Why Are Voters So Upset? Consider the Snickers Bar.

The United States has just experienced one of the biggest collapses in consumer inflation in modern history. In June 2022 consumer prices had risen 9.1 percent over the previous year. By December 2023 the rate of increase had slowed to 3.4 percent. And yet, in survey after survey, voters still declare inflation to be at or near the top of their list of concerns.

Why aren’t voters recognizing the decline in the inflation rate? Because voters are humans, and humans don’t think about inflation rationally. To understand why, let’s look at a Snickers bar.

More than 12 Snickers bars are sold every second in the United States. That makes Snickers bars a very important part of consumer purchases, and so the price of a Snickers bar should be included in the inflation calculation. Yet Snickers bars do not consume a big portion of most families’ annual budget (at least they usually don’t).

Most of us will spend far more of our budget on something like a television. With $1,500 a consumer could buy a high-end 55-inch television, or almost four Snickers bars a day for a year. Because items in the consumer price basket are weighted, roughly, by how much money consumers spend on that item in a year, television prices are more important than Snickers bars in the calculation of inflation.

However, we probably buy a Snickers bar much more frequently, perhaps even daily. So we’re much more likely to remember the price of the Snickers bar and forget the price of the television we bought last year. Consumers tend to think only about the prices of high-frequency purchases — food for the family and fuel for the S.U.V.

The different inflation rates for infrequent and frequent purchases is a big part of why consumers mistakenly believe inflation is higher than it actually is. The prices of more expensive goods like furniture and consumer electronics are actually falling — and have been falling for over a year. Once the post-pandemic surge in demand for electronics, furniture and similar items faded, manufacturers were unable to maintain higher prices, pulling the reported inflation numbers lower.