Do Survey Probabilities Match Financial Market Beliefs?

This article considers whether survey respondents' views regarding the likelihood of stock index returns exceeding specific thresholds are comparable to market views indicated by index options with strikes at analogous thresholds. It is motivated by the observation that the wording used to elicit subjective beliefs in surveys about expected future returns resembles the question a purchaser of a call option might ask. Building on this association, the authors document a similarity between the views of survey respondents and those of financial market participants as measured through call options, although the association is not 1-for-1. They find a closer association for those demonstrating a better understanding of the laws of probability, suggesting that numeracy affects the accuracy of an elicited response.     

Bank-Affiliated Mutual Fund Managers' Trading Patterns of Parent Banks' Stocks: International Evidence

The authors explore factors influencing bank-affiliated funds' decisions to increase their holdings of parent banks' stocks by analyzing survey evidence from 113 fund managers from the United States, Canada, Great Britain, Spain, and Poland. The results suggest that the propensity to buy the controlling banks' equity among financial professionals at the time of the stock market meltdown was shaped rather by the individual taste for their assets as consumption goods than by external pressures by direct superiors or the parent banks' management. Additionally, this predisposition was influenced positively by the fund managers' tendency to herd and fund participants' expectations as well as managers' sensitivity to eventual losses and previous work experience in the owning banks. The major investment segment represented by the fund also seems to be important, with an increasing level of risk acting as the denominator. Overall, this study extends the understanding of behavioral factors in bank-affiliated funds' allocation decision making.     

Users and non-users of conservation areas: Are there differences in WTP,motives and the validity of responses in CVM surveys?

It is commonly assumed that respondents' lack of familiarity with the valued resource causes invalid and unreliable responses in contingent valuation surveys. With non-users' valuations, mainly motivated by non-use values, the issue is also closely linked to the discussion of the measurement of non-use values. This paper re-examines the impact of previous use on respondents' willingness to support nature conservation, their motives for valuing the resource and the validity of responses. The users' and non-users' characteristics differed, but there was no difference between the groups in their willingness to support sustained conservation. However, those planning to visit the area in the near future were more likely to pay for conservation than other respondents, even if they did not have previous use experience. Users considered their income constraint somewhat more carefully and were more aware of conservation-related issues than non-users. However, there was no difference in the validity of the WTP responses of the groups. Thus, there seems to be no rationale from a point of view of validity to restrict CVM analysis only to those individuals who have previous experience of the resource, which is in line with the basic premise of CVM. Furthermore, non-use values remained as significant motives for valuing the resource even if the use of the resource was intensive. Therefore, if the existence of a large non-use value component is considered as problematic in general, the problem is likely to exist for all respondent groups and not only for non-users.     

Distal order effects in stated preference surveys

Stated preference researchers have previously demonstrated that a good's placement among a sequence of goods in a set of valuation questions (i.e. proximal order effects) can have a substantial impact on people's valuations of these different goods. However, the economic consequences of potential order effects stemming from other questions in a survey, prior to the valuation tasks, have received surprisingly little attention. Using an online climate change survey, we identify order effects created by prior attitude-elicitation questions, and we assess the potential impact of these distal order effects on willingness to pay (WTP) estimates for stylized climate change policies. We find that the order used in prior questions may change people's opinions toward various attributes of the good to be valued, and thereby change WTP by a substantial amount. This paper emphasizes the significance of order effects stemming from preliminary survey questions, and supports a call for diligence in the random ordering of all potentially influential preliminary information in stated preference surveys to minimize inadvertent effects from any single arbitrary ordering.     

STOCK MARKET CRASH AND EXPECTATIONS OF AMERICAN HOUSEHOLDS

This paper utilizes data on subjective probabilities to study the impact of the stock market crash of 2008 on households' expectations about the returns on the stock market index. We use data from the Health and Retirement Study that was fielded in February 2008 through February 2009. The effect of the crash is identified from the date of the interview, which is shown to be exogenous to previous stock market expectations. We estimate the effect of the crash on the population average of expected returns, the population average of the uncertainty about returns (subjective standard deviation), and the cross-sectional heterogeneity in expected returns (disagreement). We show estimates from simple reduced-form regressions on probability answers as well as from a more structural model that focuses on the parameters of interest and separates survey noise from relevant heterogeneity. We find a temporary increase in the population average of expectations and uncertainty right after the crash. The effect on cross-sectional heterogeneity is more significant and longer lasting, which implies substantial long-term increase in disagreement. The increase in disagreement is larger among the stockholders, the more informed, and those with higher cognitive capacity, and disagreement co-moves with trading volume and volatility in the market.     

A Report on the March 2001 Investor Sentiment Survey

Steep declines in the value of publicly traded stocks in the first quarter of 2001 left many market observers speculating whether investor sentiment had undergone a significant and negative change, and whether investors would subsequently flee stocks in favor of less volatile investment options. A survey study of investor expectations and confidence was conducted in late March 2001 to capture investor sentiment and compare it with similar measures taken in surveys conducted in 1998 during a period of rapid market incline. The surprising results are that there are only minor differences in investor sentiment in terms of: (a) confidence in the long and intermediate performance of the stock markets; (b) composition of stocks versus bonds in their portfolios; (c) the intention to buy on the dips; (d) the amount of risk investors plan to undertake. The high level of investor confidence observed in 2001 (in spite of a severe drop in market value) is potentially accounted for by psychological processes that influence investor judgment. These processes include reliance on image-driven affective evaluations of common stocks that contribute to excessive optimism.     

