Exposure to the COVID-19 Stock Market Crash and its Effect on Household Expectations

Tobin Hanspal, Annika Weber and Johannes Wohlfart
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Tobin Hanspal: Department of Finance, Accounting and Statistics, WU Vienna University of Economics and Business
Annika Weber: Department of Finance, Goethe University Frankfurt
Johannes Wohlfart: CEBI, Department of Economics, University of Copenhagen

No 20-13, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: We survey a representative sample of US households to study how exposure to the COVID-19 stock market crash affects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations about retirement age, desired working hours, and household debt, but have only small effects on expected spending. We provide correlational and experimental evidence that beliefs about the duration of the stock market recovery shape households' expectations about their own wealth and their planned investment decisions and labor market activity. Our findings shed light on the implications of household exposure to stock market crashes for expectation formation.

Keywords: Coronavirus; Stockholding; Wealth shocks; Expectation formation; Inequality. (search for similar items in EconPapers)
JEL-codes: D14 D31 D83 D84 D91 (search for similar items in EconPapers)
Pages: 76 pages
Date: 2020-05-25
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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