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Subjective Income Expectations, Canonical Models and Income Risk

Author

Listed:
  • Xavi Ramos

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Christian Schluter

    (Department of Economics, University of Southampton)

Abstract

Expectations are central to behaviour. Despite the existence of subjective expectations data, the standard approach is to ignore these, to hypothecate a model of behaviour and to infer expectations from realisations. In the context of income models, we reveal the informational gain obtained from using both a canonical model and subjective expectations data. We propose a test for this informational gain, and illustrate our approach with an application to the problem of measuring income risk.

Suggested Citation

  • Xavi Ramos & Christian Schluter, 2003. "Subjective Income Expectations, Canonical Models and Income Risk," Working Papers wpdea0310, Department of Applied Economics at Universitat Autonoma of Barcelona.
    • Handle: RePEc:uab:wprdea:wpdea0310
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    References listed on IDEAS

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    1. Joan Pasqual & Emilio Padilla, 2006. "Environmental Management Problems, Future Generations And Social Decisions," The IUP Journal of Public Finance, IUP Publications, vol. 0(3), pages 15-59, August.
    2. Juan Antonio Duro, 2004. "Análisis de agrupaciones provinciales a partir del enfoque de desigualdad y polarización: una nota," Working Papers wpdea0402, Department of Applied Economics at Universitat Autonoma of Barcelona.

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    More about this item

    Keywords

    subjective expectation data; canonical income models; income risk.;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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