Estimating Second Order Probability Beliefs from Subjective Survival Data
Based on subjective survival probability questions in the Health and Retirement Study (HRS), we use an econometric model to estimate the determinants of individual-level uncertainty about personal longevity. This model is built around the Modal Response Hypothesis (MRH), a mathematical expression of the idea that survey responses of 0, 50 or 100 percent to probability questions indicate a high level of uncertainty about the relevant probability. We show that subjective survival expectations in 2002 line up very well with realized mortality of the HRS respondents between 2002 and 2010. We show that the MRH model performs better than typically used models in the literature of subjective probabilities. Our model gives more accurate estimates of low probability events and it is able to predict the unusually high fraction of focal 0, 50 and 100 answers observed in many datasets on subjective probabilities. We show that subjects place too much weight on parents' age at death when forming expectations about their own longevity, while other covariates such as demographics, cognition, personality, subjective health and health behavior are underweighted. We also find that less educated people, smokers and women have less certain beliefs; and recent health shocks increase uncertainty about survival, too.
|Date of creation:||Jul 2012|
|Date of revision:|
|Publication status:||published as Hudomiet, Péter, and Robert Willis. 2013. "Estimating Second Order Probability Beliefs from Subjective Survival Data." Decision Analysis, 10(2): 152-170. PMCID: PMC3882032. DOI. Abstract.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Antoine Bommier & Bertrand Villeneuve, 2010.
"Risk Aversion and the Value of Risk to Life,"
CER-ETH Economics working paper series
10/133, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Bommier, Antoine & Villeneuve, Bertrand, 2008. "Risk Aversion and the Value of Risk to Life," MPRA Paper 11943, University Library of Munich, Germany.
- Antoine Bommier & Bertrand Villeneuve, 2004. "Risk Aversion and the Value of Risk to Life," CESifo Working Paper Series 1267, CESifo Group Munich.
- Villeneuve, Bertrand & Bommier, Antoine, 2012. "Risk Aversion and the Value of Risk to Life," Economics Papers from University Paris Dauphine 123456789/4812, Paris Dauphine University.
- Smith, V. Kerry & Taylor, Donald H., Jr. & Sloan, Frank A., 2000.
"Longevity Expectations and Death: Can People Predict Their Own Demise?,"
00-15, Duke University, Department of Economics.
- V. Kerry Smith & Donald H. Taylor & Frank A. Sloan, 2001. "Longevity Expectations and Death: Can People Predict Their Own Demise?," American Economic Review, American Economic Association, vol. 91(4), pages 1126-1134, September.
- Gabriel Picone & Frank Sloan & Donald Taylor, 2004. "Effects of Risk and Time Preference and Expected Longevity on Demand for Medical Tests," Journal of Risk and Uncertainty, Springer, vol. 28(1), pages 39-53, January.
- Manski, Charles F. & Molinari, Francesca, 2010. "Rounding Probabilistic Expectations in Surveys," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(2), pages 219-231.
- Joseph Engelberg & Charles F. Manski & Jared Williams, 2006.
"Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters,"
NBER Working Papers
11978, National Bureau of Economic Research, Inc.
- Engelberg, Joseph & Manski, Charles F. & Williams, Jared, 2009. "Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 30-41.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:18258. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.