Sociology

Archaeology

Recession

Purchasing

Population

Demographic economics

Economic growth

Durable good

Epistemology

Macroeconomics

Demography

Philosophy

Socioeconomic status

Economics

Geography

Operations management

Unemployment

Context (archaeology)

Stock market

Monetary economics

Pessimism

Business cycle

Review of Financial Studies

We show that individuals’ macroeconomic expectations are influenced by their socioeconomic status (SES). People with higher income or higher education are more optimistic about future macroeconomic developments, including business conditions, the national unemployment rate, and stock market returns. The spread in beliefs between high- and low-SES individuals diminishes significantly during recessions. A comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low-SES individuals. SES-driven expectations help explain why higher-SES individuals are more inclined to invest in the stock market and more likely to consider purchasing homes, durable goods, or cars. Received November 13, 2017; editorial decision February 12, 2019 by Editor Wei Jiang. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Socioeconomic Status and Macroeconomic Expectations