This article gives a systematic discussion of various qualitative response models, with a special emphasis on multi.response and multirariate models. While some new models (notably, multi var iate polytomous probi, models) are defined, old models are given new interpretations. The article discusses the relative merits of tno basicall differing ways to formulate multivariate models: the one that specifies marinol probabilities first and the one that specifies conditional probabilities first.
Testing life-cycle models and other economic models of saving and consumption at micro level requires knowledge of individuals' subjective believes of their mortality risk. Previous studies have shown that individual responses on subjective survival probabilities are generally consistent with life tables. However, survey responses suffer serious problems caused by focal responses of zero and one. This paper suggests using a Bayesian update model that accounts for the problems encountered in focal responses. We also propose models that help us to identify how much each individual deviates from life table in her subjective belief. The resulting individual subjective survival curves have considerable variations and are readily applicable in testing economic models that require individual subjective life expectancies.
Financial support from the National Institute on Aging through a grant to the NBER is gratefully acknowledged. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
This paper investigates whether subjective expectations about future mortality affect consumption and bequests motives. We estimate a dynamic life-cycle model based on subjective survival rates and wealth from the panel dataset Asset and Health Dynamics among Oldest Old. We find that bequest motives are small on average, which indicates that most bequests are involuntary or accidental. Moreover, parameter estimates using subjective mortality risk perform better in predicting out-of-sample wealth levels than estimates using life table mortality risks, suggesting that decisions about consumption and saving are influenced more strongly by individual-level beliefs about mortality risk than by group level mortality risk.
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