Macroeconomic Conditions and Updating of Expectations by Older Americans

Purvi Sevak and Lucie Schmidt
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Purvi Sevak: Hunter College

Working Papers from University of Michigan, Michigan Retirement Research Center

Abstract: Economic theory suggests that individual decisions about consumption, saving, and labor supply should be directly linked to subjective expectations about future events. This project uses panel data from the Health and Retirement Study from 1994-2008 merged to data on a number of local and high frequency macroeconomic indicators to estimate how individual expectations respond to fluctuations in the local and national macroeconomy. Our results suggest that individuals revise their expectations in response to both local and national macroeconomic fluctuations in ways that appear to make sense, and that this is stronger for respondents with higher levels of education.

Pages: 44 pages
Date: 2011-11
New Economics Papers: this item is included in nep-age and nep-mac
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