Expectations affect economic decisions, and therefore inaccurate expectations are costly. Expectations can be wrong in ways that are systematic (bias) or unsystematic (noise). We provide a general method for quantifying the noise component. The method is based on the insight that theoretical...

Expectations affect economic decisions, and inaccurate expectations are costly. Expectations can be wrong due to either bias (systematic mistakes) or noise (unsystematic mistakes). We develop a framework for quantifying the level of noise in survey expectations. The method is based on the...