Testing Parametric Models Using Anchoring Vignettes Against Nonparametric Alternatives

Abstract

Comparing assessments of health, job satisfaction, etc. on a subjective scale across countries or socio-economic groups is often hampered by differences in response scales across groups. Anchoring vignettes help to correct for such differences, either in parametric models (CHOPIT and extensions) or nonparametrically, comparing rankings of vignette ratings and self-assessments across groups. We construct specification tests of parametric models, comparing non-parametric rankings with rankings using the parametric estimates. Applied to six domains of health, the test always rejects standard CHOPIT, but an extended CHOPIT performs better. This implies a need for more flexible (parametric or semi-parametric) models than standard CHOPIT.