Discussion paper

DP15934 Information and Wealth Heterogeneity in the Macroeconomy

We document systematic differences in macroeconomic expectations across U.S. households and rationalize our findings with a theory of information choice. We embed this theory into an incomplete-markets model with aggregate risk. Our model is quantitatively consistent with the pattern of expectation heterogeneity in the data. Relative to a full-information counterpart, our model implies substantially increased macroeconomic volatility and inequality. We show through the example of a wealth tax that neglecting the information channel leads to erroneous conclusions about the effects of policies. While in the model without information choice a wealth tax reduces wealth inequality, in our framework it reduces information acquired in the economy, leading to increased volatility and higher wealth inequality in equilibrium.


Broer, T, A Kohlhas, K Mitman and K Schlafmann (2021), ‘DP15934 Information and Wealth Heterogeneity in the Macroeconomy‘, CEPR Discussion Paper No. 15934. CEPR Press, Paris & London. https://cepr.org/publications/dp15934