Stats › Valuation › Equity premium debate

Four numbers are all called the equity risk premium

Realised US bonds: 5%+5%RealisedUS bondsMehra Prescott: 6.18%+6.18%MehraPrescottImplied Jul 26: 4.18%+4.18%ImpliedJul 26Survey US: 5.5%+5.5%SurveyUSSurvey CFO: 4.42%+4.42%SurveyCFOProspective world: 3.25%+3.25%Prospectiveworld

Realised looks backward, implied is derived from current prices, survey is what people say they expect, and prospective is a forecast. Sources as listed below.

The equity risk premium is how much more stocks pay than government bonds. Four different figures carry that name: 5.0 points realised since 1900, 4.18% implied by prices, 5.5% in surveys and 3.0% to 3.5% forecast. They answer different questions and must never be averaged.

about 5.0 pointsRealised, US vs bonds
4.18%Implied, 1 Jul 2026
5.5%Practitioner survey
0.35%Theory could justify

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