Subjective Expectations Research Articles

Term Structure of Equity and Bond Yields over Business Cycles

Recent findings on the term structure of equity and bond yields pose serious challenges to existing equilibrium asset pricing models. This paper presents a new equilibrium model of subjective expectations to explain the joint historical dynamics of equity and bond yields (and their yield spreads). Equity/bond yields movements are mainly driven by subjective dividend/GDP growth expectations. Yields on short-term dividend claims are more volatile because short-term dividend growth expectation mean-reverts to its less volatile long-run counterpart. Procyclical slope of equity yields is due to the counter-cyclical slope of dividend growth expectations. The correlation between equity returns/yields and nominal bond returns/yields switched from positive to negative after the late 1990s, mainly owing to a stronger correlation between real GDP growth and real dividend growth expectations, and only partially due to procyclical inflation. Dividend strip returns are predictable and the strength of predictability decreases with maturity due to predictable dividend forecast errors and revisions. The model is also consistent with the data in generating persistent and volatile price-dividend ratios, and excess return volatility.

Stability of Leadership as a Determinant in the Development of Budgetary Units in Poland

This study investigates the concept of the stability of the state and the public finance sector (PFS) based on a review of current literature in the field. An attempt has been made to define the principles of public management and present the structures of public finance sector units (PFSU) in Poland. The study focuses on the public finance sector, units included in this sector, mechanisms influencing the functioning of public service organisations and their management. Part of the research is a case study analysis of a sample PFSU, which is a central administration body. The purpose of the study was to identify the measures used to assess the stability of a public finance sector unit and to interpret those measures in relation to the studied areas of the PFS in Poland. The paper explores the principles of managing the organisation of the public finance sector, the notion of public management and its genesis. The selected PFSU case was used to indicate the relationship between the functioning of a public finance sector unit and the stability of leadership in that unit. The study is descriptive and uses inference methods. The research material included the literature on public finance and management as well as internal materials of the studied public finance sector unit. The main objective of the study was to show how the destabilisation of leadership can affect the functioning of the state office. As a result of the analysis, measures most accurately describing the phenomenon of leadership stability have been constructed. They include: measures based on quantitative assessment, measures based on institutional behaviour assessment and measures based on the subjective opinions, behaviours and expectations of employees, stakeholders and associates of the PFSU. The existence of a relationship between the stability of leadership and the functioning of a public finance sector unit was confirmed. Changes were recorded in the functioning of the office during frequent personnel changes in senior civil service positions. (original abstract)

Drummond : événement et apparition d'un nouveau sujet – entretien avec Alain Badiou

Drummond: acontecimento e surgimento de um novo sujeito – entrevista com Alain Badiou
 Em entrevista, o filósofo francês Alain Badiou (1937 - ) comenta alguns poemas de Carlos Drummond de Andrade (1902-1987), à luz de sua teoria do acontecimento (événement) e da produção de subjetividade. Debate-se o papel conceitual do poema tanto no período chamado de "era dos poetas" quanto seu funcionamento enquanto necessária e incerta nomeação da ruptura, uma vez o sistema de expectativas tendo sido suspenso.

Perceived Consumption of a High-Dose Caffeine Drink Delays Neuromuscular Fatigue.

