Estimating Second Order Probability Beliefs from Subjective Survival Data

Peter Hudomiet and Robert J. Willis ()
Additional contact information
Robert J. Willis: Department of Economics and Institute for Social Research, University of Michigan, Ann Arbor, Michigan 48109

Decision Analysis, 2013, vol. 10, issue 2, 152-170

Abstract: Based on subjective survival probability questions in the Health and Retirement Study (HRS), we use an econometric model to estimate the determinants of individual-level uncertainty about personal longevity. This model is built around the modal response hypothesis (MRH), a mathematical expression of the idea that survey responses of 0%, 50%, or 100% to probability questions indicate a high level of uncertainty about the relevant probability. We show that subjective survival expectations in 2002 line up very well with realized mortality of the HRS respondents between 2002 and 2010. We show that the MRH model performs better than typically used models in the literature of subjective probabilities. Our model gives more accurate estimates of low probability events and it is able to predict the unusually high fraction of focal 0%, 50%, and 100% answers observed in many data sets on subjective probabilities. We show that subjects place too much weight on parents' age at death when forming expectations about their own longevity, whereas other covariates such as demographics, cognition, personality, subjective health, and health behavior are underweighted. We also find that less educated people, smokers, and women have less certain beliefs, and recent health shocks increase uncertainty about survival, too.

Keywords: subjective expectations; survival; epistemic probability beliefs; ambiguity (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://dx.doi.org/10.1287/deca.2013.0266 (application/pdf)

Related works:
Working Paper: Estimating Second Order Probability Beliefs from Subjective Survival Data (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ordeca:v:10:y:2013:i:2:p:152-170

Access Statistics for this article

More articles in Decision Analysis from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().