Arbeitspapier
IQ, expectations, and choice
We use administrative and survey-based micro data to study the relationship between cognitive abilities (IQ), the formation of economic expectations, and the choices of a representative male population. Men above the median IQ (high-IQ men) display 50% lower forecast errors for inflation than other men. The inflation expectations and perceptions of high-IQ men, but not others, are positively correlated over time. High-IQ men are also less likely to round and to forecast implausible values. In terms of choice, only high-IQ men increase their propensity to consume when expecting higher inflation as the consumer Euler equation prescribes. High-IQ men are also forward-looking - they are more likely to save for retirement conditional on saving. Education levels, income, socio-economic status, and employment status, although important, do not explain the variation in expectations and choice by IQ. Our results have implications for heterogeneous-beliefs models of household consumption, saving, and investment.
- Sprache
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Englisch
- Erschienen in
-
Series: KIT Working Paper Series in Economics ; No. 127
- Klassifikation
-
Wirtschaft
Consumer Economics: Empirical Analysis
Expectations; Speculations
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Macroeconomics: Consumption; Saving; Wealth
Price Level; Inflation; Deflation
Business Fluctuations; Cycles
Monetary Policy
Studies of Particular Policy Episodes
- Thema
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Behavioral Macroeconomics
Heterogeneous Beliefs
Limited Cognition
Expectations Formation
Household Finance
- Ereignis
-
Geistige Schöpfung
- (wer)
-
D'Acunto, Francesco
Hoang, Daniel
Paloviita, Maritta
Weber, Michael
- Ereignis
-
Veröffentlichung
- (wer)
-
Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON)
- (wo)
-
Karlsruhe
- (wann)
-
2019
- DOI
-
doi:10.5445/IR/1000092483
- Handle
- URN
-
urn:nbn:de:swb:90-924830
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- D'Acunto, Francesco
- Hoang, Daniel
- Paloviita, Maritta
- Weber, Michael
- Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON)
Entstanden
- 2019
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