Elhaj, HM, Imam, O, Page, BW, Vitale, JM, and Malek, MH. Perceived consumption of a high-dose caffeine drink delays neuromuscular fatigue. J Strength Cond Res 36(5): 1185-1190, 2022-The placebo effect is a concept in which a desired outcome arises, mainly from the belief that the treatment (i.e., supplement or drug) was beneficial although no active ingredient was given. The results of studies related to the placebo effect primarily examine functional performance. What remains unanswered, however, is whether these changes in performance are associated with neuromuscular alterations in the exercised muscles. The purpose of the study, therefore, was to determine the influence of the placebo effect on the physical working capacity fatigue threshold (PWCFT) for a continuous exercise paradigm. To achieve this aim, subjects were told that they were participating in a study to determine the dosage response (low or high) of caffeine on neuromuscular fatigue when in fact no caffeine was given during the experiment. We hypothesized that the perceived consumption of the high-dose caffeine drink would result in a higher PWCFT than the perceived consumption of the low-dose caffeine drink and placebo. Secondarily, we hypothesized that the perceived consumption of the high-dose caffeine drink would result in a higher power output than the perceived consumption of the placebo. Nine healthy college-aged men (mean ± SEM: age, 25.7 ± 1.3 years; body mass, 84.4 ± 3.1 kg; and height: 1.82 ± 0.02 m) volunteered to be in the study. For each of the visits, subjects were given an 8 oz. bottle of water with dissolved crystal light. After the drink was consumed, subjects rested in the laboratory for 1 hour before performing the incremental single-leg knee-extensor ergometry. Immediately after the termination of the incremental single-leg knee-extensor ergometry, the subject was asked which caffeine dose (placebo, low, or high) they believed they consumed for that visit. There were no significant mean differences for maximal power output for the 3 perceived conditions (placebo: 62 ± 3, low-dose caffeine: 62 ± 4, and high-dose caffeine: 65 ± 3 W). When the subjects perceived consuming the high-dose caffeine drink, there were significant mean differences (all p-values < 0.01), for PWCFT, between the other conditions (mean ± SEM: placebo: 23 ± 3 W, low-dose caffeine: 26 ± 2 W, and high-dose caffeine: 42 ± 3 W). This corresponded to a significant mean difference (all p-values < 0.01) when the PWCFT was presented as a percentage of the maximal power output (mean ± SEM: placebo: 37 ± 5%, low-dose caffeine: 42 ± 3%, and high-dose caffeine: 64 ± 3%). The application of our results may indicate that the subject's expectancy, to caffeine consumption, plays a critical role in delaying the onset of neuromuscular fatigue despite not receiving any caffeine in their drinks.

Racial Differences in the Impact of Subjective Life Expectancy on Advance Care Planning

The need for advance care planning (ACP) is heightened during the COVID-19 pandemic, especially for older Blacks and Latinx persons who are at a disproportionate risk of death from both infectious and chronic disease. A potentially important yet underexplored explanation for well-documented racial disparities in ACP is subjective life expectancy (SLE), which may impel or impede ACP. Using Health and Retirement Study data (n=7484), we examined the extent to which perceived chances of living another 10 years (100, 51-99, 50, 1-49, or 0 percent) predict three aspects of ACP (living will (LW), durable power of attorney for health care designations (DPAHC), and discussions). We use logistic regression models to predict the odds of each ACP behavior, adjusted for sociodemographic, health, and depressive symptoms. We found modest evidence that SLE predicts ACP behaviors. Persons who are 100% certain they will be alive in ten years are less likely (OR = .68 and .71, respectively) whereas those with pessimistic survival prospects are more likely (OR = 1.23 and 1.15, respectively) to have a LW and a DPAHC, relative to those with modest perceived survival. However, upon closer inspection, these patterns hold only for those whose LW specify aggressive measures versus no LW. We found no race differences for formal aspects of planning (LW, DPAHC) although we did detect differences for informal discussions. Blacks with pessimistic survival expectations are more likely to have discussions, whereas Latinos are less likely relative to whites. We discuss implications for policies and practices to increase ACP rates.

Attitudes Toward Aging, Physical Activity, and Functional Limitations Ten Years Later in Middle and Older Adults

Positive attitudes toward aging have been associated with better functional health (Bryant et al., 2012; Levy, Slade, & Kasl, 2002; Sargent-Cox, Anstey, & Luszcz, 2012). The current study examined the mediational role of regular leisure-time physical activity (LTPA) in this association among middle-aged and older adults. Participants were 2,209 adults ranging in age from 40 to 75 at baseline (M = 56.19; 51.2% women) from the second and the third waves of the Survey of Midlife Development in the United States (MIDUS). The mediation model was tested in Mplus 7.4. The model tested the direct association and indirect association through LTPA of attitudes toward aging in MIDUS 2 with functional limitations in MIDUS 3 ten years later. Attitudes toward aging were measured as a latent variable with two indicators (subjective age and future health expectancies). Age, sex, race/ethnicity, education, marital status, and number of chronic conditions were included as covariates. Individuals with more positive attitudes toward aging reported less functional limitations ten years later (β = -.43, p < .001). Further, more positive attitudes toward aging related to higher levels of LTPA (β = .20, p < .001), which in turn predicted less functional limitations ten years later (β = -.10, p < .01). The indirect effect of attitudes toward aging on functional limitations through LTPA was statistically significant (indirect effect = -.02, p < .01). Positive attitudes toward aging operating through higher levels of LTPA may play an important role in functional health among middle-aged and older individuals.

