Tail and Center Rounding of Probabilistic Expectations in the Health and Retirement Study

56 Pages Posted: 2 May 2018

See all articles by Pamela Giustinelli

Pamela Giustinelli

Bocconi University ; University of Michigan at Ann Arbor

Charles F. Manski

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

Francesca Molinari

Cornell University - Department of Economics

Date Written: April 2018

Abstract

A growing number of surveys elicit respondents’ expectations for future events on a 0-100 scale of percent chance. These data reveal substantial heaping at multiples of 10 and 5 percent, suggesting that respondents round their reports. This paper studies the nature of rounding by analyzing response patterns across expectations questions and waves of the Health and Retirement Study. We discover a tendency by about half of the respondents to provide more refined responses in the tails of the scale than the center. Only about five percent provide more refined responses in the center than the tails. We find that rounding varies across question domains, which range from personal health to personal finances to macroeconomic events. We develop a two-stage framework to characterize person-specific rounding. The first stage uses observed responses to infer respondents’ rounding practice in each question domain and scale segment. The second stage replaces each original point response with an interval, representing the range of possible values of the respondent’s true latent belief implied by the degree of rounding inferred in the first stage. We study how the inferred rounding types in the first stage vary with respondent characteristics, including age and cognitive abilities.

Suggested Citation

Giustinelli, Pamela and Manski, Charles F. and Molinari, Francesca, Tail and Center Rounding of Probabilistic Expectations in the Health and Retirement Study (April 2018). NBER Working Paper No. w24559, Available at SSRN: https://ssrn.com/abstract=3170776

Pamela Giustinelli (Contact Author)

Bocconi University ( email )

Via Gobbi 5
Milan, Milan 20136
Italy

HOME PAGE: http://https://sites.google.com/site/pgiustinelli/

University of Michigan at Ann Arbor ( email )

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Ann Arbor, MI 48109
United States

Charles F. Manski

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States
847-491-8223 (Phone)
847-491-7001 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Francesca Molinari

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-6367 (Phone)
607-255-2818 (Fax)

HOME PAGE: http://www.arts.cornell.edu/econ/fmolinari/

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