| Abstract: |
Measures based on self-assessments, which are increasingly important in
empirical economic research, are plagued by measurement error. This paper
presents the first attempt at measuring both revealed and self-reported
reliability of individuals' answers on self-reports of latent characteristics.
We show that measurement error on self-reports relevant to economists is
heterogeneous across individuals and can be reasonably approximated by a
distribution with two unobserved types. We propose a straightforward survey
question which allows to distinguish individuals who give highly reliable
answers from those who do not, using cross-sectional data. We demonstrate that
it predicts revealed individual reliability over and above all measured
characterises, survey conditions, and experimental treatments. We show how our
simple self-reported reliability measure can be used to cost-effectively
reduce attenuation bias in estimates of cognitive and non-cognitive
determinants of high school GPA, college graduation, unemployment, and life
satisfaction. Without requiring panel data, the achieved correction is similar
to some of the most effective reduced-form theory-based approaches in the
existing literature. Finally, we clarify the role of effort and self-knowledge
in generating measurement error and propose a simple model which rationalizes
our findings. |