Risk Ratings that Do Not Measure Probabilities

TitleRisk Ratings that Do Not Measure Probabilities
Publication TypeJournal Article
Year of Publication2003
AuthorsViscusi, WK, Hakes, JK
JournalJournal of Risk Research
Volume6
Issue1
Pagination23-43
KeywordsExpectations, Health Conditions and Status, Retirement Planning and Satisfaction
Abstract

Survey questions regarding assessed survival chances are an often-used example of a risk rating scale for eliciting a probability assessment. The responses to such questions do exhibit several properties of probabilities, but differ in some key respects, resulting in relationships which are not only inconsistent with accurate beliefs, but also in which precision is sacrificed for ease of use. The Health and Retirement Study, for example, uses a 0 to 10 scale to measure self-assessed survival probabilities to a particular age. Transformation of these responses for use as a probability results in some patterns that are consistent with a model of imperfect information, or a monotonic transformation of imperfectly perceived risks, but more subtle analysis reveals inconsistencies with either of these theories, suggesting the scale is inappropriate for use as a probability measure. The age-related effects for female respondents are the most salient results that are inconsistent with use of the survey's response scale as representing a probability.

Endnote Keywords

Subjective expectations/Retirement/Smoking/Health

Endnote ID

11962

Citation Key6872