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, , , and Michael Weber, “Forward Guidance and Household Expectations,†Working Paper, 2020.
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, Dominic Russel, and Johannes Stroebel, “The Geographic Spread of COVID19 Correlates with Structure of Social Networks as Measured by Facebook,†Working Paper, 2020.
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, Yuriy Gorodnichenko, and Michael Weber, “Monetary Policy Communications and Their Effects on Household Inflation Expectations,†Working Paper, 2019.
- 1) for holding other (non-retirement) financial wealth in January 2020 (right). 90% confidence intervals are displayed in all figures. All specifications are based on respondents in the four control arms, who have not received any information. All specifications control for gender, age, employment status, being the household’s main earner, being the household’s financial decision-maker, party affiliation, log net household income, logs of retirement wealth, of other financial wealth, of real estate wealth, and of debt, borrowing constraints, stock market participation, the share of equity in total financial assets, investment experience, Census region, survey date, and the survey arm.
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Andersen, Asger Lau, Emil Toft Hansen, Niels Johannesen, and Adam Sheridan, “Consumer Responses to the COVID-19 Crisis: Evidence from Bank Account Transaction Data,†Working Paper, 2020.
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Bachmann, Rüdiger, Tim O Berg, and Eric R Sims, “Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence,†American Economic Journal: Economic Policy, 2015, 7, 1–35.
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Baker, Scott, R.A. Farrokhnia, Steffen Meyer, Michaela Pagel, and Constantine Yannelis, “How Does Household Spending Respond to an Epidemic? Consumption During the 2020 COVID-19 Pandemic,†Working Paper, 2020.
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Binder, Carola, “Coronavirus Fears and Macroeconomic Expectations,†Review of Economics and Statistics, 2020.
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Brunnermeier, Markus K and Stefan Nagel, “Do Wealth Fluctuations Generate Time-Varying Risk Aversion? Micro-Evidence on Individuals,†American Economic Review, 2008, 98 (3), 713–36.
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Calvet, Laurent E., John Y. Campbell, and Paolo Sodini, “Fight or Flight? Portfolio Rebalancing by Individual Investors*,†The Quarterly Journal of Economics, 02 2009, 124 (1), 301–348.
Cavallo, Alberto, Guillermo Cruces, and Ricardo Perez-Truglia, “Inflation Expectations, Learning and Supermarket Prices: Evidence from Field Experiments,†American Economic Journal: Macroeconomics, 2017, 9 (3), 1–35.
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D’Acunto, Francesco, Ulrike Malmendier, and Michael Weber, “Gender Roles and the Gender Expectations Gap,†Working Paper, 2020.
D’Acunto, Ulrike Malmendier, Juan Ospina, and Michael Weber, “Exposure to Daily Price Changes and Inflation Expectations,†Working Paper, 2019.
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- Dollar changes are constructed from survey questions for retirement and other financial wealth and for income (assuming that the respondent expected a quarter of her 2019 income for the first quarter of 2020), and for spending from the survey question on percent changes and estimates of the level of spending of different groups in 2019 from the CEX. All specifications are based on respondents in the four control arms, who have not received any information. All specifications control for gender, age, employment status, being the main earner, being financial decision-maker, party affiliation, log net household income, logs of retirement wealth, of other financial wealth, of real estate wealth, and of debt, borrowing constraints, stock market participation, the equity share in total financial assets, investment experience, Census region, survey date, and the survey arm.
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Dominitz, Jeff and Charles F Manski, “Expected Equity Returns and Portfolio Choice: Evidence from the Health and Retirement Study,†Journal of the European Economic Association, 2007, 5 (2-3), 369–379.
Fetzer, Thiemo, Lukas Hensel, Johannes Hermle, and Christopher Roth, “Coronavirus Perceptions and Economic Anxiety,†Working Paper, 2020.
- Figure A10: Effects of wealth and income shocks on expected spending Notes: This figure shows binned scatter plots of the association of shocks to the respondent’s household financial wealth and net income with expected growth of total nominal household spending in 2020 compared to 2019. The plots in the top row and in the bottom right are based on specification 2 shown in Table 3, which jointly includes shocks to income, retirement financial wealth and other financial wealth. The plot in the bottom left is based on a similar specification replacing the shocks to financial wealth in retirement accounts and in non-retirement accounts with the shock to overall financial wealth. The outcome is expected household spending growth in dollars, trimmed at the 2nd and 98th percentiles.
