Stock Market Expectations of Dutch Households

36 Pages Posted: 18 Oct 2010

See all articles by Michael D. Hurd

Michael D. Hurd

RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Maarten van Rooij

De Nederlandsche Bank; Netspar

Joachim K. Winter

Ludwig Maximilian University of Munich (LMU); CESifo (Center for Economic Studies and Ifo Institute); Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA); Deutsche Bundesbank - Research Department

Multiple version iconThere are 3 versions of this paper

Date Written: October 2010

Abstract

Despite its importance for the analysis of life-cycle behavior, stock ownership by households is poorly understood. Among other approaches to the investigation of this puzzle, recent research has elicited the expectations of stock market returns by individuals. This paper reports findings from a study that collected data over a two-year period both on stock market expectations (subjective probabilities of gains or losses) and on stock ownership. On average stock market expectations are much more pessimistic about gains than the historical record of actual gains. Expectations are heterogeneous, and they are correlated with stock ownership. Over the two years of our data, stock market prices increased, and expectations of future stock market price changes also increased, lending support to the view that expectations are influenced by recent stock gains or losses.

Suggested Citation

Hurd, Michael D. and van Rooij, Maarten and Winter, Joachim K., Stock Market Expectations of Dutch Households (October 2010). NBER Working Paper No. w16464, Available at SSRN: https://ssrn.com/abstract=1692527

Michael D. Hurd (Contact Author)

RAND Corporation ( email )

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Maarten van Rooij

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Joachim K. Winter

Ludwig Maximilian University of Munich (LMU) ( email )

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