Table 5.
Heterogeneity in inflation beliefs before 2020.
| 1-yr | 3-yr | |||||||
|---|---|---|---|---|---|---|---|---|
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | |
| Inflation expectation | Inflation uncertainty | Probability infl. > 4 | Probability infl. < 0 | Inflation expectation | Inflation uncertainty | Probability infl. > 4 | Probability infl. < 0 | |
| Age > 40 | 0.51∗∗∗ | −0.33∗∗∗ | 3.83∗∗∗ | −2.70∗∗∗ | 0.55∗∗∗ | −0.30∗∗ | 4.47∗∗∗ | −2.81∗∗∗ |
| (0.10) | (0.12) | (0.91) | (0.70) | (0.11) | (0.12) | (0.92) | (0.73) | |
| Female | 0.48∗∗∗ | 0.70∗∗∗ | 6.17∗∗∗ | 1.81∗∗∗ | 0.36∗∗∗ | 0.69∗∗∗ | 4.90∗∗∗ | 2.29∗∗∗ |
| (0.10) | (0.12) | (0.92) | (0.69) | (0.11) | (0.12) | (0.91) | (0.71) | |
| Has kids | −0.02 | 0.40∗∗∗ | 0.25 | 1.66∗∗ | 0.10 | 0.31∗∗ | 0.17 | 1.47∗ |
| (0.11) | (0.13) | (0.93) | (0.72) | (0.12) | (0.13) | (0.96) | (0.77) | |
| White | −0.21 | −1.78∗∗∗ | −4.91∗∗∗ | −3.71∗∗∗ | −0.12 | −1.67∗∗∗ | −4.40∗∗∗ | −3.81∗∗∗ |
| (0.14) | (0.19) | (1.14) | (0.91) | (0.15) | (0.18) | (1.13) | (0.92) | |
| College | −0.10 | −1.02∗∗∗ | −4.14∗∗∗ | −4.37∗∗∗ | −0.14 | −0.98∗∗∗ | −3.57∗∗∗ | −4.08∗∗∗ |
| (0.08) | (0.09) | (0.83) | (0.56) | (0.08) | (0.09) | (0.83) | (0.60) | |
| Income ≥ $60k | −0.30∗∗∗ | −1.18∗∗∗ | −5.71∗∗∗ | −3.44∗∗∗ | −0.31∗∗∗ | −1.18∗∗∗ | −5.21∗∗∗ | −3.03∗∗∗ |
| (0.10) | (0.11) | (0.94) | (0.65) | (0.11) | (0.11) | (0.95) | (0.69) | |
| High numeracy | 0.04 | −1.94∗∗∗ | −5.83∗∗∗ | −8.18∗∗∗ | 0.10 | −1.90∗∗∗ | −4.60∗∗∗ | −8.17∗∗∗ |
| (0.12) | (0.15) | (1.06) | (0.83) | (0.13) | (0.15) | (1.06) | (0.87) | |
| N | 45,271 | 45,037 | 46,640 | 46,640 | 45,316 | 45,131 | 46,756 | 46,756 |
| R2 | 0.01 | 0.20 | 0.06 | 0.08 | 0.01 | 0.19 | 0.04 | 0.06 |
| Dependent variable mean | 3.25 | 4.28 | 32.80 | 16.00 | 3.31 | 4.38 | 34.19 | 17.73 |
| Constant | X | X | X | X | X | X | X | X |
| Month-of-year FE | X | X | X | X | X | X | X | X |
| Survey tenure FE | X | X | X | X | X | X | X | X |
Notes: The table shows the estimated heterogeneity across demographic groups in one-year and three-year inflation expectations, uncertainty and the probability assigned to extreme inflation outcomes before the Covid-19 outbreak. The sample consists of individual survey responses covering the period from January 1, 2017 through December 31, 2019. The demographic covariates are dummy variables for being greater than 40 years old, female, residing in a household with children under 18 years old, white, education level of bachelor's degree or higher, household income greater than or equal to $60,000, and high numeracy. High numeracy is defined as correctly answering at least 4 out of 5 financial literacy questions. The data corresponding to columns 1, 2, 5 and 6 are trimmed biweekly at the top and bottom 2% to remove outliers. The data corresponding to columns 3, 4, 7 and 8 are not trimmed. Standard errors (in parentheses) are clustered at the individual level ∗p < 0.1,∗∗p < 0.05,∗∗∗p < 0.01.