A new metric of consensus for Likert scales

In this study we present a metric of consensus for Likert-type scales. The measure gives the level of agreement as the percentage of consensus among respondents. The proposed framework allows to design a positional indicator that gives the degree of agreement for each item and for any given number of reply options. In order to assess the performance of the proposed metric of consensus, in an iterated one-period ahead forecasting experiment we test whether the inclusion of the degree of agreement in consumers’ expectations regarding the evolution of unemployment improves out-of-sample forecast accuracy in eight European countries. We find evidence that the degree of agreement among consumers contains useful information to predict unemployment rates in most countries. The obtained results show the usefulness of consensus-based metrics to track the evolution of economic variables.