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Telling mistakes and striking inconsistencies: Numeracy Measures for Risk and Time Elicitation

Author

Listed:
  • Sommervoll, Dag Einar

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

  • Holden, Stein T.

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

  • Tione, Sarah

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

Abstract

The role of numeracy (statistical literacy) in risk and time elicitation is likely to be significant, as ranking options often requires numerical comparisons. Moreover, as numeracy and preference regarding risk and time are latent variables, studying their interplay is challenging. We address one of them, the numeracy measure. Numeracy measures tend to rely on an aggregate score (typically the sum of correct responses). We develop more refined scores. These take into account that wrong responses vary in their gravity and that inconsistencies across responses may occur. Because these scores rely on more information than the mere sum of correct responses, they may serve as better proxies for the latent numeracy level. We use a large data set from rural Malawi as an illustration. This data set contains a (diagnostic) numeracy test, as well as a wide range of time and risk experiments. We find that more refined numeracy measures tend to yield lower p-values for estimates of risk aversion and impatience. These results point towards a potential benefit of more refined numeracy measures.

Suggested Citation

  • Sommervoll, Dag Einar & Holden, Stein T. & Tione, Sarah, 2026. "Telling mistakes and striking inconsistencies: Numeracy Measures for Risk and Time Elicitation," CLTS Working Papers 5/26, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    • Handle: RePEc:hhs:nlsclt:2026_005
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    References listed on IDEAS

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    Cited by:

    1. Holden, Stein T., 2026. "Decision Imprecision and the Measurement of Preferences in Multiple Price Lists," CLTS Working Papers 6/26, Norwegian University of Life Sciences, Centre for Land Tenure Studies.

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    More about this item

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    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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