Perception and reality in Iraq: An econometric analysis of the gap between citizens’ economic sentiment and official indicators

This study looks at the ongoing disconnect between Iraq’s official economic statistics and how people actually feel about their economic situation in the years following the 2003 U.S. invasion. While national figures often show improvements in broad indicators like GDP and oil revenues, those numbers don’t always match what ordinary Iraqis experience in their daily lives especially when it comes to unemployment, rising prices, public services, and how well institutions function. Because of this gap, the research focuses on how closely people’s own assessments of economic change line up with or differ from recognized economic trends. The study examines perceptions in five main areas: job opportunities, inflation, availability of basic services, infrastructure development, and the overall direction of the economy. It also looks at how demographic and institutional factors such as age, gender, education level, region, trust in government, and exposure to violence shape how people interpret economic conditions. To investigate these questions, the study relies on a structured questionnaire using a 10-point Likert scale, administered to a geographically diverse sample between March and May 2025. The subjective responses are then paired with regional macroeconomic data from both national and international sources. An econometric approach, based on multiple linear regression, estimates how objective indicators and social variables influence perception scores. In addition, the research develops a Perception Gap Index (PGI), calculated from standardized residuals, to capture the mismatch between perceived and actual economic conditions. Taken together, this approach offers a detailed look at how material realities and social context interact to shape public sentiment about the economy in post-conflict Iraq.