Nonresponse and Focal Point Answers to Subjective Probability Questions

38 Pages Posted: 26 Nov 2010

See all articles by Arthur van Soest

Arthur van Soest

Tilburg University; Netspar; RAND Corporation; Institute for the Study of Labor (IZA)

Kristin J. Kleinjans

California State University, Fullerton - Department of Economics

Multiple version iconThere are 2 versions of this paper

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

van Soest, Arthur H. O. and van Soest, Arthur H. O. and Kleinjans, Kristin J., Nonresponse and Focal Point Answers to Subjective Probability Questions (October 1, 2010). Netspar Discussion Paper No. 10/2010-055, Available at SSRN: https://ssrn.com/abstract=1715437 or http://dx.doi.org/10.2139/ssrn.1715437

Arthur H. O. van Soest (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Kristin J. Kleinjans

California State University, Fullerton - Department of Economics ( email )

Fullerton, CA 92834
United States

HOME PAGE: http://https://business.fullerton.edu/faculty/kristin-kleinjans

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