Perceptions of economic insecurity - Evidence from the survey of economic expectations

The Survey of Economic Expectations (SEE) is a new national survey initiated in an effort to learn how Americans perceive their near-term futures. This article uses SEE data on more than two thousand labor force participants interviewed in 1994 and 1995 to describe how Americans in the labor force perceive the risk of near-term economic misfortune. We measure economic insecurity through responses to questions eliciting subjective probabilities of three events in the year ahead: absence of health insurance, victimization by burglary, and job loss. Respondents are willing to describe their expectations in probabilistic terms, and they appear to do so in a meaningful way. Using the responses to classify individuals as relatively secure, relatively insecure, and highly insecure, we find that respondents with a high risk of one adverse outcome tend also to perceive high risks of the other outcomes. Males and females have similar risk perceptions, but there is substantial variation in perceptions by schooling and race. In particular, black males and males with no postsecondary schooling tend to perceive much greater insecurity than do others in the labor force. Expectations and realizations of health insurance coverage and of job loss tend to match up closely, but respondents substantially overpredict the risk of burglary.