- Two channels contribute to these trends. Firstly, some people suffer objective economic hardship, even when the overall economic conditions improve.
- Secondly, some people are working through perceptions of being under threat or feeling left behind.
Image: DANIEL OGENDO
There is a persistent and growing gap between data showing improving economic conditions and people’s negative perceptions about the same economy, what other people term as reality and perception clash.
A report by the World Economic Forum dubbed ‘Human Development Report’, explains why the case is prevalent mostly in emerging economies, why it matters, and its impact on growth prospect.
In Kenya for instance, a recent poll by research body Infotrak, revealed that majority of the citizens feel the country is headed in the wrong direction economically despite the ease in the general cost of living in the past three months in a row
The report says 58 per cent of Kenyans feel the country is not doing okay economically.
Comparatively, the survey shows that only 19 per cent feel the country is on the right path while another 19 per cent said they did not know whether the country is on the right path or not.
By region, Coast leads with 70 per cent believing Kenya is not on the right trajectory. In Nairobi, Central, and Eastern, 53, 55 and 62 per cent felt the country is in the wrong direction, respectively.
“On the other hand, 67, 68 and 45 per cent in North Eastern, Nyanza and Rift Valley are not satisfied with Kenya's direction while in Western, 64 per cent said they feel the country is on the wrong path,” the report reads.
By gender, 59 per cent of females and 57 per cent of males polled said they feel Kenya is on the wrong path.
This is despite the actual figures used to gauge how the economy is performing showing signs of improvement.
Notably, data by the Kenya National Bureau of Statistics (KNBS) shows consecutive decline in prices of food items and electricity in the past two months has brought down the cost of living, giving a sneak peak of a recovering economy.
As a result, the level of inflation in March reduced to 5.7 per cent, a record last marked in December 2021.
This was from 6.3 per cent in February, which was also a decline from the previous month of January when it headlined at 6.9 per cent.
Another key note decline is the price of fuel.
The Energy and Petroleum Regulatory Authority in the latest April review reduced them by up to Sh18.
Epra said a litre of Super petrol has decreased by Sh5.31, diesel by Sh10 per litre while Kerosene has gone down by Sh18.68 per litre.
It is believed and often reiterated by economic experts that the effects of a reduction in fuel prices trickle down to all other segments of the economy.
However, despite the above notable improving conditions, WEF reiterates that people would still perceive the economy as not going in the right direction based on various reasons.
“Two channels contribute to these trends. Firstly, some people suffer objective economic hardship, even when the overall economic conditions improve,” WEF says.
“Secondly, some people are working through perceptions of being under threat or feeling left behind, even when objective indicators of wellbeing are unchanged or even improving.”
The international lobby explains that the second channel results in shifts in beliefs and attitudes that matter because people’s behaviour, including political behaviour, is shaped in part by these beliefs.
“When they are associated with perceptions of insecurity, these beliefs are strongly linked to people having a lower sense of control over their lives and trusting others less,” it adds.
Nevertheless, it says that negative perceptions about the economy can become entrenched when they signal belonging to a group that shares a broader package of beliefs.
This may include things like hostility to action on climate change or vaccinations during the Covid-19 pandemic.
WEF says facts alone may not be sufficient to dislodge these negative beliefs, and acting consistently with these beliefs may go against what would be expected to be in peoples’ interest, as the rejection of vaccination during a pandemic would suggest.
Worth noting, is that the growing reality and perception clash is not about differences in opinion on what is best for society or on policy preferences, which are healthy characteristics of any society, but differences that extend to a whole range of behaviours and choices, not only on who to support politically but also where to live, who to choose as friends and even partners.
Wef says this kind of polarization has increased since 2011 in two-thirds of the world’s countries.
The perception and reality clash according to the firm, can be damaging because it harms collective action within and across countries, making it more challenging to address shared challenges.
To avert this growing concern, WEF suggests that countries must have a broader understanding of people’s motivations for the choices they make, rather than assuming that they will always, and only, pursue their interests.
“Policymakers, including economic policymakers, would need to consider not only the objective merits of policies, but recognize also that how policies are framed, communicated and perceived matter too,” WEF says.
Secondly, the lobby says it must be appreciated that the misperceptions between economic facts and economic sentiments extend to many other areas as well for a comprehensive and informed counter measures.