Precise or Imprecise Probabilities? Evidence from Survey Response on Late-Onset Dementia

50 Pages Posted: 5 Aug 2019

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

Date Written: July 2019

Abstract

We elicit numerical expectations for late-onset dementia in the Health and Retirement Study. Our elicitation distinguishes between precise and imprecise probabilities, while accounting for rounding of reports. Respondents quantify imprecision using probability intervals. Nearly half of respondents hold imprecise dementia probabilities, while almost a third of precise-probability respondents round their reports. We provide the first empirical evidence on dementia-risk perceptions among dementia-free older Americans and novel evidence about imprecise probabilities in a nationally-representative sample. We show, in a specific framework, that failing to account for imprecise or rounded probabilities can yield incorrect predictions of long-term care insurance purchase decisions.

Suggested Citation

Giustinelli, Pamela and Manski, Charles F. and Molinari, Francesca, Precise or Imprecise Probabilities? Evidence from Survey Response on Late-Onset Dementia (July 2019). NBER Working Paper No. w26125, Available at SSRN: https://ssrn.com/abstract=3428177

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 )

500 S. State Street
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)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Francesca Molinari

Cornell University

Ithaca, NY 14853
United States

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