Heaping at Round Numbers on Financial Questions: The Role of Satisficing

56 Pages Posted: 26 Jan 2017

See all articles by Michae Gideon

Michae Gideon

Government of the United States of America - Bureau of the Census

Brooke Helppie-McFall

University of Michigan, Survey Research Center

Joanne W. Hsu

Board of Governors of the Federal Reserve System

Date Written: 2017-01

Abstract

Survey responses to quantitative financial questions frequently display strong patterns of heaping at round numbers. This paper uses two studies to examine variation in rounding across questions and by individual characteristics. Rounding was more common for respondents low in ability, for respondents low in motivation, and for more difficult questions, all consistent with theories of satisficing. Questions that require more difficult information retrieval and integration of information exhibit more heaping. The use of records, which lowers task difficulty, reduces rounding as well. Higher episodic memory is associated with less rounding, and standard measures of motivation are negatively associated with rounding. These relationships, along with the fact that longer response latencies are associated with less rounding, all support the idea that rounding is a manifestation of satisficing on open-ended financial questions. Rounding patterns also appear remarkably similar across the two studies, despite being fielded in different modes and employing different question order and wording.

Keywords: Consumer surveys, Data collection and estimation, Satisficing

JEL Classification: C81, C83

Suggested Citation

Gideon, Michae and McFall, Brooke Helppie and Hsu, Joanne W., Heaping at Round Numbers on Financial Questions: The Role of Satisficing (2017-01). FEDS Working Paper No. 2017-006. Available at SSRN: https://ssrn.com/abstract=2906205 or http://dx.doi.org/10.17016/FEDS.2017.006

Michae Gideon (Contact Author)

Government of the United States of America - Bureau of the Census ( email )

4600 Silver Hill Road
Washington, DC 20233
United States

Brooke Helppie McFall

University of Michigan, Survey Research Center ( email )

426 Thompson St
Ann Arbor, MI 48104
United States

Joanne W. Hsu

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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