The Effects of Bracketing in Wealth Estimation

23 Pages Posted: 11 May 2001

See all articles by Harish Chand

Harish Chand

Microsoft Corporation

Li Gan

Texas A&M University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2001

Abstract

The use of bracketing in wealth surveys is sometimes criticized on the grounds that it will encourage respondents to substitute rough guesses for careful thought. In such a manner, the use of bracketing will "crowd-out" more specific answers, creating the illusion of a reduction in nonresponse. This paper examines the patterns of wealth response in the first two waves of the Health and Retirement Study. The use of the different methods of wealth response appear to be systematic and to vary in the expected directions. Based on the observed patterns, fears of a crowding-out effect appear to be overstated. On average, people do not appear to transition to bracketing. Based on the explanatory power of the brackets, the degree of crowding-out which would be necessary to make the use of bracketing counterproductive appears to be much higher than plausible. However, crowding out may present a substantial concern for the wealthiest subpopulation, warranting additional attention to the choice of bracket breakpoints. New tests of the breakeven level of crowding out are suggested by this differential effect and show that having brackets will most likely obtain more information in surveys.

Suggested Citation

Chand, Harish and Gan, Li, The Effects of Bracketing in Wealth Estimation (April 2001). Available at SSRN: https://ssrn.com/abstract=267818 or http://dx.doi.org/10.2139/ssrn.267818

Harish Chand

Microsoft Corporation ( email )

One Microsoft Way
Redmond, WA 98052

Li Gan (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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