Socioeconomic Status and Macroeconomic Expectations

51 Pages Posted: 28 Nov 2017

See all articles by Sreyoshi Das

Sreyoshi Das

Cornell SC Johnson College of Business

Camelia M. Kuhnen

University of North Carolina Kenan-Flagler Business School & NBER

Stefan Nagel

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 2017

Abstract

We show that individuals' macroeconomic expectations are influenced by their socioeconomic status (SES). People with higher income or higher education are more optimistic about future macroeconomic developments, including business conditions, the national unemployment rate, and stock market returns. The spread in beliefs between high- and low-SES individuals diminishes significantly during recessions. A comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low-SES individuals. SES-driven expectations help explain why higher-SES individuals are more inclined to invest in the stock market and more likely to consider purchasing homes, durable goods, or cars.

Suggested Citation

Das, Sreyoshi and Kuhnen, Camelia M. and Nagel, Stefan, Socioeconomic Status and Macroeconomic Expectations (November 2017). NBER Working Paper No. w24045. Available at SSRN: https://ssrn.com/abstract=3077773

Sreyoshi Das (Contact Author)

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Camelia M. Kuhnen

University of North Carolina Kenan-Flagler Business School & NBER ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
(919) 9623284 (Phone)

HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/kuhnenc/

Stefan Nagel

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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