This paper uses unique primary data on directly elicited individual subjective expectations to analyse and characterize the process that generates the income of poor, rural Indian households. We validate and use responses to subjective expectations questions and a parametric assumption to fit a household-specific probability distribution for future income. Combining computed moments from this distribution with data for actual current income, we specify and estimate a dynamic model of household income. We find that our households face a very persistent income process. Our paper is one of the first that uses subjective expectations data to model income processes.
Authors
CPP Co-Director
Orazio is an International Research Fellow at the IFS, a Professor at Yale and a Research Associate at the National Bureau of Economic Research.
Associate Director
Britta is an IFS Associate Director, Associate Staff at the Department of Economics at the UC and Researcher at NIHR Obesity Policy Research Unit.
Journal article details
- DOI
- 10.1111/ecca.12190
- Publisher
- Wiley
- Issue
- June 2016
Suggested citation
Attanasio, O and Augsburg, B. (2016). 'Subjective Expectations and Income Processes in Rural India' (2016)
More from IFS
Understand this issue
Don’t cheer end of earnings squeeze: there is more pain to come
19 June 2023
Big firm, little firm: are differences between companies driving inequality and holding back growth?
30 August 2023
The economics of immigration
8 June 2023
Policy analysis
Recent trends in public sector pay
26 March 2024
Gap between higher- and lower-paid public sector workers falls by more than a third since 2007 as doctors and experienced teachers have faced unprecedented pay cuts
26 March 2024
Living standards since the last election
21 March 2024
Academic research
Social skills and the individual wage growth of less educated workers
27 March 2024
The menopause "penalty"
18 March 2024
Evaluating pricing health insurance in lower-income countries: A field experiment in India
14 March 2024