TESTING CONSUMERS' ASYMMETRIC PERCEPTION OF CHANGES IN HOUSEHOLD FINANCIAL SITUATION
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.
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Document Type: Research Article
Affiliations: CPB Netherlands Bureau for Economic Policy Analysis, VU University of Amsterdam and Netspar
Publication date: June 1, 2010