Working Paper: CEPR ID: DP16345
Authors: Armin Falk; Thomas Neuber; Philipp Strack
Abstract: We study response behavior in surveys and show how the explanatory power of self-reports can be improved. First, we develop a choice model of survey response behavior under the assumption that the respondent has imperfect self-knowledge about her individual characteristics. In panel data, the model predicts that the variance in responses for different characteristics increases in self-knowledge and that the variance for a given characteristic over time is non-monotonic in self-knowledge. Importantly, the ratio of these variances identifies an individual’s level of self-knowledge, i.e. the latter can be inferred from observed response patterns. Second, we develop a consistent and unbiased estimator for self-knowledge based on the model. Third, we run an experiment to test the model’s main predictions in a context where the researcher knows the true underlying characteristics. The data confirm the model’s predictions as well as the estimator’s validity. Finally, we turn to a large panel data set, estimate individual levels of self-knowledge, and show that accounting for differences in self-knowledge significantly increases the explanatory power of regression models. Using a median split in self-knowledge and regressing risky behaviors on self-reported risk attitudes, we find that the R2 can be multiple times larger for above- than below-median subjects. Similarly, gender differences in risk attitudes are considerably larger when restricting samples to subjects with high self-knowledge. These examples illustrate how using the estimator may improve inference from survey data.
Keywords: survey research; rational inattention; lab experiment; noncognitive skills; preferences
JEL Codes: C83; D83; C91; D91; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| self-knowledge (D80) | variance in responses across different characteristics (C21) |
| variance in responses across different characteristics (C21) | self-knowledge (D80) |
| self-knowledge (D80) | report accuracy (Y10) |
| self-knowledge (D80) | explanatory power of regression models (C29) |