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- Figure A13: Effects of wealth and income shocks on economic plans: Heterogeneity I Notes: This figure shows heterogeneity in the effect of shocks to the respondent’s household financial wealth and net income on expected economic decisions. We plot the coefficients from specifications regressing indicators for whether the coronavirus crisis increases the respondent’s expectations about outstanding household debt by the end of 2020 (top row), expected desired working hours over the next years (middle row) and expected retirement age (bottom row), all coded as 0 or 100, on changes to a household’s retirement financial wealth, other financial wealth, and net household income. We plot these coefficients across columns by median splits (below and equal to median vs. strictly above median) according to age (left column) and pre-crisis household net income (middle), and by an indicator (0 vs.
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- Figure A3: Financial assets and incomes across groups Notes: This figure displays the average value of financial assets (top row) and gross household income during the first quarter of 2020 (bottom row), by quintile of the pre-crisis net worth distribution (left column), by quintile of the pre-crisis net income distribution (middle column) and by age group (right column). Values of financial assets are displayed separately for financial assets outside of retirement accounts, for financial assets in retirement accounts, and for the combined value of all financial assets. The sample is the full sample without missings in the relevant survey questions.
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- Figure A4: Participation and stock share of financial wealth across groups Notes: This figure displays participation, and the share of financial wealth held, in stocks or mutual funds by quintiles of pre-crisis net wealth (left column) and of pre-crisis net income, (middle), and by age group (right), respectively. The top row plots the rate of participation in stocks and stock mutual funds in the full sample. The middle row plots the unconditional equity share, and the bottom plots the conditional equity share including only respondents that report positive holdings of stocks or stock mutual funds as of January 2020. Equity shares are displayed separately for financial assets outside retirement accounts, for financial assets in retirement accounts, and for the combined value of financial assets. The sample includes all respondents without missings in the relevant survey questions.
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- Figure A8: Wealth shocks across groups by risky share Notes: This figure displays the change in the value of financial assets due to the February/March 2020 stock market drop until the survey date in percentage terms by equity portfolio share bin, separately by quintile of the pre-crisis net worth distribution (top row), by quintile of the pre-crisis net income distribution (middle row), by age group (bottom row). Changes in the value of financial assets are for the combined value of financial assets inside and outside of retirement accounts. The values are conditional on positive equity investments in January 2020. Changes in the value of financial assets are net capital losses for the majority of respondents, and net capital gains for a small fraction of respondents. We trim reported shocks to financial wealth at the 2nd and 98th percentiles. The sample is the full sample without missings in the relevant survey questions.
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- Figure A9: Job losses across groups Notes: This figure displays the percentage of respondents who lost their job since January 2020 by precrisis net wealth quintile (top left), pre-crisis net income quintile (top right), age (middle left), education (middle right), pre-crisis employment type (bottom left), and gender (bottom right). The question is presented only to respondents who report to have been employed as of January 2020. The sample is the full sample without missings in the relevant survey questions.
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- Fuster, Andreas, Greg Kaplan, and Basit Zafar,“What Would You Do With $500? Spending Responses to Gains, Losses, News and Loans,†Working Paper, 2020.
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- Giglio, Stefano, Matteo Maggiori, Johannes Stroebel, and Stephen P Utkus, “Five Facts About Beliefs and Portfolios,†Working Paper, 2020.
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- Goldfayn-Frank, Olga and Johannes Wohlfart, “Expectation Formation in a New Environment: Evidence from the German Reunification,†Journal of Monetary Economics, 2019.
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Gollier, Christian, “Time Diversification, Liquidity Constraints, and Decreasing Aversion to Risk on Wealth,†Journal of Monetary Economics, 2002, 49 (7), 1439–1459.
Gormsen, Niels Joachim and Ralph SJ Koijen, “Coronavirus: Impact on Stock Prices and Growth Expectations,†Working Paper, 2020.
