Survey Of Economic Expectations Research Articles

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Multimodality and mixture distributions: an application to a Survey of Economic Expectations

In this article we present the Silverman multimodality test and mixture distributions methodology, applying both approaches to the Survey of Economic Expectations of the Central Bank of Chile. The main results reflect the importance of a permanent monitoring of the complete distributions and not just central tendency meausures as is the practice in many central banks currently. We find that the forecasts of the private professional forecasters have systematically been in line with the inflation targeting range, although during episodes where the effective inflation proved to be outside the target range.

Can households form consistent/convergent and unbiased expectation of interest rate?

Expectation reliability remains a question. In this article, we test whether the households could form unbiased expectation of interest rate. From the Survey of Consumer Finance (SCF), we find that the majority of households hold higher interest rate expectation, and by simple t-test, the interest rate movement in 5 years does not support such expectation. Additional evidence from the Survey of Economic Expectations (SEE) confirms that it is hard to accept that the households could form unbiased expectation of interest rate.

When Kahneman meets Manski: Using dual systems of reasoning to interpret subjective expectations of equity returns

AbstractTo understand how decisions to invest in stocks are taken, economists need to elicit expectations regarding risk–return tradeoff. One of the few surveys which has elicited such expectations is the Survey of Economic Expectations in 1999–2001. Using the data from this survey, Dominitz and Manski find considerable heterogeneity across respondents that cannot be explained by simple models of expectations formation. Adapting a principle of dual reasoning borrowed from Kahneman, this paper classifies respondents according to their sensitivity to some pathologies. We find a substantial amount of unobserved heterogeneity between the least and the most sensitive respondents. We then sketch a model of expectations formation. Copyright © 2010 John Wiley & Sons, Ltd.

Measuring and interpreting expectations of equity returns

AbstractWe analyze probabilistic expectations of equity returns elicited in the Survey of Economic Expectations in 1999–2001 and in the Michigan Survey of Consumers in 2002–2004. Our empirical findings suggest that individuals use interpersonally variable but intrapersonally stable processes to form their expectations. We therefore propose to think of the population as a mixture of expectations types, each forming expectations in a stable but different way. We use our expectations data to learn about the prevalence of several specific types suggested by research in finance. Copyright © 2010 John Wiley & Sons, Ltd.

Worker Perceptions of Job Insecurity in the Mid-1990s: Evidence from the Survey of Economic Expectations

This paper analyzes the probabilistic measures of job insecurity that have recently become available through the nationwide Survey of Economic Expectations (SEE). Since 1994, employed SEE respondents have been asked questions eliciting their subjective probabilities of job loss in the coming year and their expectations of a good outcome should they lose their current job and have to engage in job search. The responses of 3600 persons interviewed from 1994 through early 1998 are analyzed here. It is found that workers vary considerably in their perceptions of job insecurity, with most workers perceiving little or no risk but some perceiving moderate to high risk. Expectations of job loss tend to decrease markedly with age, but so do expectations of a good outcome should job search become necessary. The net result is that composite job insecurity tends not to vary at all with age. Subjective probabilities of job loss tend to decrease with schooling and subjective probabilities of good search outcomes tend to increase with schooling; hence composite job insecurity tends to decrease with schooling. Perceptions of job insecurity vary little by sex. Perceptions of job insecurity vary substantially by race, the main differences being that subjective probabilities of job loss among blacks tend to be nearly double those of whites. Self-employed workers see themselves as facing less job insecurity than do those who work for others. Workers tended to perceive less job insecurity in 1996 and 1997 than in 1994 and 1995. Expectations within groups are heterogeneous, the covariates (age, schooling, sex, race, employer, year) collectively explaining only a small part of the sample variation in worker expectations. Moving beyond descriptive analysis, the paper connects the empirical findings to modern theories of the labor market. A competing-risks formalization of job separations by the two routes of job loss and voluntary quits is used to draw conclusions about workers' expectations of exogenous job destruction in the year ahead. The theory of job search is used to interpret the empirical finding that the distribution of search-outcome expectations is symmetric and quite dispersed.

Using Expectations Data To Study Subjective Income Expectations

Abstract We have collected data on the one-year-ahead income expectations of members of American households in our survey of economic expectations (SEE), a module of a national continuous telephone survey conducted at the University of Wisconsin. The income-expectations questions take this form: “What do you think is the percent chance (or what are the chances out of 100) that your total household income, before taxes, will be less than Y over the next 12 months?” We use the responses to a sequence of such questions posed for different income thresholds Y to estimate each respondent's subjective probability distribution for next year's household income. We use the estimates to study the cross-sectional variation in income expectations one year into the future. We find that the estimated subjective interquartile range (IQR) of future income tends to rise with the estimated subjective median, but more slowly than proportionately. There is substantial variation in the estimated subjective IQR among respondents with the same estimated subjective median; thus respondents appear to have fairly heterogeneous perceptions of the one-year-ahead income uncertainty they face. Much of the cross-sectional variation in the central tendency of income expectations is associated with realized income, and some of the cross-sectional variation in income uncertainty is associated with realized income, age, and employment status.

Perceptions of Economic Insecurity: Evidence From the Survey of Economic Expectations

The Survey of Economic Expectations (SEE) is a new national survey initiated in an effort to learn how American perceive their near-term futures. This article uses SEE data on more than two thousand labor force participants interviewed in 1994 and 1995 to describe how American in the labor force perceive the risk of near-term economic misfortune. The authors measure economic insecurity through responses to questions eliciting subjective probabilities of three events in the year ahead : absence of health insurance, victimization by burglary and job loss. Respondents are willing to describe their expectations in probabilistic terms and they appear to do so in a meaningful way. Using the responses to classify individuals as relatively secure, relatively insecure, and highly insecure, they find that respondents with a high risk of one adverse outcome tend also to perceive high risks of the other outcomes. Males and females have similar risk perceptions, but there is substantial variation in perceptions by schooling and race. In particular, black males and males with no postsecondary schooling tend to perceive much greater insecurity than do others in the labor force. Expectations and realizations of health insurance coverage and of job loss tend to match up closely, but respondents substantially overpredict the risk of burglary

Using Expectations Data to Study Subjective Income Expectations

We have collected data on the one-year-ahead income expectations of members of American households in our survey of economic expectations (SEE), a module of a national continuous telephone survey conducted at the University of Wisconsin. The income-expectations questions take this form: “What do you think is the percent chance (or what are the chances out of 100) that your total household income, before taxes, will be less than Y over the next 12 months?” We use the responses to a sequence of such questions posed for different income thresholds Y to estimate each respondent's subjective probability distribution for next year's household income. We use the estimates to study the cross-sectional variation in income expectations one year into the future. We find that the estimated subjective interquartile range (IQR) of future income tends to rise with the estimated subjective median, but more slowly than proportionately. There is substantial variation in the estimated subjective IQR among respondents with the same estimated subjective median; thus respondents appear to have fairly heterogeneous perceptions of the one-year-ahead income uncertainty they face. Much of the cross-sectional variation in the central tendency of income expectations is associated with realized income, and some of the cross-sectional variation in income uncertainty is associated with realized income, age, and employment status.

Valuing Pensions (Annuities) with Different Types of Inflation Protection in Total Compensation Comparisons: A Note

Valuing Pensions (Annuities) with Different Types of Inflation Protection in Total Compensation Comparisons: A Note