Stefanie Schurer - Survey item-response behavior as a proxy for unobserved ability: Theory and application

Melbourne Institute Seminar

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Barbara Broadway

bhanel@unimelb.edu.au

Title: Survey item-response behavior as a proxy for unobserved ability: Theory and application

Abstract: We develop and test an economic model of the cognitive and non-cognitive foundations of survey item-response behavior. We show that a summary measure of response behaviour -- the survey item-response rate (SIRR) -- varies with cognitive and less so with non-cognitive abilities, has a strong individual fixed component and is predictive of economic outcomes. We demonstrate the usefulness of SIRR as a proxy for cognitive ability to reduce omitted-variable biases in estimated wage returns. We derive both necessary and sufficient conditions under which the use of a proxy-variable approach reduces omitted-variable biases, providing a new guideline for informed risk evaluation.

Presenter: Associate Professor Stefanie Schurer, University of Sydney

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