggs, for example, required just as much work as in 1991.
Austria
In Austria the inflation rate was 2.7% in 2001 and 1.8% in 2002.
According to the Austrian National Bank with the help of data from the Austrian statistical authority Statistics Austria , inflation was lower in the decade after the introduction of the euro than in the previous 10 years. However, the feeling of higher price increases is not unfounded, since products to be bought every day, such as food and gasoline, have become more expensive than average, while more seldom bought, more durable goods such as electronics have become much cheaper.
Luxembourg
The Luxembourg statistical agency, Service Central de la Statistique et des Etudes Economiques, collects annual inflation rates from mid-year to mid-year. According to these data, the inflation rate was:
- Mid-2000 to mid-2001: 2.7%
- Mid 2001 to mid 2002: 2.1%
- Mid-2002 to mid-2003: 2.0%
Belgium
According to the consumer price index, inflation in Belgium was 1.6% in 2002.
Reasons for perceiving higher inflation
The statistically determined price development shows a considerable discrepancy to the extensive increase in the price of products perceived by the population. There are explanations for this from psychology.
Perceived inflation
The perceived inflation is the price level increase, which is perceived by consumers. In reality, however, this need not have taken place to the same extent. With regard to the introduction of the euro, it can be seen that goods whose prices are the focus of the public (e.g. food and drinks in restaurants) have increased noticeably, but at the same time the prices of goods that are used in everyday life have hardly increased are less noticed (e.g. rents, electricity, water). This can explain a discrepancy between felt and measured inflation.
The researchers at the Institute of German Economy examined the price development in detail as early as 2002. They found a higher inflation rate for everyday products of 4.8%, which is well above the 1.9% determined by the Federal Statistical Office for the whole of 2002. Vegetables were 14.3% more expensive, fruit 6.2% more expensive, and bread and meat each 4.1% more expensive. However, goods that were more expensive than average only accounted for 24% of the shopping basket. They came to the conclusion that the feeling widespread in the population was not unfounded, since the more expensive goods were more likely to be perceived than fixed costs that have barely changed, such as rent or heating costs. Experts from other economic institutes have come to similar conclusions.
Confirmation failure
The hypothesis that the price increases perceived by the population were caused at least in part by a confirmation error has been tested in several scientific studies.
This psychological phenomenon, known since the 1940s, is expressed in the fact that expectations influence the assessment of information. Expectations tend to be confirmed even when contradicting information accumulates. The quality of the information is not assessed independently of the direction of these expectations, so that information consistent with this is classified as more credible and more important than inconsistent. In general, this is not done by devaluing the inconsistent information, but by ignoring weaknesses in the consistent information.
In a by Traut-Mattausch et al. In the experiment published in 2004 with restaurant menu cards, the subjects were asked to estimate the price changes from DM to euros. In addition, they received both a Euro and a DM version of the same card. The dishes offered were identical in both cases, but the price changes were different. On a card that had prices increased by 15%, the test participants estimated the price increase to be 22%. Even if prices had not risen, an increase of 8% was estimated. However, a significant price reduction of 15% was only perceived as a constant price.
In other variants of the experiment, too, there was a clear trend that the new prices were always estimated to be more expensive than the old prices than they actually were. This also applied if the price conversion was carried out with the often used ratio 2: 1 or if all prices changed evenly. The effect even occurred when the test subjects presented both cards at the same time and thus a direct conversion was possible. It also showed that the perception is not due to a lack of care. If the test takers e.g. B. were offered a monetary incentive for a particularly accurate estimate, the price estimate did not improve.
The researchers also found that cognitive load, i.e. H. the distraction of another task to be performed at the same time plays a significant role. For a card for which the price level had remained the same, cognitively disturbed people perceived a price increase of 4%, while undistracted people estimated the price increase by 11%. From this, the researchers concluded that selective error correction takes place, in which results that do not meet expectations are more likely to be checked and, if necessary, corrected, while expectation-consistent results remain unchanged even if they are incorrect.
In Austria, Hofmann et al. a very similar experiment was carried out with fictitious menus for the transition from the Austrian Schilling to the Euro, which came to the same result: if the prices remained the same, an illusory price increase was perceived. Furthermore, income differences due to the currency exchange were examined. It emerged that incomes were largely perceived as unchanged.
Inaccurate conversion
Inaccuracies in the conversion in the head were also suspected as a further factor. The official exchange rate was 1.95583 Deutsche Mark at 1.00 € or 13.7603 Austrian Schilling at 1.00 €. The conversion rates commonly used by people were or are, however, 2 (for the D-Mark) and 14 (for the Schilling). This creates a discrepancy of more than two percent.
However, in experiments by Traut-Mattausch et al. could not be confirmed, since illusory price increases were determined regardless of the selected exchange rate and were greater than the purely arithmetical discrepancy. The thesis of the scientists to explain this fact is based in turn on the confirmation error: calculation errors contradicting expectations are more likely to be corrected than calculation errors consistent with expectations.
Perceptions of external factors
Another explanation is that external factors for pricing are not recognized. Cauliflower, for example, became considerably more expensive in spring 2002. The reason for this was not the changeover to the euro, but an unusual cold spell in southern Europe.
