Working Paper: NBER ID: w26125
Authors: Pamela Giustinelli; Charles F. Manski; Francesca Molinari
Abstract: 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.
Keywords: Dementia; Probabilities; Long-Term Care Insurance
JEL Codes: D80; D84; I0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Subjective probabilities of developing late-onset dementia (J14) | Economic decision-making related to long-term care insurance (G52) |
| Imprecise probabilities regarding risk of developing dementia (D81) | Economic decisions regarding LTC insurance (G52) |
| Failure to account for imprecision in probabilities (D80) | Incorrect predictions regarding LTC insurance purchasing decisions (G52) |
| Demographic factors (J11) | Tendency to report imprecise probabilities (D80) |
| Older respondents (J14) | Tendency to express imprecision in probability reports (D80) |
| More educated respondents (I25) | Tendency to hold precise beliefs (D81) |