http://economics.mit.edu/files/637 says the US Social Security Administration used a 7% real rate of return, but the paper goes on to explain why that seems too high.
https://en.wikipedia.org/wiki/Equity_premium_puzzle says the equity premium for stocks “is generally accepted to be in the range of 3–7% in the long-run.” That piece lists reasons to deny an equity premium, similar to those you enumerate, but it also says “most mainstream economists agree that the evidence [for an equity premium] shows substantial statistical power.” I don’t know enough to evaluate this debate without further investigation, but your concerns about biases seem significant.
Thanks for those notes. :)
http://economics.mit.edu/files/637 says the US Social Security Administration used a 7% real rate of return, but the paper goes on to explain why that seems too high.
https://en.wikipedia.org/wiki/Equity_premium_puzzle says the equity premium for stocks “is generally accepted to be in the range of 3–7% in the long-run.” That piece lists reasons to deny an equity premium, similar to those you enumerate, but it also says “most mainstream economists agree that the evidence [for an equity premium] shows substantial statistical power.” I don’t know enough to evaluate this debate without further investigation, but your concerns about biases seem significant.