Expectations Formation of Older Married Couples and the Rational Expectations Hypothesis

TitleExpectations Formation of Older Married Couples and the Rational Expectations Hypothesis
Publication TypeReport
Year of Publication2003
AuthorsBenítez-Silva, H, Dwyer, DS
Series TitleMichigan Retirement Research Center Research Paper
Document Number2003-062
InstitutionMichigan Retirement Research Center, University of Michigan
CityAnn Arbor, MI

This paper tests the Rational Expectations (RE) hypothesis regarding retirement expectations of married older American couples, controlling for sample selection and reporting biases. In prior research we found that individual retirement expectation formation was consistent with the Rational Expectation hypothesis, but in that work spousal considerations were not analyzed. In this research we take advantage of panel data on expectations to test the RE hypothesis among married individuals as well as joint expectations among couples. We find that regardless of whether we assume that married individuals form their own expectations taking spouse's information as exogenous, or the reports of the couple are the result of a joint expectation formation process, their expectations are consistent with the RE hypothesis. Our results support a wide variety of models in economics that assume rational behavior for married couples.

Endnote Keywords

Rational Expectations

Endnote ID


Citation Key5588