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Rounding, Focal Point Answers And Nonresponse To Subjective Probability Questions

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  • Kristin J. Kleinjans
  • Arthur Van Soest

Abstract

SUMMARY We develop a panel data model explaining answers to subjective probabilities about binary events and estimate it using data from the Health and Retirement Study on six such probabilities. The model explicitly accounts for several forms of ‘reporting behavior’: rounding, focal point ‘50%’ answers and item nonresponse. We find observed and unobserved heterogeneity in the tendencies to report rounded values or a focal answer, explaining persistency in 50% answers over time. Focal 50% answers matter for some of the probabilities. Incorporating reporting behavior does not have a large effect on the estimated distribution of the genuine subjective probabilities. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Kristin J. Kleinjans & Arthur Van Soest, 2014. "Rounding, Focal Point Answers And Nonresponse To Subjective Probability Questions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(4), pages 567-585, June.
  • Handle: RePEc:wly:japmet:v:29:y:2014:i:4:p:567-585
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    Cited by:

    1. Binswanger, Johannes & Salm, Martin, 2013. "Does Everyone Use Probabilities? Intuitive and Rational Decisions about Stockholding," IZA Discussion Papers 7265, Institute for the Study of Labor (IZA).
    2. Stefan Hoderlein & Bettina Siflinger & Joachim Winter, 2015. "Identification of structural models in the presence of measurement error due to rounding in survey responses," Boston College Working Papers in Economics 869, Boston College Department of Economics.
    3. Paul Ruud & Daniel Schunk & Joachim Winter, 2014. "Uncertainty causes rounding: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 17(3), pages 391-413, September.
    4. Charles F. Manski, 2017. "Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise," NBER Chapters,in: NBER Macroeconomics Annual 2017, volume 32 National Bureau of Economic Research, Inc.
    5. Wu, Shang & Stevens, Ralph & Thorp, Susan, 2015. "Cohort and target age effects on subjective survival probabilities: Implications for models of the retirement phase," Journal of Economic Dynamics and Control, Elsevier, vol. 55(C), pages 39-56.
    6. Huynh, Kim P. & Jung, Juergen, 2015. "Subjective health expectations," Journal of Policy Modeling, Elsevier, vol. 37(4), pages 693-711.
    7. Drerup, Tilman & Enke, Benjamin & Gaudecker, Hans-Martin von, 2014. "Measurement Error in Subjective Expectations and the Empirical Content of Economic Models," IZA Discussion Papers 8535, Institute for the Study of Labor (IZA).
    8. repec:wly:jforec:v:36:y:2017:i:7:p:756-775 is not listed on IDEAS
    9. Bissonnette, Luc & Hurd, Michael D. & Michaud, Pierre-Carl, 2014. "Individual Survival Curves Comparing Subjective and Observed Mortality Risks," IZA Discussion Papers 8658, Institute for the Study of Labor (IZA).
    10. Niu, G., 2014. "Essays on subjective expectations and mortality trends," Other publications TiSEM b9f72836-d8ad-478b-adca-4, Tilburg University, School of Economics and Management.
    11. repec:spr:eurpop:v:33:y:2017:i:4:d:10.1007_s10680-017-9411-y is not listed on IDEAS
    12. Fabian Gouret, 2017. "What can we learn from the fifties?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 36(7), pages 756-775, November.
    13. Koç, E., 2015. "Job Finding, Job Loss and Consumption Behaviour," Discussion Paper 2015-015, Tilburg University, Center for Economic Research.
    14. David R. Rappange & Job van Exel & Werner B. F. Brouwer, 2017. "A short note on measuring subjective life expectancy: survival probabilities versus point estimates," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(1), pages 7-12, January.
    15. Zelalem Yilma & Owen O’Donnell & Anagaw Mebratie & Getnet Alemu & Arjun S. Bedi, 2015. "Subjective Expectations of Medical Expenditures and Insurance in Rural Ethiopia," Tinbergen Institute Discussion Papers 15-120/V, Tinbergen Institute.
    16. Kassenboehmer, Sonja C. & Schurer, Stefanie & Leung, Felix, 2015. "Testing the Validity of Item Non-Response as a Proxy for Cognitive and Non-Cognitive Skills," IZA Discussion Papers 8874, Institute for the Study of Labor (IZA).
    17. repec:eee:econom:v:200:y:2017:i:2:p:378-389 is not listed on IDEAS
    18. repec:eee:eecrev:v:98:y:2017:i:c:p:73-85 is not listed on IDEAS
    19. Katherine Carman & Peter Kooreman, 2014. "Probability perceptions and preventive health care," Journal of Risk and Uncertainty, Springer, vol. 49(1), pages 43-71, August.

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