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Expectations of inflation: The role of demographic variables, expectation formation, and financial literacy

Bruine de Bruin, W, Vanderklaauw, W, Downs, JS, Fischhoff, B, Topa, G and Armantier, O (2010) Expectations of inflation: The role of demographic variables, expectation formation, and financial literacy. Journal of Consumer Affairs, 44 (2). 381 - 402 . ISSN 0022-0078

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Abstract

When financial decisions have consequences beyond the immediate future, individuals' economic success may depend on their ability to forecast the rate of inflation. Higher inflation expectations have been reported by individuals who are female, poorer, single and less educated. Our results suggest that these demographic differences in inflation expectations may be partially explained by variations in expectation formation and financial literacy. Specifically, higher inflation expectations were reported by individuals who focused more on how to cover their future expenses and on prices they pay (rather than on the US inflation rate) and by individuals with lower financial literacy.

Item Type: Article
Institution: The University of Leeds
Academic Units: The University of Leeds > Faculty of Business (Leeds)
Depositing User: Symplectic Publications
Date Deposited: 04 Oct 2012 09:37
Last Modified: 15 Sep 2014 03:37
Published Version: http://dx.doi.org/10.1111/j.1745-6606.2010.01174.x
Status: Published
Publisher: Wiley Blackwell
Identification Number: 10.1111/j.1745-6606.2010.01174.x
URI: http://eprints.whiterose.ac.uk/id/eprint/74538

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