Investigating Subjective Expectations in the NLSY

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DESCRIPTION (provided by applicant): In the last decade, economists have begun to consider the use of subjective data for understanding individual decision-making. A critical perspective of the emerging research is that expectations and other subjective phenomenon represent different dimensions of the same decision process generating objective demographic outcomes. Since the linkages among the components are almost always conceptual, formal models of behavior must guide analyses of subjective data. The availability of new subjective data, with their direct connection to behavioral models, affords exciting new opportunities to formulate, estimate and evaluate formal models of demographic behavior. My long-run research agenda is to formulate and estimate a structural econometric model of fertility behavior that links notions of wantedness, expectations and birth outcomes. Before such a time-intensive and arduous research agenda is undertaken, a better understanding of the properties of the subjective data is needed. This application presents a "pilot-study "to investigate the feasibility of this long run research agenda. I propose to investigate the informational content and nature of responses to subjective expectation questions in two cohorts of youth within the National Longitudinal Survey Program, the 1979 Cohort (NLSY79, individuals born in 1957-1964), and the 1997 Cohort (NLSY97, individuals born in 1980-1984). Through the execution of five empirical analyses of NLSY data, the proposed research will contribute a data product useful to researchers interested analyzing the NLSY97; will characterize the nature and quality of responses to subjective expectation questions appearing in various rounds of the NLSY79 and NLSY97 surveys; will contribute to the survey methodology literature on "best practices" for constructing and fielding subjective expectation questions; and will contribute to our understanding of the formation of subjective fertility expectations over the lifecycle, which will also contribute to our understanding of fertility decision making, especially by youth.