When making intertemporal decisions like saving for retirement individuals need to form expectations over various uncertain future events, such as the chances of high medical expenditures or chances of survival into old age. Research on individuals'expectations has made considerable progress on how to elicit individuals'expectations about the future, leading to various subjective probabilities measures being added to a number of general-purpose surveys. While there has been considerable research into the predictive power of these variables of subsequent outcomes and into measurement properties of subjective probabilities, very little is known about how individuals form and update the expectations they report. In this project we will use up to 60 waves of unique high-frequency longitudinal data on individuals'expectations that we have been collecting in the RAND American Life Panel (ALP). In the context of the ALP Financial Crisis Surveys we have queried respondents monthly about their expectations of losing their job, future stock market returns and gasoline prices, and we have asked them every quarter about their expectations about house prices, retirement, survival and out-of-pocket medical expenses. The overall objective of this proposed research is to establish the empirical foundations of how individuals form and update their expectations, recognizing that the expectation formation process is likely to vary by domain of outcome and by individuals. We will start out by studying the empirical properties of the high-frequency expectations data in cross-section and panel and what they imply for the basic features of individuals'expectation formation process in each domain. We willuse the insights to formulate models of expectation updating. We will estimate and test Bayesian updating models, as well as alternative models depending on the findings. Having a large number of observations for each individual we will estimate the expectation formation models at the individual-level and relate the resulting parameters to individual characteristics. We will further investigate the predictive power of individuals'subjective probabilities for economic decisions in panel data.

Public Health Relevance

Studies have shown a strong link between socioeconomic status and health: How individuals make inter- temporal: decisions relating to their health and economic status under uncertainty will depend on their expectations about the future. Thus expectations will indirectly influence the evolution of health and economic positions. In this project we study individuals'expectation formation in several domains and how these influence economic decision making.

Agency
National Institute of Health (NIH)
Institute
National Institute on Aging (NIA)
Type
Research Program Projects (P01)
Project #
5P01AG008291-19
Application #
8735055
Study Section
Special Emphasis Panel (ZAG1-ZIJ-3)
Project Start
Project End
Budget Start
2014-07-01
Budget End
2015-06-30
Support Year
19
Fiscal Year
2014
Total Cost
$449,680
Indirect Cost
$203,906
Name
Rand Corporation
Department
Type
DUNS #
006914071
City
Santa Monica
State
CA
Country
United States
Zip Code
90401
Cimas, M; Ayala, A; Sanz, B et al. (2018) Chronic musculoskeletal pain in European older adults: Cross-national and gender differences. Eur J Pain 22:333-345
Schwartz, Ella; Khalaila, Rabia; Litwin, Howard (2018) Contact frequency and cognitive health among older adults in Israel. Aging Ment Health :1-9
Sand, Gregor; Gruber, Stefan (2018) Differences in Subjective Well-being Between Older Migrants and Natives in Europe. J Immigr Minor Health 20:83-90
Reus-Pons, Matias; Mulder, Clara H; Kibele, Eva U B et al. (2018) Differences in the health transition patterns of migrants and non-migrants aged 50 and older in southern and western Europe (2004-2015). BMC Med 16:57
Henseke, Golo (2018) Good jobs, good pay, better health? The effects of job quality on health among older European workers. Eur J Health Econ 19:59-73
Foverskov, Else; Glymour, M Maria; Mortensen, Erik L et al. (2018) Education and Cognitive Aging: Accounting for Selection and Confounding in Linkage of Data From the Danish Registry and Survey of Health, Ageing and Retirement in Europe. Am J Epidemiol 187:2423-2430
Abeliansky, Ana Lucia; Strulik, Holger (2018) How We Fall Apart: Similarities of Human Aging in 10 European Countries. Demography 55:341-359
Heger, Dörte; Korfhage, Thorben (2018) Care choices in Europe: To Each According to His or Her Needs? Inquiry 55:46958018780848
Solé-Auró, Aïda; Jasilionis, Domantas; Li, Peng et al. (2018) Do women in Europe live longer and happier lives than men? Eur J Public Health 28:847-852
Lourenco, Joana; Serrano, Antonio; Santos-Silva, Alice et al. (2018) Cardiovascular Risk Factors Are Correlated with Low Cognitive Function among Older Adults Across Europe Based on The SHARE Database. Aging Dis 9:90-101

Showing the most recent 10 out of 309 publications