The Rationality of Retirement Expectations and the Role of New Information

TitleThe Rationality of Retirement Expectations and the Role of New Information
Publication TypeJournal Article
Year of Publication2005
AuthorsBenítez-Silva, H, Dwyer, DS
JournalThe Review of Economics and Statistics
Volume87
Issue3
Pagination587-592
ISBN Number00346535, 15309142
Keywordsretirement expectations
Abstract

This paper tests the rationality of retirement expectations, controlling for sample selection and reporting biases. We find that retirement expectations in the Health and Retirement Study are consistent with the rational expectations hypothesis. We also analyze how new information affects the evolution of retirement expectations and discover that, on average, individuals correctly anticipate most uncertain events when planning their retirement, except for some health shocks, the need for additional private health coverage, and the probability of a job change. Our results support a wide variety of models in economics that assume rational behavior.

URLhttp://www.jstor.org/stable/40042951
Citation Key11443