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Views of Financial Economists on the Equity Premium and On Professional Controversies


Ivo Welch


University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

Journal of Business

Abstract:     
The consensus of 226 academic financial economists forecasts an arithmetic equity premium of 7% per year over 10 and 30 year horizons; and 6% to 7% over 1 and 5 year horizons. Pessimistic and optimistic 30-year scenario forecasts average 2% and 13%. Respondents claim to revise their forecast downward when the stock market rises. They perceive the profession's consensus to be higher than it really is and are influenced by this perception. There is agreement that markets are efficient and lack arbitrage opportunities, and that government intervention in financial markets is detrimental.

JEL Classification: G12

Accepted Paper Series


Date posted: July 5, 2000  

Suggested Citation

Welch, Ivo, Views of Financial Economists on the Equity Premium and On Professional Controversies. Journal of Business. Available at SSRN: http://ssrn.com/abstract=224341

Contact Information

Ivo Welch (Contact Author)
University of California, Los Angeles (UCLA) ( email )
405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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