Life expectancy as a constructed belief: Evidence of a live-to or die-by framing effect
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Life expectancy as a constructed belief: Evidence of a live-to or die-by framing effect John W. Payne & Namika Sagara & Suzanne B. Shu & Kirstin C. Appelt & Eric J. Johnson
Published online: 29 December 2012 # Springer Science+Business Media New York 2012
Abstract Life expectations are essential inputs for many important personal decisions. We propose that longevity beliefs are responses constructed at the time of judgment, subject to irrelevant task and context factors, and leading to predictable biases. Specifically, we examine whether life expectancy is affected by the framing of expectations questions as either live-to or die-by, as well as by factors that actually affect longevity such as age, gender, and self-reported health. We find that individuals in a live-to frame report significantly higher chances of being alive at ages 55 through 95 than people in a corresponding die-by frame. Estimated mean life expectancies across three studies and 2300 respondents were 7.38 to 9.17 years longer when solicited in a live-to frame. We are additionally able to show how this framing works on a process level and how it affects preference for life annuities. Implications for models of financial decision making are discussed. Keywords Life Expectancy . Framing Effects . Judgment . Annuities JEL Classification D03 – Behavioral Economics . D84 – Expectations An individual who plans for the future must, in one way or another, consider how long he or she expects to live. For instance, the almost 80 million baby boomers Support for this research was provided by Alfred P. Sloan and Russell Sage Foundations. Additional support was provided by the Fuqua School of Business, Duke University and NIA Grant 5R01AG027934 to Columbia University.
J. W. Payne (*) : N. Sagara Fuqua School of Business, Duke University, Durham, NC, USA e-mail: [email protected]
S. B. Shu Anderson School of Business, University of California, Los Angeles, CA, USA K. C. Appelt : E. J. Johnson School of Business, Columbia University, New York, NY, USA
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J Risk Uncertain (2013) 46:27–50
approaching retirement in the United States will have to plan for the possibility of living 10, 20, 30, or more years beyond retirement, plans that depend critically on each individual’s own predicted life expectancy. At the other end of the life cycle, Fischhoff et al. (2000) suggest that teenagers’ life expectancy judgments may cause them to take more risks because they exaggerate the probability that they are not going to live beyond age 20. Also, as noted by Elder (2007), and others, subjective life expectations play a central role in the Maximization of the Expected Utility of Lifetime Consumption model (or Life-Cycle model; see Browning and Crossley 2001). Judgments of longevity are typically assumed in economics to be relatively accurate expectations, reflecting personally held information about one’s own likelihood of living to various ages expressed with only random error (Hurd 2009). Examples of more personally held information are the longevity of one’s parent
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