Accounting For Individual-Specific Reliability of Self-Assessed Measures of Economic Preferences and Personality Traits

Thomas Dohmen and Tomáš Jagelka

No 16027, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Measures based on self-assessments, which are increasingly important in empirical economic research, are plagued by measurement error. This paper presents the first attempt at measuring both revealed and self-reported reliability of individuals' answers on self-reports of latent characteristics. We show that measurement error on self-reports relevant to economists is heterogeneous across individuals and can be reasonably approximated by a distribution with two unobserved types. We propose a straightforward survey question which allows to distinguish individuals who give highly reliable answers from those who do not, using cross-sectional data. We demonstrate that it predicts revealed individual reliability over and above all measured characterises, survey conditions, and experimental treatments. We show how our simple self-reported reliability measure can be used to cost-effectively reduce attenuation bias in estimates of cognitive and non-cognitive determinants of high school GPA, college graduation, unemployment, and life satisfaction. Without requiring panel data, the achieved correction is similar to some of the most effective reduced-form theory-based approaches in the existing literature. Finally, we clarify the role of effort and self-knowledge in generating measurement error and propose a simple model which rationalizes our findings.

Keywords: personality traits; reliability; measurement error; economic preferences (search for similar items in EconPapers)
JEL-codes: C81 C83 D90 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2023-03
New Economics Papers: this item is included in nep-cbe and nep-hap
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Published - published online in: Journal of Political Economy Microeconomics, 26 June 2024

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Journal Article: Accounting for Individual-Specific Reliability of Self-Assessed Measures of Economic Preferences and Personality Traits (2024)
Working Paper: Accounting for Individual-Specific Reliability of Self-Assessed Measures of Economic Preferences and Personality Traits (2023)
Working Paper: Accounting for Individual-Specific Reliability of Self-Assessed Measures of Economic Preferences and Personality Traits (2023)
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