Housing demand in Russia: Rationing and reform1

In a number of articles Alexeev (1988a) and (1988b) shows that in the former Soviet Union the administrative rationing of housing was partially replaced by market forces acting through the second economy. This paper uses a much richer dataset to update his analysis for Russia to consider housing demand in 1992, the last year of the administrative allocation system. Almost immediately after the survey used for this analysis Russia began to privatize the housing stock as part of its movement towards a market economy. The questions we ask are: Were households really able to beat the system, as argued by Alexeev and, if so, were they still able to do so in 1992? Our answer to the second question is that in 1992 households were not able to beat the system. Income had no observable effect on housing demand. Furthermore, we do not think that the difference in our empirical results and Alexeev's is due only to the broader economic changes that occurred since his estimation or the richer dataset available to us. Indeed, our answer to the first question is that there are good reasons for arguing that Alexeev's estimates of the income elasticity of housing demand are biased upwards.     

Finance–Growth Nexus and the P‐bias: Evidence from OECD Countries

Recent studies provide new empirical evidence confirming that financial development is linked to economic growth in OECD countries. Using new dynamic panel regression techniques, these appraisals indicate that within the group of high‐income countries stock market size as a measure of financial advancement contributes significantly to overall economic activity. Applying the same advanced techniques, this paper questions this conclusion by showing that the findings of these studies seem to be not only not robust with respect to adding new observations but also likely to be plagued by a severe price bias which belittles the information content of the used financial indicator (stock market capitalization). We provide evidence that anticipative price effects (i.e. expectations of future growth, reflected in current stock prices) may be driving the statistical relationship between stock market activities and economic growth in high‐income countries to a much larger extent than recent analyses of the finance– growth link in OECD countries suggest .     

Modelling Heterogeneity and Uncertainty in Contingent Valuation: an Application to the Valuation of Informal Care

Both the lack of market data and the need to adopt a more holistic approach in the valuation of non‐market activities within health care have pointed towards the use of contingent valuation (CV) methods. However, to date, few studies have employed such techniques to value informal care, despite its provision being an important public policy question. We propose an analytical framework that through the use of random parameters models and respondents' certainty scales can incorporate both unobserved and observed heterogeneity in the CV modelling. This is the first CV study of informal care for Scotland (UK) and a £7.68 per hour value is estimated.     

Australian Macroeconomic Policy Experience*

This paper looks at Australian macroeconomic experience from approximately 1912 to 1985. The whole period is divided into five episodes. The idea in preparing this paper was to try to answer three questions namely: how did Australian experience differ from that of other OECD countries, what policy lessons could be learnt, and finally, what light could be shed on the relevance of various macroeconomic theories notably rational expectations. In fact. the questions have by no means been adequately answered though the paper goes furthest in dealing with the first question. I hope it will encourage further discussion and research¹ Anticipating some of the conclusions, the historical review suggests that Australian experiences have been fairly similar to those of other OECD countries. notably European countries. But the timing has sometimes differed the Australian wages explosions have been (more or less) exceptional and recently Australia has been special in having on incomes policy, It also appears that the theory of rational expectations does not get much support from Australian was behaviour, that policy from 1916 to 1981 was not really monetarist, and that fiscal expansions since 1982 have been made possible by the availability of the international capital market.     

One model fits all? — On the moderating role of emotional engagement and confusion in the elicitation of preferences for climate change adaptation policies

Environmental economic and psychological studies often implicitly assume homogeneity of respondents' decision strategies in questionnaire-based surveys. However, social psychology and behavioural research suggest that there is a wide variety of approaches that individuals use to make such choices.We explore this heterogeneity against the backdrop of so-called ‘dual process models’, analysing participants' responses in a survey of public beliefs about and preferences for climate change adaptation policies. We find that the postulate of two different types of decision-making, the systematic-analytical and the heuristic-holistic, does indeed help us to understand patterns in respondent behaviour that are, in turn, underpinned by respondents' motivation and ability to process information. Participants who were motivated and able to process the information provided were more likely to express preferences in line with their beliefs about adaptation policies, whereas those less motivated and more confused were more likely to use generalised rules-of-thumb that were not specific to the policy issue at hand. Depending on the theoretical framework of a study, such heterogeneity in response consistency and use of generic rules-of-thumb might have implications for the usefulness of survey outcomes. We discuss the implications of our findings, and draw conclusions for survey-based environmental research.     

