---
title: Affective Sensitivity and Inflation Expectations across the Income Distribution
url: https://www.ml-quant.com/papers/repec/toh-dssraa-155/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-11-06
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: RePEc:toh:dssraa:155
source_url: https://econpapers.repec.org/RePEc:toh:dssraa:155
featured: 2026-11-06
citations: unknown
topic: Econometrics & Forecasting
---


# Affective Sensitivity and Inflation Expectations across the Income Distribution

Lower-income households form inflation beliefs two and a half times more sensitive to their emotional state than higher-income households, affecting expectations substantially independent of fundamentals.

- Source: https://econpapers.repec.org/RePEc:toh:dssraa:155
- Identifier: RePEc:toh:dssraa:155
- Released: 2026-11-02
- First featured: Quant Letter No. 138 (2026-11-06): https://www.ml-quant.com/issues/2026-11-06/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Econometrics & Forecasting
- Authors: Shahdah Hanif, Wali Ullah

## Related

- [The Federal Reserve’s Response to the Global Financial Crisis and Its Long-Term Impact: An Interrupted Time-Series Natural Experimental Analysis](https://www.ml-quant.com/papers/arxiv/2305.12318/): Quantitative easing positively affected US GDP but did not impact inflation.
- [Behind the curve: Reassessing inflation risks with a High-dimensional Distributional VAR (HiDVAR)](https://www.ml-quant.com/papers/repec/zbw-imfswp-344237/): HiDVAR, a data-rich distributional framework, improves inflation tail-risk assessment by 28% in CRPS relative to standard benchmarks and performs well in real-time evaluation.
- [Improving inflation forecasting by modeling expectation de-anchoring in low-inflation periods](https://www.ml-quant.com/papers/repec/zbw-imfswp-344239/): A model allowing expectations to shift to a low-inflation equilibrium cuts forecast errors roughly 50 percent versus central bank projections for euro area core inflation in the 2010s.
- [News shocks and inflation: theory and evidence from large oil discoveries](https://www.ml-quant.com/papers/repec/bis-biswps-1389/): Large oil discoveries with production lags of five years show that anticipated future output raises core inflation a decade ahead, with effects concentrated in nontradables under fixed exchange rates.
- [Official Inflation Information and Household Expectations in High-Inflation Türkiye](https://www.ml-quant.com/papers/ssrn/7665101/): Türkiye survey respondents shown the official 30.6-32.6% inflation rate lower their expectations by 3.2 percentage points, though the effect is selective by age and political affiliation.
- [150 years of U.S. inflation expectations](https://www.ml-quant.com/papers/repec/zbw-qucehw-344109/): A narrative intensity measure from New York Times articles since 1870 predicts inflation better than commodity-based measures and reveals that the 1930s deflation was anticipated earlier than consensus suggests.