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Nonresponse and Focal Point Answers to Subjective Probability Questions

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Author Info

  • Kleinjans, Kristin J.

    ()
    (California State University, Fullerton)

  • van Soest, Arthur

    ()
    (Tilburg University)

Abstract

We develop and estimate a panel data model explaining the answers to questions about subjective probabilities, using data from the US Health and Retirement Study. We explicitly account for nonresponse, rounding, and focal point “50 percent” answers. Our results indicate that for three of the four questions considered, almost all 50 percent answers can be explained by rounding. We also find observed and unobserved heterogeneity in the tendencies to report rounded values or a focal answer, explaining persistency in 50 percent-answers over time. Incorporating rounding and focal answers changes some of the conclusions about the socio-economic factors that determine expectations.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5272.

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Length: 39 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5272

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Keywords: item nonresponse; rounding; expectations;

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References

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  1. Soest, A.H.O. van & Hurd, M., 2004. "A Test for Anchoring and Yea-Saying in Experimental Consumption Data," Discussion Paper 2004-27, Tilburg University, Center for Economic Research.
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Cited by:
  1. Alexander Zimper, 2012. "The emergence of "fifty-fifty" probability judgements in a conditional Savage world," Working Papers 291, Economic Research Southern Africa.
  2. Robin L. Lumsdaine & Rogier J.D. Potter van Loon, 2013. "Wall Street vs. Main Street: An Evaluation of Probabilities," NBER Working Papers 19103, National Bureau of Economic Research, Inc.
  3. 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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