Earnings expectations, revisions, and realizations

During the spring and the fall of 1993, respondents to a national household survey were asked to report expectations of spring 1994 weekly earnings. Elicited in the form of subjective probabilities, these data are potentially much more informative than are typical reports of economic expectations. Subjective probability distributions of future weekly earnings are estimated for each respondent, based on his or her reports of a series of subjective probabilities. This paper analyzes the cross-sectional variation in expectations, revisions of expectations between the spring and the fall of 1993, and the relationship between 1993 expectations and the distribution of spring 1994 earnings realizations. Generally positive findings on the validity of the data bode well for the prospects of eliciting expectations in future surveys.