Browsing by Subject "Bayesian updating of expectations"
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Item Subjective health expectations(Towson University. Department of Economics, 2010) Jung, Juergen; Huynh, Kim P.; Towson University. Department of EconomicsSubjective health expectations are derived using data from the Health and Retirement Study (HRS). We first use a Bayesian updating mechanism to correct for focal point responses and reporting errors of the original health expectations variable. We then test the quality of the health expectations measure and describe its correlation with various health indicators and other individual characteristics. Our results indicate that subjective health expectations do contain additional information that is not incorporated in subjective mortality expectations and that the rational expectations assumption cannot be rejected for subjective health expectations. Finally, the data suggest that individuals younger than 70 years of age seem to be more pessimistic about their health than individuals in their 70’s.