Exposure to the COVID-19 stock market crash and its effect on household expectations

Tobin Hanspal, Annika Weber and Johannes Wohlfart

No 279, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

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)
Date: 2020
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Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:279

DOI: 10.2139/ssrn.3577217

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