Business-Level Expectations and Uncertainty

25 Pages Posted: 13 Dec 2017

See all articles by Nicholas Bloom

Nicholas Bloom

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

Steven J. Davis

University of Chicago; National Bureau of Economic Research (NBER)

Lucia Foster

U.S. Census Bureau - Center for Economic Studies

Brian Lucking

Stanford University

Scott Ohlmacher

University of Maryland

Itay Saporta Eksten

Tel Aviv University - Eitan Berglas School of Economics; University College London - Department of Economics

Date Written: December 9, 2017

Abstract

The Census Bureau’s 2015 Management and Organizational Practices Survey collected innovative 5-bin data on own future outcomes and probabilities for shipments, employment, capital and materials expenditures at 35,000 manufacturing plants. About 85% of plants provide logically sensible responses to the 5-bin questions, suggesting that most managers can form and express (subjective) probability distributions. The other 15% of plants have lower productivity, employment, wages, managerial education, structured management scores, and multinational ownership. First and second moments of plant-level subjective probability distributions covary strongly with first and second moments, respectively, of historical outcomes, suggesting that our subjective expectations data are well founded. Finally, our plant-level subjective uncertainty measures correlate positively with realized stock-return volatility, option-implied volatility and analyst disagreement about future earnings for the plant’s parent firm and for the median publicly listed firm in the plant’s industry.

Keywords: uncertainty, expectations, investment, employment

JEL Classification: L2, M2, O32, O33

Suggested Citation

Bloom, Nicholas and Davis, Steven J. and Foster, Lucia and Lucking, Brian and Ohlmacher, Scott and Saporta Eksten, Itay, Business-Level Expectations and Uncertainty (December 9, 2017). Available at SSRN: https://ssrn.com/abstract=3085377 or http://dx.doi.org/10.2139/ssrn.3085377

Nicholas Bloom (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building, Room 231
579 Serra Mall
Stanford, CA 94305-6072
United States
650-725-7836 (Phone)

HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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Steven J. Davis

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7312 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lucia Foster

U.S. Census Bureau - Center for Economic Studies ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Brian Lucking

Stanford University ( email )

Scott Ohlmacher

University of Maryland

College Park
College Park, MD 20742
United States

Itay Saporta Eksten

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

HOME PAGE: http://www.tau.ac.il/~itaysap/

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

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