A parsimonious model of subjective life expectancy

TitleA parsimonious model of subjective life expectancy
Publication TypeJournal Article
Year of Publication2013
AuthorsLudwig, A, Zimper, A
JournalTheory and Decision
KeywordsExpectations, Health Conditions and Status, Methodology, Other

On average, young people underestimate whereas old people overestimate their chances to survive into the future. Such subjective survival beliefs violate the rational expectations paradigm and are also not in line with models of rational Bayesian learning. In order to explain these empirical patterns in a parsimonious manner, we assume that self-reported beliefs express likelihood insensitivity and can, therefore, be modeled as non-additive beliefs. In a next step we introduce a closed form model of Bayesian learning for non-additive beliefs which combines rational learning with psychological attitudes in the interpretation of information. Our model gives a remarkable fit to average subjective survival beliefs reported in the Health and Retirement Study.


Times Cited: 0

Endnote Keywords

Representative Agent/Bayesian Learning/Smoking Decisions/Expectations/Survival

Endnote ID


Citation Key7949