Perceptions of Economic Insecurity: Evidence from the Survey of Economic Expectations

39 Pages Posted: 19 Jul 2000 Last revised: 3 Oct 2010

See all articles by Jeff Dominitz

Jeff Dominitz

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; RAND Corporation

Charles F. Manski

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 1996

Abstract

We have recently initiated the Survey of Economic Expectations (SEE) to learn how Americans perceive their near-term futures. This paper uses SEE data on over two thousand labor force participants interviewed in 1994 and 1995 to describe how Americans in the labor force perceive the risk of near-term economic misfortune. We measure economic insecurity through responses to questions eliciting subjective probabilities of three events in the year ahead: absence of health insurance, victimization by burglary, and job loss. With item response rates exceeding 98 percent, respondents clearly are willing to answer the expectations questions and they appear to do so in a meaningful way. Using the responses to classify individuals as relatively secure, relatively insecure, and highly insecure, we find that respondents with a high risk of one adverse outcome tend also to perceive high risks of the other outcomes. Economic insecurity tends to decline with age and with schooling. Black respondents perceive much greater insecurity than do whites, especially among males. Within the period 1994-1995, we find some time-series variation in insecurity but no clear trends. We find that expectations and realizations of health insurance coverage and of jobs tend to match up quite closely, but respondents substantially overpredict the risk of burglary.

Suggested Citation

Dominitz, Jeff and Manski, Charles F., Perceptions of Economic Insecurity: Evidence from the Survey of Economic Expectations (July 1996). NBER Working Paper No. w5690, Available at SSRN: https://ssrn.com/abstract=225575

Jeff Dominitz

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

RAND Corporation ( email )

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Charles F. Manski (Contact Author)

Northwestern University - Department of Economics ( email )

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847-491-7001 (Fax)

National Bureau of Economic Research (NBER)

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