Precise or Imprecise Probabilities? Evidence From Survey Response on Late-Onset Dementia (WP-19-21)
Pamela Giustinelli, Charles F. Manski, and Francesca Molinari
The authors elicit numerical expectations for late-onset dementia in the Health and Retirement Study. Their elicitation distinguishes between precise and imprecise probabilities, while accounting for rounding of reports. Respondents quantify imprecision using probability intervals. Nearly half of respondents hold imprecise dementia probabilities, while almost a third of precise-probability respondents round their reports. The researchers provide the first empirical evidence on dementia-risk perceptions among dementia-free older Americans and novel evidence about imprecise probabilities in a nationally-representative sample. They show, in a specific framework, that failing to account for imprecise or rounded probabilities can yield incorrect predictions of long-term care insurance purchase decisions.
This paper is published in the Journal of the European Economic Association.