Expectations Uncertainty and Household Economic Behavior

51 Pages Posted: 11 Dec 2018

See all articles by Itzhak Ben-David

Itzhak Ben-David

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Elyas Fermand

University of North Carolina (UNC) at Chapel Hill - Finance Area

Camelia M. Kuhnen

University of North Carolina Kenan-Flagler Business School & NBER

Geng Li

Federal Reserve Board

Multiple version iconThere are 2 versions of this paper

Date Written: December 2018

Abstract

We show that there exists significant heterogeneity across US households in how uncertain they are in their expectations regarding personal and macroeconomic outcomes, and that uncertainty in expectations predicts households' choices. Individuals with lower income or education, more precarious finances, and living in counties with higher unemployment are more uncertain in their expectations regarding own-income growth, inflation, and national home price changes. People with more uncertain expectations, even accounting for their socioeconomic characteristics, exhibit more precaution in their consumption, credit, and investment behaviors.

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Suggested Citation

Ben-David, Itzhak and Fermand, Elyas and Kuhnen, Camelia M. and Li, Geng, Expectations Uncertainty and Household Economic Behavior (December 2018). NBER Working Paper No. w25336. Available at SSRN: https://ssrn.com/abstract=3298718

Itzhak Ben-David (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
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HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/index.htm

National Bureau of Economic Research (NBER) ( email )

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HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/

Elyas Fermand

University of North Carolina (UNC) at Chapel Hill - Finance Area ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
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/

Geng Li

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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