%0 Report %D 2011 %T Household Stock Market Beliefs and Learning %A Kezdi, Gabor %A Robert J. Willis %K Consumption and Savings %K Expectations %K Methodology %K Net Worth and Assets %X This paper characterizes heterogeneity of the beliefs of American households about future stock market returns, provides an explanation for that heterogeneity and establishes its relationship to stock holding behavior. We find substantial belief heterogeneity that is puzzling since households can observe the same publicly available information about the stock market. We propose a simple learning model where agents can invest in the acquisition of financial knowledge. Differential incentives to learn about the returns process can explain heterogeneity in beliefs. We check this explanation by using data on beliefs elicited as subjective probabilities and a rich set of other variables from the Health and Retirement Study. Both descriptive statistics and estimated relevant heterogeneity of the structural parameters provide support for our explanation. People with higher lifetime earnings, higher education, higher cognitive abilities, defined contribution as opposed to defined benefit pension plans, for example, possess beliefs that are considerably closer to what historical time series would imply. Our results also suggest that a substantial part of the reduced form relationship between stock holding and household characteristics is due to differences in beliefs. Our methodological contribution is estimating relevant heterogeneity of structural belief parameters from noisy survey answers to probability questions. %B NBER Working Paper %I National Bureau of Economic Research %C Cambridge, MA %G eng %4 Multiple or Simultaneous Equation Models/Consumer Economics: Empirical Analysis/Consumer Economics: Empirical Analysis/Information, Knowledge, and Uncertainty: General/Information, Knowledge, and Uncertainty: General/Subjective Probabilities/Stock Market %$ 62802 %R 10.3386/w17614 %0 Report %D 2010 %T Occupational Learning, Financial Knowledge, and the Accumulation of Retirement Wealth %A Brooke Helppie %A Kandice Kapinos %A Robert J. Willis %A Michigan Retirement Research Center %K Health Conditions and Status %K Net Worth and Assets %X This study explores the relationship between general human capital investment, financial knowledge, occupational spillovers, and the accumulation of wealth in a primarily descriptive manner. Drawing upon human capital theory and following previous related work by Delavande, Rohwedder and Willis (2008), we hypothesized that individuals with daily exposure to financial knowledge through their occupation would benefit by having greater financial knowledge that would translate into greater wealth accumulation than individuals who do not enjoy such spillovers from their occupation. Using data from the Cognitive Economics Study and the Health and Retirement Study, we find strong evidence that individuals in financial occupations tend to have greater financial knowledge and moderate evidence that they also have greater wealth accumulation. %B Working Paper %I Michigan Retirement Research Center, University of Michigan %C Ann Arbor, MI %G eng %U http://hdl.handle.net/2027.42/78354 %4 human capital/financial knowledge/Cognitive Economics Study/wealth Accumulation %$ 24320 %0 Report %D 2009 %T Stock Market Expectations and Portfolio Choice of American Households %A Kezdi, Gabor %A Robert J. Willis %K Expectations %K Methodology %K Net Worth and Assets %K Risk Taking %X This paper measures heterogeneity in the stock market expectations of households using survey answers to probability questions. We address survey measurement error in an explicit way and develop a joint model of the effect of expectations on portfolio choice on the one hand and survey answers on the other hand. The model is consistent with documented features of measurement error. We show substantial heterogeneity and that heterogeneity in expectations predicts heterogeneity in stockholding. We show that a general tendency to be optimistic is related to optimism about stock returns and in turn increases stockholding, while a general tendency to be uncertain is strongly related to uncertainty about stock market returns and in turn decreases stockholding. We estimate the level of risk tolerance that links subjective beliefs to stockholding to be moderate. We also show that a significant part of stockholding differences among demographic groups is explained by differences in their expectations. %I University of Michigan %G eng %U http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.506.1967&rep=rep1&type=pdf %4 subjective expectations/survey measurement/household finances/Stock Market/expectations/risk tolerance %$ 23500 %0 Report %D 2002 %T Who Becomes a Stockholder? Expectations, Subjective Uncertainty, and Asset Allocation %A Kezdi, Gabor %A Robert J. Willis %K Net Worth and Assets %B MRDRC Publications %I Michigan Retirement and Disability Research Center, University of Michigan %C Ann Arbor, MI %G eng %U https://mrdrc.isr.umich.edu/pubs/who-becomes-a-stockholder-expectations-subjective-uncertainty-and-asset-allocation/ %L wp_2002/Kezdi-Willis_NBER.pdf %4 Assets/Stock Market %$ 6656