Note: I thank Rob Alessie, Marcel Das, Bas van der Klaauw, Marcel Lever, Rocus van Opstal, Arthur van Soest, Daniel van Vuuren, and two anonymous referees for commenting on previous versions of this study. In addition I also thank the participants of the TMR meeting in Utrecht (November 2006), and at the Tilburg AGE Meeting (October 9, 2004). I also thank Thomas L. Steinmeier and Arie Kapteyn for their comments at the “Improving Social Insurance Programs” conference at Maryland University (September 13, 2003). This paper is based on the Social Economic Panel (SEP) data administered by Statistics Netherlands. The views expressed in this paper are of the author, and do not necessarily reflect the views of Statistics Netherlands.
TESTING CONSUMERS' ASYMMETRIC PERCEPTION OF CHANGES IN HOUSEHOLD FINANCIAL SITUATION
Version of Record online: 5 JAN 2010
© 2010 The Author. Journal compilation © International Association for Research in Income and Wealth 2010
Review of Income and Wealth
Volume 56, Issue 2, pages 327–350, June 2010
How to Cite
Mastrogiacomo, M. (2010), TESTING CONSUMERS' ASYMMETRIC PERCEPTION OF CHANGES IN HOUSEHOLD FINANCIAL SITUATION. Review of Income and Wealth, 56: 327–350. doi: 10.1111/j.1475-4991.2009.00371.x
- Issue online: 17 MAY 2010
- Version of Record online: 5 JAN 2010
Using empirical analysis, this study shows that individuals perceive negative changes in their financial situation as larger relative to positive changes. Evidence of this asymmetry is provided using survey data on individual expectations, perceptions, income, and wealth. The study's results are in line with results in the psychological-economic literature but, contrary to that literature, are obtained by analyzing panel survey data, rather than experimental evidence. These results cast some doubts on the tendency of economists to treat symmetrically the relation between economic variables and income or wealth in their models.