Socioeconomic Status and Macroeconomic Expectations

Sreyoshi Das, Camelia M. Kuhnen, Stefan Nagel

NBER Working Paper No. 24045
Issued in November 2017
NBER Program(s):Asset Pricing

We show that individuals' macroeconomic expectations are influenced by their socioeconomic status (SES). People with higher income or higher education are more optimistic about future macroeconomic developments, including business conditions, the national unemployment rate, and stock market returns. The spread in beliefs between high- and low-SES individuals diminishes significantly during recessions. A comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low-SES individuals. SES-driven expectations help explain why higher-SES individuals are more inclined to invest in the stock market and more likely to consider purchasing homes, durable goods, or cars.

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Document Object Identifier (DOI): 10.3386/w24045

Published: Sreyoshi Das & Camelia M Kuhnen & Stefan Nagel, 2020. "Socioeconomic Status and Macroeconomic Expectations," The Review of Financial Studies, vol 33(1), pages 395-432. citation courtesy of

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