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Perceptions of Economic Insecurity: Evidence from the Survey of Economic Expectations

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  • J. Dominitz
  • C. F. Manski

Abstract

We have recently initiated the Survey of Economic Expectations (SEE) in an effort to learn how Americans perceive their near-term futures. This paper use SEE data on over two thousand labor force participants interviewed in 1994 and 1995 to describe how Americans in the labor force perceive the risk of near-term economic misfortune. We measure economic insecurity through responses to questions eliciting subjective probabilities of three events in the year ahead: absence of health insurance, victimization by burglary, and job loss. With item response rates exceeding 98 percent, respondents clearly are willing to answer the expectations questions and they appear to do so in a meaningful way. Using the responses to classify individuals as relatively secure, relatively insecure, and highly insecure, we find that respondents with a high risk of one adverse outcome tend also to perceive high risks of the other outcomes. Economic insecurity tends to decline with age and with schooling. Black respondents perceive much greater insecurity than do whites, especially among males. Within the period 1994-1995, we find some time-series variation in insecurity but no clear trends. We find that expectations and realizations of health insurance coverage and of job loss tend to match up quite closely, but respondents substantially overpredict the risk of burglary.

Suggested Citation

  • J. Dominitz & C. F. Manski, "undated". "Perceptions of Economic Insecurity: Evidence from the Survey of Economic Expectations," Institute for Research on Poverty Discussion Papers 1105-96, University of Wisconsin Institute for Research on Poverty.
  • Handle: RePEc:wop:wispod:1105-96
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    File URL: http://www.irp.wisc.edu/publications/dps/pdfs/dp110596.pdf
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    References listed on IDEAS

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    1. repec:aph:ajpbhl:1991:81:9:1148-1152_7 is not listed on IDEAS
    2. Camerer, Colin & Weber, Martin, 1992. "Recent Developments in Modeling Preferences: Uncertainty and Ambiguity," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 325-370, October.
    3. Jeff Dominitz & Charles F. Manski, 1996. "Eliciting Student Expectations of the Returns to Schooling," Journal of Human Resources, University of Wisconsin Press, pages 1-26.
    4. F. Thomas Juster, 1966. "Consumer Buying Intentions and Purchase Probability: An Experiment in Survey Design," NBER Books, National Bureau of Economic Research, Inc, number just66-2, January.
    5. J. Dominitz & C. F. Manski, "undated". "Using expectations data to study subjective income expectations," Institute for Research on Poverty Discussion Papers 1050-94, University of Wisconsin Institute for Research on Poverty.
    6. Jeff Dominitz, 1998. "Earnings Expectations, Revisions, And Realizations," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 374-388, August.
    7. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1992. "Earnings uncertainty and precautionary saving," Journal of Monetary Economics, Elsevier, vol. 30(2), pages 307-337, November.
    8. Charles F. Manski, 1993. "Adolescent Econometricians: How Do Youth Infer the Returns to Schooling?," NBER Chapters,in: Studies of Supply and Demand in Higher Education, pages 43-60 National Bureau of Economic Research, Inc.
    9. James Tobin, 1957. "On the Predictive Value of Consumer Intentions and Attitudes," Cowles Foundation Discussion Papers 41, Cowles Foundation for Research in Economics, Yale University.
    10. Fischhoff, Baruch, 1994. "What forecasts (seem to) mean," International Journal of Forecasting, Elsevier, vol. 10(3), pages 387-403, November.
    11. Manski, C.F., 1989. "The Use Of Intentions Data To Predict Behaviour : A Best- Case Analysis," Working papers 8905, Wisconsin Madison - Social Systems.
    12. Adrian W. Throop, 1992. "Consumer sentiment: its causes and effects," Economic Review, Federal Reserve Bank of San Francisco, pages 35-59.
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    More about this item

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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