When we analyze the performance of the economy and its impact on society and people’s lives, wherever we work, we work a lot with data and indicators: inflation, GDP, credit, exchange rates, reserves, growth, wages, and many others. But our most important assessments are not made exclusively from statistical tables containing data on the past, but are oriented towards the future and depend, among other things, on the daily behavior of millions of households and firms: how much they spend, how much they save, what wages they negotiate, what prices they display. And this behavior is driven, to a large extent, by perceptions and expectations.

Perhaps surprisingly, this idea is not new. In 1759, seventeen years before The Wealth of Nations, Adam Smith published The Theory of Moral Sentiments. For him, as for us today, economics could not be reduced to mechanical cause-and-effect relationships, because trust, perception, moral choices, and the way we relate to each other and to the events we experience contribute to the social fabric and, implicitly, to the functioning of markets.

Almost two centuries later, John Maynard Keynes called “animal spirits” that component of decision-making that cannot be reduced to a cold calculation of probabilities. In conditions of uncertainty, as we still have today from multiple perspectives, probabilities are unknown and no one can build an architecture of scenarios that completely describes possible future outcomes. In such situations, economic sentiment is both cause and signal:

· cause, because it directly influences consumption, saving, and investment decisions;

· signal, because, measured rigorously, it offers explanations that statistical data only confirm later, but also benchmarks for what follows.

Modern behavioral economics has taken this idea further and added experimental rigor to it. Daniel Kahneman and Richard Thaler have shown that economic agents or the decision makers behind them are not a form of perfectly rational homo oeconomicus as, for the sake of simplicity, they are presented in many textbooks. Their decisions are influenced by inertia, loss aversion, the limits of self-control, mental accounting, and the way in which options are presented to them. In other words, it is not just what we choose that matters, but also the context in which we choose – what Thaler called the architecture of choice. Two people with similar incomes can make radically different decisions because they perceive risk, safety, and the future differently. And these perceptions are precisely what today’s Index aims to measure.

Robert Shiller added another essential dimension: the power of narratives. People react not only to data, but also to the stories through which they interpret the data. Narratives about

inflation, prosperity, crisis, jobs, technology, or decline spread through society and can change economic behavior. Sometimes the same figure is viewed with optimism or fear, depending on the collective story in which it is placed.

Modern sentiment indicators try to transform such elements into measurable information, and we need this because they are part of the mechanism of the economy.

There is a solid international experience in this area. The European Commission publishes the Economic Sentiment Indicator, which brings together information on confidence in industry, services, trade, construction, and among consumers. The OECD tracks the Consumer Confidence Index, based on households’ expectations regarding their financial situation, the general economy, unemployment, and saving. In the United States, the Conference Board and the University of Michigan have been measuring consumer confidence and sentiment for decades. Managers and investors also track indicators such as the Purchasing Managers’ Index, which quickly captures changes in orders, production, and employment.

Quantitative data show what was produced, how much was invested, and how prices evolved. There are many situations in which sentiment indicators deviate from the picture drawn by official data referring to the past. They highlight additional information about the effects that the dynamics of the economy have on people’s lives.

It is also worth mentioning what a sentiment indicator cannot do. It is, by its nature, a much more volatile measure compared to other economic variables: it reacts to the news of the week, to the tone of the public debate, sometimes to the orientations and sympathies of the respondent more than to his economic situation. International literature shows that confidence indicators often anticipate the inflection points of the dynamics of the economy, but also generate numerous false signals. Therefore, in order to increase the quality of the conclusions, it is important to analyze the trends of sentiment indicators in conjunction with the dynamics of the variables that measure the real economy.

At the same time, sentiment indicators are useful because they measure something that is otherwise very difficult to distinguish from classical statistics: the level of trust between different categories of participants in the economy or on the markets. And trust has a precise economic property: it reduces coordination costs. When people trust institutions, rules, and the stability of the financial system, the decision horizon is extended. Contracts are concluded for longer periods, investments become larger, and savings can be more easily transformed into productive capital. On the contrary, when trust erodes, the preference for liquidity increases, investments are postponed, and the risk premium increases. Trust is therefore an invisible infrastructure of the economy and society. And, like any infrastructure, it is built slowly and can deteriorate quickly.

Here we can make a connection with the roadmap for Romania’s economic future. A credible national strategy must take into account both what we can measure (productivity, investment, infrastructure, education, energy, public finances) and what we can only

perceive: trust, expectations, willingness to invest, and people’s conviction that today’s effort will produce prosperity tomorrow.

For this X-ray to become truly useful, three things are important:

· The first is continuity. A single measurement is a snapshot; repeated measurements make a movie. What matters is the direction, magnitude, and persistence of change.

· The second is comparability: a stable methodology allows us to distinguish a real change from a statistical effect.

· And last but not least, disaggregation: the national average can hide important differences between generations, regions, income groups, or occupational status.

We can measure financial capital, we can build physical capital, we can form human capital. But there is also a fourth capital, which does not appear in national accounts: trust capital. Its level determines the success with which a society can mobilize resources, accept difficult reforms, and transform opportunities into common achievements.

Households and companies do not decide based on statistical tables, but based on what they know, understand, perceive, and anticipate. Consumption, saving, and investment are therefore also formed in this area of perceptions. That is why the gap between statistics and perceptions should not be ignored, but understood. And to understand it, perceptions must first be measured. Because sometimes, before the economy changes direction in statistics, the direction has already changed in people’s minds. And this will certainly be seen and felt after a while.