Rounding, focal point answers and nonresponse to subjective probability questions

K. Kleinjans, A.H.O. van Soest

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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.
Original languageEnglish
Pages (from-to)567-585
JournalJournal of Applied Econometrics
Volume29
Issue number4
DOIs
Publication statusPublished - Jun 2014

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