Parameter Estimation Using On-Line Household Surveys
Saturday, Jan. 7, 2017 7:30 PM – 9:30 PM
- Chair: Wilbert Van der Klaauw, Federal Reserve Bank of New York
Preference for the Workplace, Investment in Human Capital, and Gender
AbstractWe use a hypothetical choice methodology to estimate preferences for workplace attributes and quantify how much these preferences influence pre-labor market human capital investments. This method robustly identifies preferences for various job attributes, free from omitted variable bias and considering the equilibrium job match. Women on average have a higher willingness-to-pay (WTP) for jobs with greater work flexibility and job stability, and men have a higher WTP for jobs with higher earnings growth. These job preferences relate to college major choices and actual job choices, and explain as much as 25 percent of the gender wage gap.
Analyzing Consumer Decision Making Under Uncertainty Using Strategic Survey Questions (SSQs)
AbstractStandard expected utility maximization models make strong predictions about how changing the payoff to a risky decision affects the desirability of that decision, given specifications for the risk environment and underlying utility function parameters. In this Strategic Survey Question (SSQ) experimental module run with Survey of Consumer Expectations (SCE) on-line panel members, respondents were asked to score several risky decisions. Each decision was presented and scored under four different payoff assumptions. The idiosyncratic risk components can be subtracted out for each respondent, because the questions were written such that underlying risks do not vary with the expected payoffs. The key baseline expectations need to compute expected values for each respondent are taken from the SCE core questions. The risky decisions involved choices about changing jobs, expanding a business, buying a home, investing in human capital, and changing portfolio composition. As expected, respondents scored any given decision more favorably when the expected payoff is higher. Respondents who self-reported higher risk aversion require a higher payoff in order for a given decision to score above the break-even point, meaning the point where taking the action just becomes preferred to not taking the action. This new multiple-payoff approach makes it possible to go beyond point estimates for parameters of interest, and test assumptions about curvature across the payoff possibilities, and the role of ambiguity in underlying expectations.
Estimating Discount Functions with Consumption Choices Over the Lifecycle
AbstractIntertemporal preferences are difficult to measure because financial payments (e.g., checks in the mail) do not coincide with utility flows. We estimate time preferences using a structural buffer stock consumption model and the Method of Simulated Moments. The model includes stochastic labor income, liquidity constraints, child and adult dependents, liquid and illiquid assets, revolving credit, retirement, and discount functions that allow short-run and long-run discount rates to differ. Data on wealth accumulation and credit card borrowing over the lifecycle identify the parameters in the model. In almost all specifications we reject the restriction to a constant discount factor (i.e., exponential discounting). Our benchmark estimates imply a short-term discount factor of β = 0.50 and a long-term annualized discount factor of δ = 0.97.
- C4 - Econometric and Statistical Methods: Special Topics
- C8 - Data Collection and Data Estimation Methodology; Computer Programs