Nonresponse and Focal Point Answers to Subjective Probability Questions
38 Pages Posted: 26 Nov 2010
There are 2 versions of this paper
Nonresponse and Focal Point Answers to Subjective Probability Questions
Date Written: October 1, 2010
Abstract
We develop and estimate a panel data model explaining the answers to questions about subjective probabilities, using data from the US Health and Retirement Study. We explicitly account for nonresponse, rounding, and focal point “50 percent” answers. Our results indicate that for three of the four questions considered, almost all 50 percent answers can be explained by rounding. We also find observed and unobserved heterogeneity in the tendencies to report rounded values or a focal answer, explaining persistency in 50 percent-answers over time. Incorporating rounding and focal answers changes some of the conclusions about the socio-economic factors that determine expectations.
Keywords: Item Nonresponse, Rounding, Expectations
JEL Classification: C81, D84
Suggested Citation: Suggested Citation
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