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Models for Anchoring and Acquiescence Bias in Consumption Data

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  • Soest, A.H.O. van
  • Hurd, M.

    (Tilburg University, Center for Economic Research)

Abstract

Item non-response in household survey data on economic variables such as income, assets or consumption is a well-known problem.Follow-up unfolding bracket questions have been used as a tool to collect partial information on respondents that do not answer an open-ended question.It is also known, however, that mistakes are made in answering such unfolding bracket questions.In this paper, we develop several limited dependent variable models to analyze two sources of mistakes, anchoring and acquiescence (or yeasaying), focusing on the first bracket question.We use the experimental module of the AHEAD 1995 data, where the sample is randomly split into respondents who get an open-ended question on the amount of total family consumption - with follow-up unfolding brackets (of the form: is consumption $X or more?) for those who answer don t know or refuse - and respondents who are immediately directed to unfolding brackets.In both cases, the entry point of the unfolding bracket sequence is randomized.We compare models in which the probability of a mistake depends on the deviation between the true consumption amount and the entry point amount $X and models in which it does not.We find that allowing for acquiescence bias substantially changes the conclusions on the selective nature of non-response to the open-ended question and on the distribution of consumption expenditures in the population.Once acquiescence bias is taken into account, anchoring in the first bracket question plays only a minor role.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2004-26.

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Date of creation: 2004
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Handle: RePEc:dgr:kubcen:200426

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Keywords: consumption; household economics; distribution; nonresponse;

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References

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  1. Donald Green & Karen Jacowitz & Daniel Kahneman & Daniel McFadden, 1995. "Referendum Contingent Valuation, Anchoring, and Willingness to Pay for Public Goods," Working Papers _010, University of California at Berkeley, Econometrics Laboratory Software Archive.
  2. Michael D. Hurd, 1999. "Anchoring and Acquiescence Bias in Measuring Assets in Households Surveys," Working Papers 99-02, RAND Corporation Publications Department.
  3. Erich Battistin & Raffaele Miniaci & Guglielmo Weber, 2003. "What Do We Learn from Recall Consumption Data?," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
  4. Manski, C.F., 1990. "The Selection Problem," Working papers 90-12, Wisconsin Madison - Social Systems.
  5. F. Thomas Juster & James P. Smith, 2004. "Improving the Quality of Economic Data: Lessons from the HRS and AHEAD," Labor and Demography 0402010, EconWPA.
  6. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages F540-F567, November.
  7. Richard O‘Conor & Magnus Johannesson & Per-Olov Johansson, 1999. "Stated Preferences, Real Behaviour and Anchoring: Some Empirical Evidence," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(2), pages 235-248, March.
  8. P. Frykblom & Jason Shogren, 2000. "An Experimental Testing of Anchoring Effects in Discrete Choice Questions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(3), pages 329-341, July.
  9. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Staff General Research Papers 1501, Iowa State University, Department of Economics.
  10. Kevin J. Boyle & Hugh F. MacDonald & Hsiang-tai Cheng & Daniel W. McCollum, 1998. "Bid Design and Yea Saying in Single-Bounded, Dichotomous-Choice Questions," Land Economics, University of Wisconsin Press, vol. 74(1), pages 49-64.
  11. Cameron Trudy Ann & Quiggin John, 1994. "Estimation Using Contingent Valuation Data from a Dichotomous Choice with Follow-Up Questionnaire," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 218-234, November.
  12. Michael D. Hurd & Daniel McFadden & Harish Chand & Li Gan & Angela Menill & Michael Roberts, 1998. "Consumption and Savings Balances of the Elderly: Experimental Evidence on Survey Response Bias," NBER Chapters, in: Frontiers in the Economics of Aging, pages 353-392 National Bureau of Economic Research, Inc.
  13. Kanninen Barbara J., 1995. "Bias in Discrete Response Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 114-125, January.
  14. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  15. Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
  16. Holmes Thomas P. & Kramer Randall A., 1995. "An Independent Sample Test of Yea-Saying and Starting Point Bias in Dichotomous-Choice Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 121-132, July.
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Cited by:
  1. Essig, Lothar, 2004. "Methodological aspects of the SAVE data set," Sonderforschungsbereich 504 Publications 05-17, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  2. Deborah A. Cobb-Clark & Steve Stillman, 2006. "The Retirement Expectations of Middle-Aged Individuals," CEPR Discussion Papers 540, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. Kristin J. Kleinjans & Jinkook Lee, 2006. "The link between individual expectations and savings: Do nursing home expectations matter?," Economics Working Papers 2006-05, School of Economics and Management, University of Aarhus.

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