⁵²The presumption that permanent idiosyncratic shocks are easily observed is bolstered by the work of Low et al. [2010], who find that most ‘permanent’ changes to individual income income are concentrated in periods when people change jobs or become unemployed or reemployed. It is not plausible to assume that consumers are not aware that their income has permanently changed when they take a new job or are fired from an existing one. Furthermore, there are at least some shocks whose transitory nature is impossible to misperceive; the best example is lottery winnings in Norway, see again Fagereng et al. [2017]. The consumption responses to those shocks resemble the responses measured in the previous literature to shocks that economists presumed (contra Pischke) that consumers knew to be transitory. If consumers respond to such shocks in ways similar to their responses to unambiguously transitory shocks like lottery winnings, it seems hard to accept Pischke’s crucial assumption that consumers treat all income shocks identically because they cannot perceive whether any given shock is transitory or permanent. A further motivation for our choice to assume that consumers perceive their idiosyncratic shocks is that our strategy has been to deviate as little as possible from the well-understood benchmark models in the micro consumption literature, which has become sufficiently widely used that they are the natural base upon which to build. A final piece of evidence comes from some newly collected data from the Federal Reserve Bank of New York’s Survey of Consumer Expectations. Karahan et al. [2017] report on results from an experiment in which consumers were asked to forecast their future income. The actual realizations of the same consumer’s income were collected in a subsequent wave of the survey. The principal result is that consumers’ mean forecast error was very close to zero. The authors of the post (entitled “Understanding Permanent and Temporary Income Shocks”) present the results as a confirmation of modern models’ standard assumption that consumers have accurate perceptions of the dynamics of their income.