Probability Limits: Are Subjective Assessments Adequately Accurate?

TitleProbability Limits: Are Subjective Assessments Adequately Accurate?
Publication TypeJournal Article
Year of Publication2001
AuthorsBassett, WF, Lumsdaine, RL
JournalJournal of Human Resources
Call Numberpubs_2001_Bassett-Lumsdaine.pdf
KeywordsEnd of life decisions, Methodology

The Health and Retirement Study asks respondents their subjective probabilities about 12 future events. An individual's responses contain a common component that is unrelated to the true probability of the event in question. Use of the entire set of an individual's responses to control for this unobserved individual heterogeneity can improve the information content in responses regarding intergenerational transfer and labor force participation plans. Although there is little overall gain from renormalization, in samples where the respondent may not fully have understood the question adjusting the responses for heterogeneity leads to an improved ability to predict outcomes in later waves.


ProCite field 3 : Federal Reserve System; Brown U and NBER

Endnote Keywords

Criteria for Decision Making under Risk and Uncertainty/Probabilities/Probability

Endnote ID


Citation Key6731