The Role of Demographic and Psychological Differences in Future Financial and Economic Expectations

Abstract

In this study, agents are asked to assess the movements of short and long-term economic and financial variables. These variables include the price level of goods and services, real economic and financial variables. Differently from prior research, this paper investigates short and long run expectations, and tests the influence of racial composition of population on future price expectations. We analyze the agent expectations from further aspects such as age, marital status, working, psychological mood, income and wealth. The findings indicate that expectations are different between demographic groups. Particularly, females tend to expect higher changes almost in the entire tested variables; ethnic minorities systematically report higher expectations; marital status has no impact on future expectations; and working agents tend to be more conservative regarding future changes. In addition, pessimistic agents generally tend to report higher future price movements mainly for gold, interest rates, unemployment and inflation rates.