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Does age matter in inflation uncertainty?

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  • Zhong, Chunping
  • Huo, Jiaxu

Abstract

This letter studies age-heterogeneous inflation uncertainty. We contrast two measures of uncertainty: The variance of the respondents' subjective belief distribution and the relatively objective rounding-based uncertainty. Inconsistency of two measures suggests that older individuals may underestimate inflation uncertainty while the young tend to overestimate it. This is further supported by the observation that older individuals have higher prediction errors. The research indicates a potential bias in subjective uncertainty assessments of different age groups.

Suggested Citation

  • Zhong, Chunping & Huo, Jiaxu, 2024. "Does age matter in inflation uncertainty?," Economics Letters, Elsevier, vol. 242(C).
    • Handle: RePEc:eee:ecolet:v:242:y:2024:i:c:s0165176524003185
    DOI: 10.1016/j.econlet.2024.111834
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    References listed on IDEAS

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    1. Binder, Carola C., 2017. "Measuring uncertainty based on rounding: New method and application to inflation expectations," Journal of Monetary Economics, Elsevier, vol. 90(C), pages 1-12.
    2. Engelberg, Joseph & Manski, Charles F. & Williams, Jared, 2009. "Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 30-41.
    3. Feigenbaum James A. & Li Geng, 2012. "Life Cycle Dynamics of Income Uncertainty and Consumption," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-49, May.
    4. Ulrike Malmendier & Stefan Nagel, 2016. "Learning from Inflation Experiences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(1), pages 53-87.
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