The precision of subjective data and the explanatory power of economic models

• Published in: Journal of econometrics Vol. 200; no. 2; pp. 378 - 389
• Main Authors: Drerup, Tilman, Enke, Benjamin, von Gaudecker, Hans-Martin
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.10.2017
• Subjects: Measurement error; Stock market participation; Subjective expectations; C35; G11; C51; Measurement error; Subjective expectations; Stock market participation

Subjective expectations are important primitives in many economic models, yet their direct measurement often yields imprecise and inconsistent data. This has previously been treated as a pure measurement error problem. In contrast, this paper argues that the individual-level precision of such data m...