*Note: The item was tested in German. This is an English translation of the original German wording.*
Both experimental conditions from question 2 are taken into account in this question. The two groups were compared in the evaluation in order to find differences in their answer behaviors.
The objective of this question is unclear, that is, it is unclear what respondents are supposed to do. Are they supposed to provide their estimate of the prices and the repayment rate in 12 months? Are they supposed to provide the optimal ratio of price and repayment rate? Or something else? Given that the question objective is unclear, we are not able to provide a concrete suggestion for improvement but only some general recommendations.
We recommend to rephrase the explanation of the relationship between interest and inflation rate to break down the complexity of the topic as much as possible for the participants.
Especially the misconception that the loan will be repaid faster if you pick a higher repayment rate or that it takes longer if you pick a rate of less than 500 Euros should be corrected. This could eventually be accomplished by including the statement that the repayment time is the same in all answer categories. Alternatively or in addition, a statement on the duration of the loan repayment could be included.
Additionally, the way how the repayment rates are calculated should be explained, i.e. which interest rates are at the base of these calculations.
Finally, the recommendation for question 1 should also be adopted here, that is, the amount of 1.500 Euros/1.700 Euros should be reduced.
Three answer categories are selected particularly often: 15% of the participants prefer a relatively high loan repayment over high living expenses, 22% prefer the other extreme. The third frequently selected category is the one that matches the 2% inflation rate that was expected by the ECB in experimental condition 2. This means that some respondents may probably not state their personal preference but select the scenario they think is most likely to occur.
The category selection probe for this question (“Could you please explain your answer in a little more detail? Why did you choose this value?”) revealed the following question problems:
Only around 21% of the answers indicate that the participants really understood the question. 18% of them argue correctly that the last answer category “1650 EUR or more / 326 EUR or less” is the cheapest for them overall (e.g. “If prices and wages rise the loan repayment gets easier because the loan is less valuable”, ID 140). Another 3% of the respondents argue it is more important to them that living expenses remain low because this affects more people in total (e.g. “Because the prices decrease, they apply for everyone. The interest only affects people who actually have to repay loans”, ID 171).
The results from the specific probe (“How easy was it for you to answer question 7?”) also point towards problems on the part of the participants. Almost 70% state, it was “very difficult” or “rather difficult” to answer the question. The reasons for this difficulty are:
The last probing question regarding the comprehensibility of the explanations about the relationship between interest and inflation rate was answered with “little comprehensible” or “not comprehensible at all” by 25% of the respondents.