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- Title
Discrimination and Economic Expectations.
- Authors
Bazley, William; Bonaparte, Yosef; Korniotis, George; Kumar, Alok
- Abstract
This paper examines whether perceptions of discrimination affect the economic expectations of U.S. households. We focus on two forms of expectations that play a central role in economic and financial decisions of households: labor income and inflation. Using experimental data, we demonstrate that discrimination generates greater dispersion in household forecasts. It increases subjective expectations of income uncertainty by 8% and inflation uncertainty by 5%. The impact of discrimination is concentrated among racial/ethnic minorities, inducing 12%–16% greater variation in their income uncertainty expectations and 10%–12% greater variation in their inflation uncertainty expectations. Both psychological and emotional factors appear to influence the discrimination–economic expectations relation. This paper was accepted by David Sraer, finance. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.02276.
- Subjects
ECONOMIC expectations; INCOME; HOUSEKEEPING; PSYCHOLOGICAL factors; MINORITIES
- Publication
Management Science, 2024, Vol 70, Issue 6, p4115
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2022.02276