Wishful Thinking in Macroeconomic Expectations: A Field Experiment in China
Pemberi pidato: LI Jingjing
Tanggal: 30, April, 2021 – Jumat
Tempat: Kamar 2235, Gedung 2, Kampus Songjiang
Summary: We conduct an online field experiment in China to investigate determinants of macroeconomic expectations following the Covid-19 outbreak. We investigate the effect of probability overweighting, religiosity, ambiguity aversion, and time preference. We find that subjects exhibiting probability overweighting, having higher degree of religiosity, having lower discount factor are more optimistic on economic growth and income, while ambiguity averse subjects are more pessimistic about the impact of Covid-19 outbreak on the economic growth rate. We compute the forecast errors and estimate the proportion of forecasts with rounding and implausible values. We find that significant proportion of subjects have rather poor understanding on macroeconomic variables. Subjects with higher degree of religiosity, living in small towns and villages, and with higher subjective socioeconomic status have higher forecast errors, while subjects with better education have lower forecast errors. Overall, we find that subjects form optimistic expectations, supporting the implication of belief-based utility (Brunnermeier and Parker, 2005) and wishful thinking (Seybert and Bloomfield, 2009) on macroeconomic expectations.
Speaker Biography: Li Jingjing, Doktor Ilmu Ekonomi The Hong Kong University of Science and Technology.