Bracketing effects in categorized survey questions and the measurement of economic quantities

In households surveys, quantities of interest are frequently elicited using categorized (range-card) formats rather than open-ended questions. One advantage of this format is that is typically reduces item non-response. Unfortunately, results from research in social psychology suggest that the choice of bracket values in range-card questions is likely to influence responses. As yet, there is not much known about the effects of bracketing bias on the measurement of economic quantities and regression analysis. This paper reports evidence on existence and size of bracketing bias based on data from controlled survey experiments. I also discuss strategies for avoiding bracketing bias in household surveys.

The impact of pension reforms and demography on stock markets

Population aging is just beginning to hit the industrialized countries in full force, and it will have a tremendous impact on capital markets. Capital market effects of population aging are particularly strong in continental European economies such as Germany, with their large pay-as-you- go public pension systems. The younger generations in these countries are becoming aware of the need to provide for more retirement income through own private saving, and these effects will be accentuated by fundamental pension reforms that aim at more pre-funding. Population aging therefore changes households’ savings behavior and portfolio composition, and much more assets will be invested in the stock market. Capital markets will grow in size, and active institutional investors such as pension funds are likely to become more important in continental European countries.

Design effects in survey-based measures of household consumption

An important issue in designing survey questions on household consumption is the level of aggregation of expenditure categories. In this paper, I present experimental evidence on biases that are related to the choice of expenditure categories. Comparing responses to a 'one shot' question with responses to a more disaggregated design that comprises 35 expenditure categories reveals significant underreporting in the one-shot question. The same holds true when responses to one of these still relatively broad categories (food and beverages) are compared with measures from a budget survey that is based on a very detailed expenditure diary. There is also some evidence that these biases affect subsequent substantive economic analysis such as the estimation of Engel curves.

Response bias in survey-based measures of household consumption

An important aspect of household surveys is the design of consumption questions. A controlled experiment shows that a single question on total monthly nondurables expenditure and a design with 35 disaggregated categories produce different results. These differences vary with household characteristics.consumption

Completely positive maps of order zero

We say a completely positive contractive map between two C*-algebras has order zero, if it sends orthogonal elements to orthogonal elements. We prove a structure theorem for such maps. As a consequence, order zero maps are in one-to-one correspondence with *-homomorphisms from the cone over the domain into the target algebra. Moreover, we conclude that tensor products of order zero maps are again order zero, that the composition of an order zero map with a tracial functional is again a tracial functional, and that order zero maps respect the Cuntz relation, hence induce ordered semigroup morphisms between Cuntz semigroups.Comment: 13 page

The Relationship Between Risk Attitudes and Heuristics in Search Tasks: A Laboratory Experiment

Experimental studies of search behavior suggest that individuals stop searching earlier than predicted by the optimal, risk-neutral stopping rule. Such behavior could be generated by two different classes of decision rules: rules that are optimal conditional on utility functions departing from risk neutrality, or heuristics derived from limited cognitive processing capacities and satisfycing. To discriminate among these two possibilities, we conduct an experiment that consists of a standard search task as well as a lottery task designed to elicit utility functions. We find that search heuristics are not related to measures of risk aversion, but to measures of loss aversion

Structural Measurement Errors in Nonseparable Models

This paper considers measurement error from a new perspective. In surveys, response errors are often caused by the fact that respondents recall past events and quantities imperfectly. We explore the consequences of recall errors for such key econometric is- sues as the identification of marginal effects or economic restrictions in structural models. Our identification approach is entirely nonparametric, using Matzkin-type nonseparable models that nest a large class of potential structural models. We establish that measurement errors due to poor recall are generally likely to exhibit nonstandard behavior, in particular be nonclassical and differential, and we provide means to deal with this situation. Moreover, our findings suggest that conventional wisdom about measurement errors may be misleading in many economic applications. For instance, under certain conditions left-hand side recall errors will be problematic even in the linear model, and quantiles will be less robust than means. Finally, we apply the main concepts put forward in this paper to real world data, and find evidence that underscores the importance of focusing on individual response behavior

Item nonresponse to financial questions in household surveys: An experimental study of interviewer and mode effects

We analyze nonresponse to questions on financial items such as income and asset holdings in the SAVE survey, exploiting a controlled field experiment. As part of the SAVE study, a representative survey conducted in Germany in 2001, questions on household income and financial assets were administered using different interview modes (personal interview vs. drop-off questionnaire). The data also allow investigating the influence of interviewer characteristics on nonresponse. Our results are in line with predictions derived from models of survey response behavior that have been developed in survey research and social psychology.

Survey Evidence on Conditional Norm Enforcement

We discuss survey evidence on individuals' willingness to sanction norm violations - such as evading taxes, drunk driving, fare dodging, or skiving o work - by expressing disapproval or social exclusion. Our data suggest that people condition their sanctioning behavior on their belief about the frequency of norm violations. The more commonly a norm violation is believed to occur, the lower the individuals' inclination to punish it. Based on an instrumental variable approach, we demonstrate that this pattern reflects a causal relationship.Norm Enforcement; Sanctioning; Social Norms; Survey Evidence