Loonies Under Your Bed: Misdirected Attention and the Diluted Value of Stock Market Reports
Arthur Lupia (),
Cassandra Grafstrom,
Yanna Krupnikov,
Adam Seth Levine,
William MacMillan () and
Erin McGovern
MPRA Paper from University Library of Munich, Germany
Abstract:
Many people pay attention to media reports of the US stock market’s performance. Using a data-based thought experiment, we cast the market’s recent highs and lows in an unusually unattractive light. The result matters because the economic and political factors that make it relevant are likely to continue. Using research in economics and psychology, we explain why so many investors and media reports are blind to the unattractive interpretation. To mitigate the blindness’ harmful consequences, we propose an alternate way of presenting stock market information. The alternative is easy to implement and can help citizens draw important inferences from the attention they already pay to financial reports. The word “loonies” refers to Canadian dollars, which play a key role in our analysis. Loonies are not causal of any of the key relationships in our analysis, but provide a useful device for making a broader point about key US asset values.
Keywords: stock market; money illusion; fiscal policy; information; learning; exchange rate (search for similar items in EconPapers)
JEL-codes: A20 E21 E52 (search for similar items in EconPapers)
Date: 2007-09-13
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/4912/1/MPRA_paper_4912.pdf original version (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4912
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().