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Survey response in probabilistic questions and its impact on inference

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  • de Bresser, Jochem
  • van Soest, Arthur
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    Abstract

    We develop a panel data model of expectations of a continuous outcome variable elicited on a percentage-chance scale. The model explains the location and dispersion of the subjective distributions by socio-economic covariates and unobserved factors. Moreover, it accounts explicitly for non-response, non-informative focal answers, and recall and rounding errors. We apply the model to the expected retirement income replacement rate of Dutch wage workers. We find that incorporating these features of the answering process increases the size and significance of relationships with covariates. The estimates indicate substantial rounding but few focal answers. Respondents tend to stick to a certain answering strategy: non-response, rounding and especially non-informative focal answers are characterized by substantial unobserved heterogeneity across individuals.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 96 (2013)
    Issue (Month): C ()
    Pages: 65-84

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    Handle: RePEc:eee:jeborg:v:96:y:2013:i:c:p:65-84

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    Web page: http://www.elsevier.com/locate/jebo

    Related research

    Keywords: Expectations; Survey response; Rounding; Recall error; Unobserved heterogeneity; Aging;

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    References

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    1. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, October.
    2. de Bruin, Wandi Bruine & Fischhoff, Baruch & Millstein, Susan G. & Halpern-Felsher, Bonnie L., 2000. "Verbal and Numerical Expressions of Probability: "It's a Fifty-Fifty Chance"," Organizational Behavior and Human Decision Processes, Elsevier, vol. 81(1), pages 115-131, January.
    3. Adeline Delavande & Susann Rohwedder, 2011. "Individuals' uncertainty about future social security benefits and portfolio choice," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 498-519, 04.
    4. Péter Hudomiet & Gábor Kézdi & Robert J. Willis, 2011. "Stock market crash and expectations of American households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 393-415, 04.
    5. Jeff Dominitz & Charles F. Manski, 2006. "Measuring Pension-benefit Expectations Probabilistically," LABOUR, CEIS, vol. 20(2), pages 201-236, 06.
    6. Basit Zafar, 2010. "Can subjective expectations data be used in choice models? Evidence on cognitive biases," Staff Reports 454, Federal Reserve Bank of New York.
    7. Mitchell, Olivia S, 1988. "Worker Knowledge of Pension Provisions," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 21-39, January.
    8. Andrews, Donald W K, 1988. "Chi-Square Diagnostic Tests for Econometric Models: Theory," Econometrica, Econometric Society, vol. 56(6), pages 1419-53, November.
    9. Michael D. Hurd, 2009. "Subjective Probabilities in Household Surveys," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 543-564, 05.
    10. Charles F. Manski, 2004. "Measuring Expectations," Econometrica, Econometric Society, vol. 72(5), pages 1329-1376, 09.
    11. Jeff Dominitz, 1998. "Earnings Expectations, Revisions, And Realizations," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 374-388, August.
    12. van Santen, Peter & Alessie, Rob & Kalwij, Adriaan, 2012. "Probabilistic survey questions and incorrect answers: Retirement income replacement rates," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 267-280.
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