The Review of Economics and Statistics Vol. 74 No. 2 1992
An Empirical Window on Rational Expectations Formation
Abstract
Persons' expectations regarding their ultimate life span provide a tractable empirical opportunity to test for rational expectations. To the extent people only utilize information from "current life tables, " they underestimate the more relevant ultimate life expectancy that results from on-going improvements in mortality experience not reflected in these tables. The expectations observed in the authors' empirical work are not consistent with rational-expectations models. All available information about life expectancies and their trends were not used by the surveyed households in forming life-span expectations. This deficiency precludes correct estimation of the ultimate life expectancy necessary for informed life-cycle choices.
- DOI
- 10.2307/2109664
- Volume
- 74
- Issue
- 2
- Pages
- 320
- Sources
- crossref openalex