Research

Household Disagreement about Expected Inflation, with Paula Patzelt and Ricardo Reis. 

June 2025. In Research Handbook of Inflation (Edward Elgar Publishing), edited by Guido Ascari and Riccardo Trezzi. Chapter 15. 

Abstract: This paper surveys the major facts from research on disagreement between households on what they expect inflation to be. We document them using figures and correlations that capture: the statistical regularities on the observable drivers of disagreement, the measurement of residual disagreement, the usefulness of disagreement to forecast inflation, the response of disagreement to shocks, the disagreement between households and professionals, and the relation between disagreement, risk, and uncertainty.

• Local copy (link)

• Published version (link)

• Data and figures (GitHub)

• Media [Financial Times] [New York Times]

Polarizing Time Preferences: the Ambivalent Role of Uncertainty in Savings.

• Current draft: May 2026  (link)

Abstract: This paper studies how uncertainty reshapes forward-looking behavior in household decision-making. Using a survey experiment (N = 2,000), I show that exogenous increases in income uncertainty polarize time preferences: they make forward-looking individuals more forward-looking (4-7%) and short-sighted individuals more short-sighted (3-5%). This divergence carries through to saving: uncertainty raises saving for the former but reduces it for others, so that the aggregate precautionary response appears muted. I explain this pattern with a consumption-saving model in which agents choose how much thought to allocate to the future, trading off the benefits of planning ahead against planning costs that rise with uncertainty. Because individuals differ in how strongly these costs respond to uncertainty, the same shock leads some to plan more and others to disengage. Embedding the mechanism in an incomplete-markets general equilibrium model, calibrated to the experimental evidence, produces endogenous heterogeneity in patience, raises the wealth Gini by 26% and the top-1 percent wealth share by 71% relative to an economy with uniform discounting. How households cope with risk---not just the risk they face---shapes both saving and wealth inequality.

Private Signals and Public Feedback: How Households Learn to Forecast Inflation 

Current version: April 2026. 

Abstract: Households overweight their personal price experience when forming inflation expectations, and information provision does not fix this. Among the NY Fed SCE panel respondents, who are interviewed monthly for up to twelve months, forecast accuracy improves substantially over their tenure in the panel. I show that this is not because households acquire better information about inflation during or between interviews: forecast variance falls 66% while the covariance of forecasts with realized inflation does not change. Instead, experienced respondents reweight away from their personal price experience toward the public CPI, reacting more strongly than newcomers to the same monthly CPI release. Within-person dynamics during the 2021–22 inflation surge corroborate the mechanism. A Bayesian model in which agents learn the precision of their private price signal rationalizes the evidence. 

Empty vessels make the most noise: "don't know" answers in household expectations surveys. 

Current version: March 2024. 

Abstract: Standard practice in household expectations surveys discards "don't know" responses, which account for roughly 10% of answers to the Michigan Survey of Consumers' one-year inflation expectations question. I show this convention biases inference. Non-respondents are concentrated among women, lower-income, less-educated, and older households --- the same characteristics that predict higher reported expectations --- so dropping them induces sample selection. Three complementary strategies pin down the direction of the bias: regressions on observable correlates, multiple imputation from each respondent's other survey answers, and a natural experiment in the Bank of England Inflation Attitudes Survey in which the "don't know" option was briefly removed in May 2020. All three point the same way; the imputation exercise puts the average gap at about 1 percentage point. Re-running tests of full-information rational expectations on the multiply-imputed sample further reveals substantial underreaction to current inflation among "don't know" households --- underreaction that is statistically undetectable in the conventional sample. Because non-response declines when inflation rises, the share of households whose expectations are well-measured is itself cyclical, with implications for the time-varying traction of expectations-based monetary policy.

Risky Business? Earning Dynamics and Entrepreneurship 

with Bo Jacobs-Strom and Kate Smith (LSE)

Abstract: To what extent do the risks of starting and running a business lead to resource misallocation? Individuals face a variety of risks when starting a business---a key one is the difference in earnings relative to staying in salaried employment. Starting a business may offer a higher probability of faster earnings growth, but can also increase the probability of very low earnings realizations. We provide novel evidence on the earnings dynamics of business owners compared with employees using rich administrative data from the UK. We complement these findings by implementing a new survey to elicit the risk preferences and constraints faced by potential and current business owners. Informed by these findings we develop and estimate a model of occupational choice to quantify the extent to which earning risk discourages entrepreneurship and study the different ways policy can alleviate these risks. 

The “uncertainty trap”: does greater subjective uncertainty about economic outlooks reinforce inequalities?