Subjective expectations, experiences, and stock market participation: Evidence from the lab

Abstract Recent evidence suggests that stock market experiences, i.e. realized returns, impact subjective expected returns. I bring a model into the laboratory and find that experience-based subjective expected returns can help explain limited stock market participation. In the experiment, the probability of subjects participating in the stock market is increasing in both their subjective expected returns and past realized returns. I find that “learning from experience” generates heterogeneity in subjective expected returns, where subjects who “experience” low returns have lower subjective expected returns than subjects who only observe low returns. This experience effect is asymmetric, where subjects who experience high returns have no statistically significant difference in their subjective expected returns than subjects who only observe high returns. Finally, after a series of low returns, a fraction of subjects leave the stock market indefinitely.

Pathways for reduction of HIV-related stigma: a model derived from longitudinal qualitative research in Kenya and Uganda.

IntroductionThe rollout of antiretroviral therapy (ART) has been associated with reductions in HIV‐related stigma, but pathways through which this reduction occurs are poorly understood. In the newer context of universal test and treat (UTT) interventions, where rapid diffusion of ART uptake takes place, there is an opportunity to understand the processes through which HIV‐related stigma can decline, and how UTT strategies may precipitate more rapid and widespread changes in stigma. This qualitative study sought to evaluate how a UTT intervention influenced changes in beliefs, attitudes and behaviours related to HIV.MethodsLongitudinal qualitative in‐depth semi‐structured interview data were collected within a community‐cluster randomized UTT trial, the Sustainable East Africa Research in Community Health (SEARCH) study, annually over three rounds (2014 to 2016) from two cohorts of adults (n = 32 community leaders, and n = 112 community members) in eight rural communities in Uganda and Kenya. Data were inductively analysed to develop new theory for understanding the pathways of stigma decline.ResultsWe present an emergent theoretical model of pathways through which HIV‐related stigma may decline: internalized stigma may be reduced by two processes accelerated through the uptake and successful usage of ART: first, a reduced fear of dying and increased optimism for prolonged and healthy years of life; second, a restoration of perceived social value and fulfilment of subjective role expectations via restored physical strength and productivity. Anticipated stigma may be reduced in response to widespread engagement in HIV testing, leading to an increasing number of HIV status disclosures in a community, “normalizing” disclosure and reducing fears. Improvements in the perceived quality of HIV care lead to people living with HIV (PLHIV) seeking care in nearby facilities, seeing other known community members living with HIV, reducing isolation and facilitating opportunities for social support and “solidarity.” Finally, enacted stigma may be reduced in response to the community viewing the healthy bodies of PLHIV successfully engaged in treatment, which lessens the fears that trigger enacted stigma; it becomes no longer socially normative to stigmatize PLHIV. This process may be reinforced through public health messaging and anti‐discrimination laws.ConclusionsDeclines in HIV‐related stigma appear to underway and explained by social processes accelerated by UTT efforts. Widespread implementation of UTT shows promise for reducing multiple dimensions of stigma, which is critical for improving health outcomes among PLHIV.

The Moderating Role of Views of Aging in the Longitudinal Relationship Between Physical Health and Mental Distress.

