On Expectations, Realizations and Partial Retirement

Tinbergen Institute Working Paper No. TI 2004-052/3

41 Pages Posted: 7 May 2004

See all articles by Mauro Mastrogiacomo

Mauro Mastrogiacomo

De Nederlansdche Bank (DNB); Vrije Universiteit Amsterdam, School of Business and Economics

Date Written: December 2003

Abstract

This study investigates whether many people fear an unexpected shock in their financial situation around retirement and whether the related expectations and realizations match each other. We use the Dutch Social Economic Panel survey data, where expectations about the next year's financial situation are reported. We show that realized changes exceed expectations, and that this finding is more prominent around age 65. The descriptive statistics, as well as the non-parametric tests on the conditional distribution of expectations and realizations, suggest that individuals around retirement are overly pessimistic and attach more weight to prospective bad events than to good events. The model estimates show that their fears are unjustified, in particular when individuals are highly educated. Further the link between macro shocks, micro-shocks and expectations is investigated.

Keywords: Retirement, expectations, non parametric test

JEL Classification: D84, J26

Suggested Citation

Mastrogiacomo, Mauro, On Expectations, Realizations and Partial Retirement (December 2003). Tinbergen Institute Working Paper No. TI 2004-052/3, Available at SSRN: https://ssrn.com/abstract=540882 or http://dx.doi.org/10.2139/ssrn.540882

Mauro Mastrogiacomo (Contact Author)

De Nederlansdche Bank (DNB) ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31(0)20 444 6037 (Phone)
+31(0)20 444 6004 (Fax)

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