Wage development
Another possible explanation is the development of wages. In the 10 years after the introduction of the euro, net wages in Germany have increased by 0.79% annually, while prices have risen twice as fast. As a result, wages have fallen in real terms, and even smaller price increases have a stronger effect. Also in Austria it is shown that z. B. on average more working time is required to pay for services.
literature
- Eva Traut-Mattausch: The T € uro illusion . Distorted judgments in price comparisons, Kovač, Hamburg 2004, ISBN 978-3-8300-1335-8 (= study series psychological research results. Volume 105, also dissertation at the Ludwig Maximilians University Munich 2004).
Web links
- Brachinger, H .: The euro as expensive? Perceived inflation in Germany. (PDF) In: Economy and Statistics 9/2005. Federal Statistical Office , September 2005, p. 16 , accessed on July 2, 2012 (guest article and excerpt from “Economy and Statistics 9/2005”, from p. 999).
- Beuerlein, I .: Five years after the introduction of euro cash - Was the euro really expensive? (PDF) In: Economy and Statistics 2/2005. Federal Statistical Office , February 2007, p. 5 , accessed on July 2, 2012 (excerpt from “Economy and Statistics 2/2005”, from p. 208).
- Chlumsky, J. et al. Engelhardt, N .: One year euro - one year expensive? (PDF) Federal Statistical Office , December 2002, p. 23 , accessed on July 2, 2012 .
- Price monitor of the Federal Statistical Office. Federal Statistical Office , accessed on July 2, 2012 .
Individual evidence
- ↑ Inflation rates calculated on the basis of the Harmonized Index of Consumer Prices from Eurostat
- ↑ Business and Consumer Survey of the European Commission
- ↑ a b Frankfurter Allgemeine Zeitung, The times of high perceived inflation are over , May 23, 2005
- ↑ Elisabeth Noelle-Neumann , Public Opinion , published in the Yearbook of European Integration 1991/1992 , available at [1]
- ↑ a b Focus, "Caution, Teuro!", No. 19/2001
- ↑ a b c d Eva Traut-Mattausch, Tobias Greitemeyer, Dieter Frey, Stefan Schulz-Hardt; Illusory Price Increases after the Euro Changeover in Germany: An Expectancy-Consistent Bias , J Consum Policy (2007) 30: 421–434, doi: 10.1007 / s10603-007-9049-y (English)
- ↑ Focus magazine, "Dem Teuro on the Track", issue 22/2002, May 27, 2002
- ↑ a b Spiegel Online, How Boycott-Hans staged the popular uprising , May 17, 2002
- ↑ Hans-Werner Sinn in the Süddeutsche Zeitung of July 2, 2002, Der Seelen-Teuro , available at cesifo-group.de
- ↑ Spiegel Online, “The Teuro gave us the rest” , June 19, 2002
- ↑ "Why the euro is not expensive" , kurier.at, December 26, 2011, retrieved from schuldenhilfswerk.at ( Memento from March 4, 2016 in the Internet Archive )
- ↑ www.zeit.de The Teurorists
- ^ Price index of the Federal Statistical Office
- ^ Price index from Statistics Austria
- ^ Price index of the Luxembourg Statistical Authority
- ↑ Price index from Statistics Belgium ( Memento from September 6, 2011 in the Internet Archive )
- ↑ a b c d HICP data from Eurostat
- ↑ a b Spiegel Online, The Secret of Perceived Inflation , May 30, 2002
- ↑ a b List of the Institute of German Economy of above-average price groups in spring 2002, published in Spiegel Online on May 30, 2002
- ↑ Issue No. 19/2001
- ↑ Focus, Ten Years of Teuro, November 28, 2011
- ↑ Price driver euro - development of selected consumer prices half a year after the currency conversion, Statistisches Amt München ( Memento of July 9, 2007 in the Internet Archive )
- ↑ Stern.de, Because of expensive euros! , February 24, 2011 ( Memento from August 5, 2012 in the Internet Archive )
- ↑ http://www.bild.de/geld/wirtschaft/euro/euro-kein-teuro-21839012.bild.html
- ↑ http://www.bild.de/geld/wirtschaft/wirtschaft/was-reallich-teuer-wurde-4665490.bild.html
- ↑ [2] Berliner Kurier, Is the euro really expensive? , December 19, 2011
- ↑ Press release of the Institut der Deutschen Wirtschaft on the study ( Memento of July 27, 2012 in the Internet Archive ), July 24, 2012
- ↑ a b Wirtschaftsblatt, “Why the euro is not a expensive euro”, December 27, 2011
- ↑ a b derwesten.de, Why the euro is not expensive, December 29, 2011
- ↑ Greitemeyer, T. Schulz-Hardt, S., Traut-Mattausch, E., & Frey, D. (2002). Expectation-based perception when introducing the euro: the euro is not always a expensive euro. Business Psychology, 4, 22-28
- ^ E. Hofmann, B. Kamleitner, E. Kirchler, S. Schulz-Hardt; Dwindling purchasing power after the currency changeover: On the expected perception of the (T) euro in business psychology, 2006-1 edition, published by Pabst Science Publishers, abstract available at [3]
- ↑ Frankfurter Rundschau, Euro or Teuro ?, December 13, 2011
- ↑ German private households have less and less purchasing power ( Memento from December 1, 2016 in the Internet Archive ), BadenTV, September 11, 2015
- ↑ GfK Purchasing Power Studies Europe , GfK , October 22, 2015