Key Findings Details
Investment Decisions in Retirement: The Role of Subjective Expectations
Marco Angrisani, Michael Hurd and Erik Meijer
- An economic model that allows individuals to have different beliefs about stock market returns than the average of the past 50 years represents individuals’ investment behavior better than a typical "rational" economic model.
- If stock market returns are, on average, as they were in the past 50 years, individuals incur a welfare loss of up to 12%, depending on risk aversion.
- If stock market returns are, on average, as they were in the past 10 years, individuals on average invest near-optimally.