Socioeconomic Status and Macroeconomic Expectations

By Sreyoshi Das, Camelia M. Kuhnen, Stefan Nagel. The Review of financial studies, 2017

165 citations recorded by the source corpus.

We show that individuals’ macroeconomic expectations are influenced by their socioeconomic status (SES). People with higher income or higher education are more optimistic about future macroeconomic developments, including business conditions, the national unemployment rate, and stock market returns. The spread in beliefs between high- and low-SES individuals diminishes significantly during recessions. A comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low-SES individuals. SES-driven expectations help explain why higher-SES individuals are more inclined to invest in the stock market and more likely to consider purchasing homes, durable goods, or cars. Received November 13, 2017; editorial decision February 12, 2019 by Editor Wei Jiang. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Subfields: Economics and Econometrics, Political Science and International Relations, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/4ff61127e7445e1375b6bee839fe6d41b3ba22b1

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Citations in the corpus

Psychology-based Models of Asset Prices and Trading Volume (2018, background): “(18)There are now several papers that document the effect of personal experience on beliefs about economic outcomes; see, for example, Das et al. (2017) and Kuchler and Zafar (2017).”
Belief Disagreement and Portfolio Choice (2018, unknown): “7Bartels (2002) and Gaines et al. (2007) document a partisan bias in perceptions of changes in economic performance and military outcomes, and Alesina et al.”
Noncognitive Abilities and Financial Delinquency: The Role of Self-Efficacy in Avoiding Financial Distress (2017, unknown): “…economic developments (Greenwood and Shleifer (2014), Malmendier and Nagel (2016), Kuchler and Zafar (2016)), as well as by people’s personal socioeconomic situation (Kuhnen and Miu (2017)), have been shown to predict households’ investment decisions (Kezdi and Willis (2011), Das et al. (2017)).”
How Do Expectations about the Macroeconomy Affect Personal Expectations and Behavior? (2020, background): “The finding of greater pessimism and a higher dispersion of beliefs among consumers than among professional forecasters is in line with previous findings on inflation expectations (Armantier et al., 2013; Mankiw et al., 2003) and with qualitative expectations on aggregate economic conditions over a ”
Exposure to Daily Price Changes and Inflation Expectations (2019, unknown): “Das et al. (2018) document that income and socioeconomic status help predict individuals’ macroeconomic expectations such as business conditions, the national unemployment rate, and stock returns.”