Extrapolative Uncertainty and Household Economic Behavior

• 成果类型: Article
• 署名作者: Fermand, Elyas; Kuhnen, Camelia M.; Li, Geng; Ben-David, Itzhak
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine; National Bureau of Economic Research; Federal Reserve System - USA; Federal Reserve System Board of Governors; University System of Ohio; Ohio State University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.00820
• 发表日期: 2024
• 页码: 5607-5625
• 关键词: Household finance; expectations; Extrapolation; uncertainty

摘要

We examine the uncertainty in households' expectations regarding macroeconomic outcomes, namely inflation and the rate of nationwide home price growth. We document that people extrapolate from the instability of their personal and local environment when assessing the future volatility of these macroeconomic variables. Consequently, there are within-person spillovers in subjective uncertainty regarding different economic outcomes. This extrapolative behavior is more pronounced among lower-numeracy individuals, and it persists throughout the business cycle. People with more uncertain macroeconomic expectations are more likely to engage in precautionary behaviors regarding consumption and equity market exposure and are more concerned about credit market access.