中国股票市场有效性的实证研究——基于方差比的检验方法

本文采用方差比检验方法对中国金融市场的有效性进行检验。通过对覆盖我国股票市场60%以上市值的沪深300指数以及基金金鑫的历史收益率进行检验表明,我国股票市场在短期是弱式有效的,但从中长期来看是基本无效的。     

A Benchmark Profile of Economics Departments in 15 Private Universities

During the spring of 1999, the authors completed a benchmarking survey of 15 economics departments in private universities as part of a strategic planning exercise. All are selective medium-sized institutions that experience roughly the same types of market pressures and compete for the same types of students. The authors report the information gleaned from the survey concerning such items as departmental resources, teaching loads, class sizes, departmental research expectations, and weights given to research, teaching, and service in salary determination and promotion. The authors believe that their results and methods might be useful to other economics departments engaging in bench-marking exercises.     

Inflation literacy and inflation expectations: Evidence from Austrian household survey data

Inflation expectations are known to be quite heterogeneous across agents. We investigate whether this heterogeneity is primarily due to differences in people’s understanding of the inflation process and of the goals and intentions of the central bank. Using micro data from a survey conducted among 2000 Austrian households, we construct an indicator of “inflation literacy” from several questions on people’s knowledge about different aspects of inflation. We find that this indicator helps explain both the level and the uncertainty of inflation expectations: Households with relatively higher levels of inflation literacy tend to have lower and more accurate short-term and long-term inflation expectations. Interestingly, however, they are less certain about their inflation expectations than people with lower levels of inflation literacy. We also find that people’s trust in the central bank and in its ability to maintain price stability significantly dampens their inflation expectations.     

Wealth inequality in Central and Eastern Europe: Evidence from household survey and rich lists’ data combined*

We study how the problem of the ‘missing rich’, the underrepresentation of the wealthiest in household surveys, affects wealth inequality estimates for the post‐socialist countries of Central and Eastern Europe (CEE). The survey data from the second wave of the Household Finance and Consumption Survey (HFCS) are joined with the data from the national rich lists for Estonia, Hungary, Latvia, Poland and Slovakia. Pareto distribution is fitted to the joined survey and rich lists’ data to impute the missing observations for the largest wealth values. We provide the first estimates of the top‐corrected wealth inequality for the CEE region in 2013/2014. Despite a short period of wealth accumulation during the post‐1989 market economy period, our adjustment procedure reveals that wealth inequality in the Baltic countries is comparable to that of Germany (one of the most wealth‐unequal countries in Europe), while in Poland and Hungary it has reached levels observed in France or Spain. We discuss possible explanations of these findings with reference to the speed and range of privatization processes, extent of income inequality, and the role of inheritances and wealth taxes in the region.     

Beyond the efficient markets hypothesis: Towards a new paradigm

To go beyond the efficient markets hypothesis (EMH) we suppose that the stock market can be in one of three states: (1) a fundamental state, where share prices are determined largely as in the EMH; (2) a bubble or bull market state, where share prices are above their fundamental levels but are expected to continue to rise further, and (3) a bear market state, where shares are held exclusively by irrational agents and rational agents cannot exploit the overvaluation because of short-selling constraints. Also, heterogeneous rational expectations may help explain some features of stock market behaviour.     

Valuing low probability risk: survey and experimental evidence

This study uses a survey question and an economics experiment to elicit the value of a risk mitigation investment. For 93 subjects (48 males and 45 females) the responses to hypothetical questions are compared with a risk mitigation decision that has a salient outcome. We find no gender-differentiated responses to either the maximum accepted price in the economics experiment or hypothetical willingness to pay questions from the survey. In our design, the two procedures generate aggregate measures that were in close agreement, however individual decisions were seldom consistent.     

Perceived economic prospects during the early stage of COVID-19 breakout

How does a new epidemic affect individuals' expectations on economic prospects in the early stage of the breakout? We implemented an incentivized longitudinal online survey soon after the outbreak of the coronavirus disease 2019 (COVID-19) epidemic in China to answer this question. Results show that fewer new confirmed COVID-19 cases significantly increase individuals' expectations on gross domestic product and consumer price index growth rates. Our finding provides evidence that at the early stage of an unfamiliar epidemic, containing the spread of the disease may help to maintain positive economic expectations among individuals.     

Macroeconomic expectations and consumer sentiment during the COVID-19 pandemic: The role of others’ beliefs

This paper investigates the effect of information about cross-country ratings of the government’s and the public’s reaction to the COVID-19 pandemic on consumers’ macroeconomic expectations and sentiment. We conduct consumer surveys with randomized control trials (RCTs) in two waves in Thailand and Vietnam. The information treatments have the strongest effect when the information shown contradicts consumers’ prior beliefs. In the first survey, conducted when the first lockdown was eased, treatment effects are stronger in Vietnam, causing more optimistic expectations and sentiment. In the second survey, conducted at the start of the second wave of infections, treatment effects are stronger in Thailand, causing a more pessimistic outlook.     

Trust,trust games and stated trust: Evidence from rural Bangladesh

Levels of trust are measured by asking standard survey questions on trust and by observing behavior in a trust game using a random sample in rural Bangladesh. Follow-up questions and correlations between stated expectations and the amount sent in the trust game reveal that the amount sent is correlated with a general measure of trust. The trust and need motives combined with expectations explains differences in amounts sent, and this highlights the potential importance of motives that cannot be inferred directly from people's behavior and expectations alone.