Some degree of mental distress is commonly present in old age, and it is often exacerbated in later life following changes in physical health. This work presents in 2 studies among samples that have been exposed to stressful experiences in the past, a prospective examination of how the association between physical health and mental distress is attenuated by 2 forms of views on aging, evaluations of age, and evaluations of one's future. Study 1 (N = 226) was conducted in 2008 (Time 1) and 2014 (Time 2), among Israeli war veterans (mean age 64.90, SD = 5.04); Study 2 (N = 132) was conducted in 2014 (Time 1) and 2015 (Time 2) among older adults who were exposed to ongoing rocket fire in the south of Israel (mean age 66.44, SD = 9.77). Participants reported on their subjective age, subjective life expectancy (SLE [in Study 1]/distance to death [DtD; in Study 2]), health, and mental distress. Both studies showed that after controlling for exposure to trauma and for Time 1 mental distress, Time 1 subjective age, but not SLE/DtD, moderated the association between Time 1 physical health and Time 2 mental distress. Subjective age and SLE represent distinct features of views of aging. Subjective age may reflect perceptions of one's aging process, associated more directly with health-related outcomes over time. SLE reflects future, death-related perceptions, therefore perhaps less directly associated with such outcomes.

Weather Fluctuations, Expectation Formation, and Short-Run Behavioral Responses to Climate Change

One premise adopted in most previous studies is that weather fluctuations affect economic outcomes contemporaneously. Yet under certain circumstances, the impact of weather fluctuations in the current year can be carried over into the future. Using agricultural production as an example, we empirically investigate how past weather fluctuations affect economic decision-making by shifting agents’ subjective expectations over future climate. We find that agricultural producers do not form expectations on future climate using only long-run normals, and instead engage in a combination of heuristics, including the availability heuristic and the reinforcement strategy. Adopting these learning mechanisms causes farmers to significantly over-react to more recent fluctuations in weather and water availability when making ex ante acreage and crop allocation decisions.

Academic and non-academic investments at university: The role of expectations, preferences and constraints

This paper estimates a discrete choice model of time allocation decisions made by university students. We consider investments in academic and non-academic activities, such as job placements or volunteering. Identification is achieved using data collected through a recent survey of UK university students on subjective expectations about the returns to these activities, and the enjoyment students derive from them. Unobserved heterogeneity in the choice set is addressed using a sufficient set logit method. The analysis reveals significant ethnic differences in the level of investments, expected academic and labour market returns, and enjoyment of academic and non-academic activities. Simulations suggest that existing constraints play an important role in explaining ethnic gaps in investments.

Learning and Subjective Expectation Formation: A Recurrent Neural Network Approach

I propose a flexible non-parametric method using Recurrent Neural Networks (RNN) to estimate a generalized model of expectation formation. This approach does not rely on restrictive assumptions of functional forms and parametric methods yet nests the standard approaches of empirical studies on expectation formation. Applying this approach to data on macroeconomic expectations from the Michigan Survey of Consumers (MSC) and a rich set of signals available to U.S. households, I document three novel findings: (1) agents' expectations about the future economic condition have asymmetric and non-linear responses to signals; (2) agents' attentions shift from signals about the current state to signals about the future: they behave as adaptive learners in ordinary periods and become forward-looking as the state of economy gets worse; (3) the content of signals on economic conditions, rather than the amount of news coverage on these signals, plays the most important role in creating the attention-shift. Double Machine Learning approach is then used to obtain statistical inferences of these empirical findings. Finally, I show these stylized facts can be generated by a model with rational inattention, in which information endogenously becomes more valuable when economic status worsens.

Subjective expectations regarding longevity and future health: a cross-sectional survey among patients with Crohn's disease.

