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Precise or Imprecise Probabilities? Evidence from Survey Response on Late-onset Dementia

Pamela Giustinelli, Charles F. Manski, Francesca Molinari

NBER Working Paper No. 26125
Issued in July 2019
NBER Program(s):The Program on Aging, The Health Care Program, The Health Economics Program

We elicit numerical expectations for late-onset dementia in the Health and Retirement Study. Our 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. We 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. We 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.

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Document Object Identifier (DOI): 10.3386/w26125

 
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