Expectation Formation of Older Married Couples and the Rational Expectations Hypothesis
45 Pages Posted: 12 Feb 2008
Date Written: October 2003
Abstract
This paper tests the Rational Expectations (RE) hypothesis regarding retirement expectations of married older American couples, controlling for sample selection and reporting biases. In prior research we found that individual retirement expectation formation was consistent with the Rational Expectation hypothesis, but in that work spousal considerations were not analyzed. In this research we take advantage of panel data on expectations to test the RE hypothesis among married individuals as well as joint expectations among couples. We find that regardless of whether we assume that married individuals form their own expectations taking spouse's information as exogenous, or the reports of the couple are the result of a joint expectation formation process, their expectations are consistent with the RE hypothesis. Our results support a wide variety of models in economics that assume rational behavior for married couples.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Wage Expectations in the Labor Market: Survey Evidence on Rationality
-
What to Expect when you are Expecting Rationality: Testing Rational Expectations using Micro Data
By Hugo Benitez-silva and Debra S. Dwyer
-
Expectations in Micro Data: Rationality Revisited
By Hugo Benitez-silva, Debra S. Dwyer, ...
-
Testing the Rationality of State Revenue Forecasts
By Daniel R. Feenberg, William M. Gentry, ...
-
Over-Optimism in Forecasts by Official Budget Agencies and its Implications
-
Are Errors in Official U.S. Budget Receipts Forecasts Just Noise?
By Robert Martin Mcnab, Mark Rider, ...
-
By John L. Mikesell and Justin M. Ross