The Predictive Validity of Subjective Probabilities of Survival

20 Pages Posted: 14 May 2003

See all articles by Michael D. Hurd

Michael D. Hurd

RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Kathleen M. McGarry

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

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Abstract

Although expectations, or more precisely subjective probability distributions, play a prominent role in models of decision making under uncertainty, we have had very little data on them. Based on panel data from the Health and Retirement Study, we study the evolution of subjective survival probabilities and their ability to predict actual mortality. In panel, respondents modify their survival probabilities in response to new information such as the onset of a new disease condition. Subjective survival probabilities predict actual survival: those who survived in the panel reported survival probabilities approximately 50% greater at baseline than those who died.

Suggested Citation

Hurd, Michael D. and McGarry, Kathleen M., The Predictive Validity of Subjective Probabilities of Survival. Available at SSRN: https://ssrn.com/abstract=347127

Michael D. Hurd (Contact Author)

RAND Corporation ( email )

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State University of New York at Stony Brook - College of Arts and Science - Department of Economics ( email )

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Kathleen M. McGarry

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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