|
This paper tests the Rational Expectations (RE) hypothesis regarding retirement
expectations of married older American couples, controlling for sample selection and
reporting biases. In prior research we found that individual retirement expectation
formation was consistent with the Rational Expectation hypothesis, but in that work
spousal considerations were not analyzed. In this research we take advantage of panel
data on expectations to test the RE hypothesis among married individuals as well as joint
expectations among couples. We find that regardless of whether we assume that married
individuals form their own expectations taking spouse’s information as exogenous, or the
reports of the couple are the result of a joint expectation formation process, their
expectations are consistent with the RE hypothesis. Our results support a wide variety of
models in economics that assume rational behavior for married couples.
|