The aim was to explore the subjective health expectations (sHE) of patients with Crohn's disease (CD) for both the near future and the elderly. A cross-sectional survey was performed in four gastroenterology centres in Hungary. Consecutive outpatients with CD with age ≥18 were recruited. Socio-demographic and disease characteristics were recorded and the Crohn's Disease Activity Index (CDAI), Perianal Disease Activity Index, Patients' Global Assessment (PGA) and current pain visual analogue scale (VAS) were assessed. Subjective life expectancy (sLE) was explored and compared to statistical life expectancy. Current health and sHE for 1year ahead and for ages 60/70/80/90 were assessed using the descriptive system of the EQ-5D-3L. In all, 206 patients (54.9% men) with a mean age of 34.7 (SD 10.5years) and disease duration of 10.5 (SD 6.3) years were studied. The CDAI score was 110.5 (SD 77.0) and 66% were treated by biologic drugs. Mean current EQ-5D-3L score was 0.80 (SD 0.17) and patients expected a 0.05 (SD 0.15) improvement within a year (P<0.05). For ages 60/70/80/90, a mean EQ-5D-3L score of 0.59, 0.38, 0.10 and -0.12 respectively was provisioned. Age, current health status, sLE, PGA and pain VAS showed significant correlation with both 1-year and older age sHE (P<0.05). Long-term sHE and sLE were negatively affected by the presence of extraintestinal manifestations but not by previous CD-related surgery. Patients with CD expect severe deterioration in health in later life. Given that unrealistic sHE may affect patients' current quality of life and health behaviour, we encourage physicians to explore and consider CD patients' sHE in clinical care.

Cohort profile: the mature adults cohort of the Malawi longitudinal study of families and health (MLSFH-MAC)

PurposeThe Mature Adults Cohort of the Malawi Longitudinal Study of Families and Health (MLSFH-MAC) contributes to global ageing studies by providing a rare opportunity to study the processes of individual...

Perceived uncertainty shocks, excess optimism-pessimism, and learning in the business cycle

What are the effects of beliefs, sentiment, and uncertainty, over the business cycle? To answer this question, we develop a behavioral New Keynesian macroeconomic model, in which we relax the assumption of rational expectations. Agents are, instead, boundedly rational: they have a finite-planning horizon, and they learn about the economy over time. Moreover, we allow agents to have a potentially asymmetric loss function in forecasting, which creates a direct channel for expected variances to affect the economy. In forming expectations, agents may be subject to shifts in optimism and pessimism (sentiment) and their beliefs may be influenced by their perceptions about future uncertainty. We estimate the behavioral model using Bayesian methods and exploit a large number of subjective expectation series (both point and density forecasts) at different horizons from the Survey of Professional Forecasters. We find that sentiment shocks are the key source of business cycle fluctuations. Shifts in perceived uncertainty can also affect real activity and inflation through a confidence channel, as they play an important role in belief formation. Overall, the results shed light on the importance of behavioral forces over the business cycles, and on the contribution and interaction of first-moment - sentiment - shocks versus second-moment - perceived uncertainty - shocks.

Involvement of Striatal Direct Pathway in Visual Spatial Attention in Mice

The basal ganglia are implicated in a range of perceptual functions [1], in addition to their well-known role in the regulation of movement [2]. One unifying explanation for these diverse roles is that the basal ganglia control the level of commitment to particular motor or cognitive outcomes based on the behavioral context [3, 4]. If this explanation is applicable to the allocation of visual spatial attention, then the involvement of basal ganglia circuits should incorporate the subject's expectations about the spatial location of upcoming events as well as the routing of visual signals that guide the response. From the viewpoint of signal detection theory, these changes in the level of commitment might correspond to shifts in the subject's decision criterion, one of two distinct components recently ascribed to visual selective attention [5]. We tested this idea using unilateral optogenetic activation of neurons in the dorsal striatum of mice during a visual spatial attention task [6], taking advantage of the ability to specifically target medium spiny neurons in the "direct" pathway associated with promoting responses [7, 8]. By comparing results across attention task conditions, we found that direct-pathway activation caused changes in performance determined by the spatial probability and location of the visual event. Moreover, across conditions with identical visual stimulation, activation shifted the decision criterion selectively when attention was directed to the contralateral visual field. These results demonstrate that activity through the basal ganglia may play an important and distinct role among the multifarious mechanisms that accomplish visual spatial attention.

