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(Mis)measuring Uncertainty: Bunching in Probabilistic Expectations

Author

Listed:
  • Carola Binder
  • Laura Crespo
  • Carlos Gento
  • Luis M. Guirola
  • Ernesto Villanueva

Abstract

Probabilistic expectation questions are often used to measure subjective uncertainty, but respondents frequently assign all probability to one outcome. We show that this bunching is partly a survey artifact rather than genuine certainty. In the (online) ECB Consumer Expectations Survey and the (in person) Spanish Survey of Household Finances, bunching is higher among less financially literate respondents and increases with panel tenure. Two survey-design changes provide stronger evidence: enforcing neutral interviewer protocols reduces bunching by about 15 percentage points, and a later questionnaire redesign reduces it by a further 18 percentage points. Interviewer-level variation also falls after standardization. These findings imply that degenerate responses in probabilistic expectations can reflect task burden and survey administration, causing standard measures to overstate certainty and understate uncertainty.

Suggested Citation

  • Carola Binder & Laura Crespo & Carlos Gento & Luis M. Guirola & Ernesto Villanueva, 2026. "(Mis)measuring Uncertainty: Bunching in Probabilistic Expectations," NBER Working Papers 35733, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35733
    Note: ME
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    More about this item

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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