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Probabilistic survey questions and incorrect answers: Retirement income replacement rates

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  • van Santen, Peter
  • Alessie, Rob
  • Kalwij, Adriaan

Abstract

We study responses to subjective retirement income replacement rate expectations questions in a survey of Dutch employees. One out of three respondents is unable to provide probabilities satisfying the requirements of a cumulative distribution function. We show that using probabilistic survey questions yields an endogenous sample selection when these individuals are removed from the sample, biasing the results toward more pessimistic expectations and excess uncertainty in the replacement rate. These biases are most prevalent for less-educated individuals.

Suggested Citation

  • van Santen, Peter & Alessie, Rob & Kalwij, Adriaan, 2012. "Probabilistic survey questions and incorrect answers: Retirement income replacement rates," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 267-280.
    • Handle: RePEc:eee:jeborg:v:82:y:2012:i:1:p:267-280
    DOI: 10.1016/j.jebo.2012.02.007
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    6. Teresa Bago d'Uva & Esen Erdogan Ciftci & Owen O'Donnell & Eddy van Doorslaer, 2015. "Who can predict their Own Demise? Accuracy of Longevity Expectations by Education and Cognition," Tinbergen Institute Discussion Papers 15-052/V, Tinbergen Institute.
    7. Tullio Jappelli & Immacolata Marino & Mario Padula, 2019. "Pension Uncertainty and Demand for Retirement Saving," CSEF Working Papers 526, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Bago d'Uva, Teresa & O'Donnell, Owen & van Doorslaer, Eddy, 2020. "Who can predict their own demise? Heterogeneity in the accuracy and value of longevity expectations☆," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    9. Niels Vermeer & Maarten Rooij & Daniel Vuuren, 2019. "Retirement Age Preferences: The Role of Social Interactions and Anchoring at the Statutory Retirement Age," De Economist, Springer, vol. 167(4), pages 307-345, December.
    10. Basiglio, Stefania, 2018. "Essays on financial behaviour of households and firms," Other publications TiSEM c13423c5-8bf2-44a7-baa7-3, Tilburg University, School of Economics and Management.
    11. Tullio Jappelli & Immacolata Marino & Mario Padula, 2021. "Social Security Uncertainty and Demand for Retirement Saving," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(4), pages 810-834, December.
    12. de Bresser, Jochem & van Soest, Arthur, 2013. "Survey response in probabilistic questions and its impact on inference," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 65-84.
    13. Diaz-Serrano, Luis & Nilsson, William, 2022. "The reliability of students’ earnings expectations," Labour Economics, Elsevier, vol. 76(C).
    14. Luc Bissonnette & Arthur van Soest, 2015. "The Financial Crisis and Consumers' Income and Pension Expectations," Cahiers de recherche 1502, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    15. de Bresser, J.R., 2013. "Between goals and expectations : Essays on pensions and retirement," Other publications TiSEM 4a23d569-88cd-40fa-aa23-c, Tilburg University, School of Economics and Management.
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    More about this item

    Keywords

    Subjective expectations; Selection bias; Retirement income uncertainty;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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