Maternal subjective expectations about the technology of skill formation predict investments in children one year later

A growing literature reports significant socio-economic gaps in investments in the human capital of young children. Because the returns to these investments may be huge, parenting programs attempt to improve children’s environments by increasing parental expectations about the importance of investments for their children’s human capital formation. We contribute to this literature by investigating the relevance of maternal subjective expectations (MSE) about the technology of skill formation in predicting investments in the human capital of children. We develop and implement a framework to elicit and analyze MSE data. We launch a longitudinal study with 822 participants, all of whom were women in the second trimester of their first pregnancy at the date of enrollment. In the first wave of the study, during pregnancy, we elicited the woman’s MSE. In the second wave, approximately one year later, we measured maternal investments using the Home Observation for the Measurement of the Environment (HOME) Inventory. The vast majority of study participants believe that the Cobb–Douglas technology of skill formation describes the process of child development accurately. We observed substantial heterogeneity in MSE about the impact of human capital at birth and investments in child development at age two. Family income explains part of this heterogeneity in MSE. The higher the family income, the higher the MSE about the impact of investment in child development. We find that a one-standard-deviation of MSE measured at pregnancy is associated with 11% of a standard deviation in investments measured when the child is approximately nine months old.

Placebo Response Reduction and Accurate Pain Reporting Training Reduces Placebo Responses in a Clinical Trial on Chronic Low Back Pain: Results From a Comparison to the Literature.

A literature review was conducted to compare placebo responses in a recent trial-which implemented an accurate pain reporting (APR) and placebo response reduction (PRR) training program-with placebo responses in similar previous trials in chronic lower back pain (CLBP) that did not use such training. A literature search was performed to find parallel design, randomized, controlled trials of pharmacological treatments administered orally or through intravenous injection for CLBP. Studies were assessed for the proportion of placebo responders, defined as the proportion of patients in the placebo group with ≥30% reduction in pain intensity. A χ analysis was performed on the proportion of responders from the SPRINT trial and from other similar studies. Of 844 studies identified in the initial screening process, 16 studies were included for comparison. The percentage of placebo responders was statistically significantly lower in the SPRINT study (19.1%) compared with other CLBP trials (38.0%) (P=0.003). Our results show that the placebo response was lower in the SPRINT trial than other comparable studies on CLBP. These findings are consistent with results from other studies showing that neutralizing subject and study staff expectations of therapeutic benefit can decrease the placebo response in clinical trials. The results of this study suggest training participants and staff to improve pain reporting accuracy, neutralize expectations, and decrease external cues that may bias participants' pain ratings in clinical trials may effectively decrease the placebo response leading to increased assay sensitivity.

Dynamic decisions under subjective expectations: A structural analysis

We study dynamic discrete choice models without assuming rational expectations. Agents’ beliefs about state transitions are subjective, unknown, and may differ from their objective counterparts. We show that agents’ preferences and subjective beliefs are identified in both finite and infinite horizon models. We estimate the model primitives via maximum likelihood estimation and demonstrate the good performance of the estimator by Monte Carlo experiments. Using the Panel Study of Income Dynamics (PSID) data, we illustrate our method in an analysis of women’s labor participation. We find that workers do not hold rational expectations about income transitions.

Private Information and Misinformation in Subjective Life Expectancy

Good retirement planning requires accurate estimation of the time horizon, that is, the lifespan. People may overestimate or underestimate their lifespan and, as a result, under- or over-save for their retirement. Determining to what extent a person overestimates or underestimates their lifespan requires the separation of private information (e.g. family longevity history) and misinformation (e.g. misperception of one’s related cohort life expectancy). This paper proposes a method to identify and separate the effects of private information and misinformation on one’s subjective life expectancy. The method requires the person to provide their subjective life expectancy estimations for not only themselves but also for their peers. We apply the method to a sample of about 700 Chinese adults aged 40 and above. We find that misinformation leads the respondents to overestimate their remaining lifespan by 18% on average. We also find that private information leads the respondents in our sample to believe that their remaining lifespan will be 12% longer on average than their peers of the same age and gender. However, the dispersion of the individual estimates is large, meaning that some people may significantly overestimate their lifespan while others significantly underestimate. Also, as age increases, the relative importance of private information in the subjective life expectancy increases as compared to misinformation.