Measuring Long-Run Expectations that Correlate with Investment Decisions

Peter Haan, Chen Sun, Felix Weinhardt and Georg Weizsäcker

No 70, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: Different methods of eliciting long-run expectations yield data that predict economic choices differently well. We ask members of a wide population sample to make a 10-year investment decision and to forecast stock market returns in one of two formats: they either predict the average of annual growth rates over the next 10 years, or they predict the total, cumulative growth that occurs over the 10-year period. Results show that total 10-year forecasts are more pessimistic than average annual forecasts, but they better predict experimental portfolio choices and real-world stock market participation.

Keywords: Household finance; long-run predictions; survey experiments (search for similar items in EconPapers)
JEL-codes: D01 D14 D84 D9 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2025-07-28
New Economics Papers: this item is included in nep-exp and nep-for
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0070

DOI: 10.48462/opus4-5904

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