Numeracy and decision making

Peters, Ellen; Västfjäll, Daniel; Slovic, Paul; Mazzocco, Ketti; Dickert, Stephan

doi:10.1037/e640112011-034

Cited by 386 publications

(765 citation statements)

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“…There is also growing evidence that emotional responses to risk information may mediate cognitive risk perceptions, shape behavior independently, or both. [20][21][22] Although our results are based on a hypothetical scenario, they suggest that obstetricians and genetic counselors should be cautious about providing verbal interpretations of prenatal screening test results to patients. Helping couples understand their test results is a challenging task, and it is only natural to want to facilitate comprehension by verbally interpreting the meaning of quantitative data for patients.…”

Section: Commentmentioning

confidence: 74%

Does labeling prenatal screening test results as negative or positive affect a woman’s responses?

Zikmund‐Fisher

Fagerlin

Keeton

et al. 2007

American Journal of Obstetrics and Gynecology

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Objective-We tested whether adding interpretive labels (e.g., "negative test") to prenatal genetic screening test results changes perceived risk and preferences for amniocentesis.Study Design-Women (N=1,688) completed a hypothetical pregnancy scenario via the Internet. We randomized participants into two groups: high (12.5/1000) risk of fetal chromosomal problems or low (2/1000) risk. After prenatal screening, estimated risk was identical (5/1000) for all participants, but results were provided either alone or with interpretive labels.Results-When receiving test results without labels, all participants react similarly. With labels, participants receiving "positive" or "abnormal" results reported higher perceived risk (p<0.001), greater worry (p<0.001), and greater interest in amniocentesis (57% vs. 37%, p<0.001) than those receiving "negative" or "normal" results. Conclusions-Interpretive labels for test results can induce larger changes to women's risk perceptions and behavioral intentions than numerical results alone do, creating decision momentum. This finding has broad clinical implications for patient-provider communication.

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Section: Commentmentioning

confidence: 74%

Does labeling prenatal screening test results as negative or positive affect a woman’s responses?

Zikmund‐Fisher

Fagerlin

Keeton

et al. 2007

American Journal of Obstetrics and Gynecology

View full text Add to dashboard Cite

show abstract

“…Loss aversion is measured using a set of 9 choices between mixed (gain and loss) gambles and then re-scaled between 0 and 1. Numeracy was measured through a set of eight questions: five questions test numeracy through questions of probability and likelihood following Peters et al (2006), and the additional three questions are taken from the CRT (Frederick 2005). The total number of correct answers is rescaled between 0 and 1 to arrive at our numeracy measure.…”

Section: Discussionmentioning

confidence: 99%

“…For example, recent findings regarding consumers' financial knowledge (both objective and subjective knowledge), financial literacy, numeracy, and overall cognitive ability offer important predictions for how consumers who differ in individual ability may react to annuity offerings (Fernandes, Lynch, and Netermeyer 2014;Hadar and Fox 2012;Peters et al 2006;Frederick 2005). A comprehensive survey of all individual factors that may influence annuity choice is outside the feasibility of a relatively short consumer study, so we focus on individual measures that closely relate to the tradeoffs inherent in our chosen attribute set.…”

Section: The Role Of Annuities In Consumer Decumulationmentioning

confidence: 99%

Consumer Preferences for Annuity Attributes: Beyond Net Present Value

Shu

Zeithammer

Payne

2016

Journal of Marketing Research

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Decisions about life annuities are an important part of consumer decumulation of retirement assets, yet are relatively underexplored by marketing researchers studying consumer financial decision-making. In this paper we propose and estimate a model of individual preferences for life annuity attributes using a choice-based stated-preference survey. Annuities are presented in terms of consumer-relevant attributes such as monthly income, yearly adjustments, period certain guarantees, and company financial strength. We find that attributes directly influence preferences beyond their impact on the annuity's expected present value. The strength of the direct influence depends on how annuities are described: when represented only via basic attributes, consumers undervalue inflation protection and preferences are not monotonically increasing in duration of period certain guarantees. When descriptions are enriched with cumulative payment information, consumers no longer undervalue inflation protection, but nonlinear preferences for period certain options remain. We find that among annuities with the same expected payout but different annual increases and period certain guarantees, the proportion of consumers choosing the annuity over self-management can vary by more than a factor of two. With baby boomers now retiring at the rate of almost 10,000 per day, the issue of decumulation of retirement assets is increasingly important to economists, public policy experts, and the financial services industry. It should also be of interest to researchers in marketing because consumers in the market for decumulation products, such as annuities, face a choice problem with large financial stakes, limited learning opportunities, difficult consumption tradeoffs, multiple sources of uncertainty, issues of trust and branding, and long time periods. All of these aspects of the decumulation problem are topics on which marketing research can offer important insights. This paper studies the structure of consumer preferences for life annuities -an important class of decumulation products. We employ a choice-based conjoint analysis to measure consumer preferences and relate them to the underlying financial value of the products. KeywordsAnnuities, as well as many other financial products, provide a unique setting for choice modeling because most annuity attributes have calculable expected present value that can be directly compared to consumers' revealed utilities. Consequently, we are able to see whether an attribute influences demand only through its contribution to the normative net present financial value of the annuity product ("NPV"), or whether attribute values have psychological worth "beyond NPV." We find that a typical consumer choosing from a set of annuities does not merely maximize the expected financial value, but also reacts to several product attributes directlyexpressing preferences beyond the effect of attributes on the financial value. For example, most consumers overvalue medium (10-20 years) levels of period-certa...

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“…the ability to comprehend, use and attach meaning to numbers (Peters et al, 2006). Peters and colleagues (2006) showed that people with a high level of numeracy have similar responses/reactions to different presentation formats and this may depend on their ability to easily convert one format into the other.…”

Section: Introductionmentioning

confidence: 99%