Household income expectations: The role of unexpected income changes and aggregate conditions

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216224%3A14560%2F25%3A00141347" target="_blank" >RIV/00216224:14560/25:00141347 - isvavai.cz</a>

Result on the web

<a href="https://www.sciencedirect.com/science/article/pii/S0167268125001830" target="_blank" >https://www.sciencedirect.com/science/article/pii/S0167268125001830</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.jebo.2025.107064" target="_blank" >10.1016/j.jebo.2025.107064</a>

Result language

angličtina

Original language name

Household income expectations: The role of unexpected income changes and aggregate conditions

Original language description

We analyse how unexpected income changes and aggregate conditions influence income expectations, their uncertainty, and expectation errors. We use a uniquely rich longitudinal Dutch survey collecting detailed information on the distribution of household income expectations. Our results show that unexpected income changes, much more than aggregate conditions, induce a revision in income expectations across the entire spectrum of the expected income distribution, consistent with extrapolative behaviour. We also document that unexpected income changes increase the uncertainty about future income. Our results provide some evidence of over-reaction, particularly to negative unexpected income changes and among high-income individuals. These effects differ based on an individual's position in the income distribution, which may be attributed to differences in income dynamics, role of insurance mechanisms, and varying levels of awareness about how unexpected income changes and aggregate conditions impact household finances.

Czech name

—

Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

—

OECD FORD branch

50200 - Economics and Business

Project

—

Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2025

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Journal of Economic Behavior & Organization

ISSN

0167-2681

e-ISSN

1879-1751

Volume of the periodical

236

Issue of the periodical within the volume

August

Country of publishing house

NL - THE KINGDOM OF THE NETHERLANDS

Number of pages

28

Pages from-to

1-28

UT code for WoS article

001507557100001

EID of the result in the Scopus database

2-s2.0-105007149472