Greenwood, Robin and Andrei Shleifer, “Expectations of Returns and Expected Returns,†The Review of Financial Studies, 2014, 27 (3), 714–746.
Guiso, Luigi and Paolo Sodini, “Household Finance: An Emerging Field,†in “Handbook of the Economics of Finance,†Vol. 2, Elsevier, 2013, pp. 1397–1532.
Haliassos, Michael and Carol C. Bertaut, “Why do so Few Hold Stocks?,†The Economic Journal, 1995, 105 (432), 1110–1129.
Hoynes, Hilary, Douglas L Miller, and Jessamyn Schaller, “Who Suffers During Recessions?,†The Journal of Economic Perspectives, 2012, 26 (3), 27–47.
Imas, Alex, “The Realization Effect: Risk-taking After Realized versus Paper Losses,†American Economic Review, 2016, 106 (8), 2086–2109.
Jappelli, Tullio and Mario Padula, “The Consumption and Wealth Effects of an Unanticipated Change in Lifetime Resources,†Management Science, 2015, 62 (5), 1458–1471.
- Johannes Wohlfart, Department of Economics and CEBI, University of Copenhagen, CESifo, e-mail: johannes.wohlfart@econ.ku.dk Figure A2: Information Treatment FinCrisisInfo Notes: This figure illustrates the information treatment screen, providing an example of the FinCrisisInfo treatment arm. The information treatment includes a dynamic figure contrasting the respondent’s prior belief (in dark orange, on the right) with the actual number of years it took for the US stock market to recover to its levels before the 2007-2009 Financial Crisis (in yellow, on the left). Recovery durations for the three different information treatments FinCrisisInfo, BlackMondayInfo and DotComInfo are calculated based on monthly time series data of the S&P500.
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Kuchler, Theresa and Basit Zafar, “Personal Experiences and Expectations about Aggregate Outcomes,†Journal of Finance, 2019, 74 (5), 2491–2542.
Laudenbach, Christine, Benjamin Loos, Jenny Pirschel, and Johannes Wohlfart, “The Trading Response of Individual Investors to Local Bankruptcies,†Working Paper, 2020.
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Malmendier, Ulrike and Stefan Nagel, “Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?,†The Quarterly Journal of Economics, 2011, 126 (1), 373–416.
- Meeuwis, Maarten, Jonathan A Parker, Antoinette Schoar, and Duncan I Simester, “Belief Disagreement and Portfolio Choice,†Working Paper, 2019.
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- Mian, Atif, Amir Sufi, and Nasim Khoshkhou, “Partisan Bias, Economic Expectations, and Household Spending,†Working Paper, 2018.
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Online Appendix: Exposure to the COVID-19 Stock Market Crash and its Effect on Household Expectations Tobin Hanspal1 Annika Weber2 Johannes Wohlfart3 A Additional figures Figure A1: US stock market and number of initial jobless claims around the survey period Notes: This figure displays the number of initial jobless claims (in thousands, left axis) and the development of the S&P500 stock market index (index points, right axis) over the first 19 weeks in 2020, on a weekly basis. The April 6-13 survey period is highlighted in light red. 1 Tobin Hanspal, Department of Finance, Accounting and Statistics, WU Vienna University of Economics and Business, e-mail: tobin.hanspal@wu.ac.at 2 Annika Weber, Department of Finance, Goethe University Frankfurt, e-mail: annika.weber@hof.unifrankfurt. de 3
- Roth, Christopher and Johannes Wohlfart, “How Do Expectations About the Macroeconomy Affect Personal Expectations and Behavior?,†Review of Economics and Statistics, 2019.
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- Vissing-Jørgensen, Annette, “Limited Asset Market Participation and the Elasticity of Intertemporal Substitution,†Journal of Political Economy, 2002, 110 (4), 825–853.
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- Vissing-Jorgensen, Annette, “Perspectives on Behavioral Finance: Does â€Irrationality â€Disappear with Wealth? Evidence from Expectations and Actions,â€NBER Macroeconomics Annual, 2003, 18, 139–194.
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Weber, Martin, Elke U Weber, and Alen NosicÌ, “Who Takes Risks When and Why: Determinants of Changes in Investor Risk Taking,†Review of Finance, 2013, 17 (3), 847–883.