This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Expected and Realized Income Changes : Evidence from the Dutch Socio-Economic Panel

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Das, M.
Soest, A. van (Tilburg University, Center for Economic Research)

Additional information is available for the following registered author(s):

Abstract

Income expectations play a central role in household decision making. In the life cycle model for example, consumption and savings decisions reflect expectations of future income. In empirical applications where direct information on expectations is not available, it is usually assumed that expectations are rational, and reflected by observed future realizations. In this paper, we analyze direct subjective information on expected changes of household income in one panel wave of Dutch families. First, we describe these data and investigate how the expectations can be explained by, among other variables, income changes in the past. Second, we combine these data with information on realized income changes in the next panel wave, and analyze the dierences between expected and realized changes. We find that, on average, households underestimate their future incomes signiantly. In particular, this holds for those families whose income has fallen in the past.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://arno.uvt.nl/show.cgi?fid=3150
File Format: application/pdf
File Function:
Download Restriction: no
File URL: http://arno.uvt.nl/show.cgi?fid=3151
File Format: application/postscript
File Function:
Download Restriction: no

Publisher Info
Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 52.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 1995
Date of revision:
Handle: RePEc:dgr:kubcen:199552

Contact details of provider:
Web page: http://center.uvt.nl

For technical questions regarding this item, or to correct its listing, contact: (Corry Stuyts).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1992. "Earnings uncertainty and precautionary saving," Journal of Monetary Economics, Elsevier, vol. 30(2), pages 307-337, November. [Downloadable!] (restricted)
    Other versions:
  2. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December. [Downloadable!] (restricted)
    Other versions:
  3. Hey, John D., 1994. "Expectations formation: Rational or adaptive or ...?," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 329-349, December. [Downloadable!] (restricted)
  4. Wolfgang Hardle & Oliver Linton, 1994. "Applied Nonparametric Methods," Cowles Foundation Discussion Papers 1069, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  5. Deaton, A. & Grosh, M., 1998. "Consumption," Papers 191, Princeton, Woodrow Wilson School - Development Studies.
  6. Robert E. Hall & Frederic S. Mishkin, 1982. "The Sensitivity of Consumption to Transitory Income: Estimates from Panel Data on Households," NBER Working Papers 0505, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Jeff Dominitz & Charles F. Manski, 1994. "Using Expectations Data to Study Subjective Income Expectations," NBER Working Papers 4937, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1994. "Income Risk, Borrowing Constraints and Portfolio Choice," CEPR Discussion Papers 888, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Carroll, Christopher D, 1994. "How Does Future Income Affect Current Consumption?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 111-47, February. [Downloadable!] (restricted)
    Other versions:
  10. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dustmann, C. & Soest, A. van, 1999. "Parametric and nonparametric estimation in models with misclassified categorical dependent variables," Discussion Paper 51, Tilburg University, Center for Economic Research. [Downloadable!]
  2. Luigi Pistaferri & Tullio Jappelli, 1998. "Using Subjective Income Expectations to Test for Excess Sensitivity of Consumption to Predicted Income Growth," CSEF Working Papers 12, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
    Other versions:
  3. Rob Alessie & Thomas F. Crossley & Vincent Hildebrand, 2006. "Estimating a Collective Household Model with Survey Data on Financial Satisfaction," Social and Economic Dimensions of an Aging Population Research Papers 161, McMaster University. [Downloadable!]
    Other versions:
  4. Das, M. & Soest, A. van, 2000. "Expected versus realized income changes : a test of the rational expectations hypothesis," Discussion Paper 105, Tilburg University, Center for Economic Research. [Downloadable!]
  5. Mauro Mastrogiacomo, 2004. "On Expectations, Realizations and Partial Retirement," Tinbergen Institute Discussion Papers 04-052/3, Tinbergen Institute. [Downloadable!]
  6. Jeremy Clark & Lana Friesen, 2006. "Overconfidence in Forecasts of Own Performance: An Experimental Study," Working Papers in Economics 06/09, University of Canterbury, Department of Economics. [Downloadable!]
    Other versions:
  7. Gomes, F. A. R., 2007. "The Effect of Future Income Uncertainty in Savings Decision," Ibmec Working Papers wpe_72, Ibmec Working Paper, Ibmec São Paulo. [Downloadable!]
  8. Maurizio Bovi, 2008. "The “Psycho-analysis” of Common People’s Forecast Errors. Evidence from European Consumer Surveys," ISAE Working Papers 95 Classification-JEL C42, ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY). [Downloadable!]
  9. Xavier Ramos & Christian Schluter, 2006. "Subjective Income Expectations and Income Risk," IZA Discussion Papers 1950, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Richard Disney & Sarah Tanner, 1999. "What can we learn from retirement expectations data?," IFS Working Papers W99/17, Institute for Fiscal Studies. [Downloadable!]
  11. Das, M. & Donkers, B., 1997. "How certain are Dutch households about future income? : an empirical analysis," Discussion Paper 38, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  12. Xavier Ramos & Christian Schluter, 2003. "Subjective Income Expectations, Canonical Models and Income Risk," Working Papers wpdea0310, Department of Applied Economics at Universitat Autonoma of Barcelona. [Downloadable!]
  13. Hugo Benítez-Silva & Debra S. Dwyer, 2003. "Expectation Formation of Older Married Couples and the Rational Expectations Hypothesis," Working Papers wp062, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
    Other versions:
  14. Das, M. & Soest, A. van, 1996. "A panel data model for subjective information on household income growth," Discussion Paper 75, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  15. Hugo Benítez-Silva & Debra Dwyer & Wayne-Roy Gayle & Thomas Muench, 2008. "Expectations in micro data: rationality revisited," Empirical Economics, Springer, vol. 34(2), pages 381-416, March. [Downloadable!] (restricted)
  16. Sean Nicholson, 2004. "How Much Do Medical Students Know About Physician Income?," NBER Working Papers 10542, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Sean Nicholson & Nicholas S. Souleles, 2001. "Physician Income Expectations and Specialty Choice," NBER Working Papers 8536, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Das, M. & Dominitz, J. & Soest, A. van, 1997. "Comparing predictions and outcomes : theory and application to income changes," Discussion Paper 45, Tilburg University, Center for Economic Research. [Downloadable!]
Statistics
Access and download statistics

Did you know? Citation analysis on IDEAS includes online papers that are freely accessible and whose text could be automatically analyzed, currently about 210000 papers.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.