Exposure to the COVID-19 stock market crash and its effect on household expectations

  • We survey a representative sample of US households to study how exposure to the COVID-19 stock market crash a↵ects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations about retirement age, desired working hours, and household debt, but have only small e↵ects on expected spending. We provide correlational and experimental evidence that beliefs about the duration of the stock market recovery shape households’ expectations about their own wealth and their planned investment decisions and labor market activity. Our findings shed light on the implications of household exposure to stock market crashes for expectation formation.

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Author:Tobin HanspalORCiDGND, Annika Renate WeberGND, Johannes WohlfartORCiDGND
Parent Title (English):SAFE working paper series ; No. 279
Series (Serial Number):SAFE working paper (279)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2020
Year of first Publication:2020
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2020/06/02
Tag:Coronavirus; Expectation formation; Inequality; Stockholding; Wealth shocks
Issue:May 21, 2020
Page Number:77
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht