Eliciting Stock Market Expectations: The Effects of Question Wording on Survey Experience and Response Validity

Abstract

Expectations about stock market movements are an important factor in models of investments and savings. To better understand consumers’ financial behavior, economic surveys such as the Health and Retirement Study (HRS) ask participants to report expectations about the stock market. However, readability statistics suggest that the HRS’ stock market expectations questions use relatively complex wording, which may contribute to their relatively high rates of missing responses. Here, the authors build on survey design research to improve the readability of these questions. In 2 experiments using national online panels, they test whether revising stock market expectation questions to reduce their difficulty affects respondents’ (1) survey experience, as measured by percent of missing answers and ratings of question clarity and difficulty, and (2) response validity, as assessed by respondents’ confidence in their answer and comparisons between expectations and stock market outcomes. In both studies, the authors’ revisions improved survey experience. Unfortunately, revisions also decreased the perceived (Study 1) and actual (Study 2) validity of responses. The authors discuss implications of question revisions for the design of economic surveys.

Keywords: stock market expectations, survey design, HRS, survey experience, response validity