A Study of How Economic Attitudes Are Shaped by Environmental Shocks and Life Experiences

Social attitudes, attitudes toward financial risk and attitudes toward deferred gratification are thought to influence many important economic decisions over the life-course. In economic theory, these attitudes are key components in diverse models of behavior, including collective action, saving and investment decisions and occupational choice. The relevance of these attitudes have been confirmed empirically. Yet, the factors that influence them are not well understood. This research evaluates how these attitudes are affected by large disruptive events, namely, a natural disaster and a civil conflict, and also by an individual-specific life event, namely, having children.

By implementing rigorous empirical strategies drawing on rich longitudinal datasets, this research project advances our understanding of how life experiences shape these attitudes. Moreover, compelling evidence is provided that the observed changes in attitudes are likely to reflect changes in preferences given that they are not driven just by changes in financial circumstances. Therefore the findings of this research project also contribute to the discussion of whether preferences are really fixed, a usual assumption in economics.

In the first chapter, I study how altruistic and trusting attitudes are affected by exposure to the 2004 Indian Ocean tsunami as long as ten years after the disaster occurred. Establishing a causal relationship between natural disasters and attitudes presents several challenges as endogenous exposure and sample selection can confound the analysis. I take on these challenges by exploiting plausibly exogenous variation in exposure to the tsunami and by relying on a longitudinal dataset representative of the pre-tsunami population in two districts of Aceh, Indonesia. The sample is drawn from the Study of the Tsunami Aftermath and Recovery (STAR), a survey with data collected both before and after the disaster and especially designed to identify the impact of the tsunami. The altruistic and trusting attitudes of the respondents are measured by their behavior in the dictator and trust games. I find that witnessing closely the damage caused by the tsunami but without suffering severe economic damage oneself increases altruistic and trusting behavior, particularly towards individuals from tsunami affected communities. Having suffered severe economic damage has no impact on altruistic behavior but may have increased trusting behavior. These effects do not seem to be caused by the consequences of the tsunami on people’s financial situation. Instead they are consistent with how experiences of loss and solidarity may have shaped social attitudes by affecting empathy and perceptions of who is deserving of aid and trust.

In the second chapter, co-authored with Ryan Brown, Duncan Thomas and Andrea Velasquez, we investigate how attitudes toward financial risk are affected by elevated levels of insecurity and uncertainty brought on by the Mexican Drug War. To conduct our analysis, we pair the Mexican Family Life Survey (MxFLS), a rich longitudinal dataset ideally suited for our purposes, with a dataset on homicide rates at the month and municipality-level. The homicide rates capture well the overall crime environment created by the drug war. The MxFLS elicits risk attitudes by asking respondents to choose between hypothetical gambles with different payoffs. Our strategy to identify a causal effect has two key components. First, we implement an individual fixed effects strategy which allows us to control for all time-invariant heterogeneity. The remaining time variant heterogeneity is unlikely to be correlated with changes in the local crime environment given the well-documented political origins of the Mexican Drug War. We also show supporting evidence in this regard. The second component of our identification strategy is to use an intent-to-treat approach to shield our estimates from endogenous migration. Our findings indicate that exposure to greater local-area violent crime results in increased risk aversion. This effect is not driven by changes in financial circumstances, but may be explained instead by heightened fear of victimization. Nonetheless, we find that having greater economic resources mitigate the impact. This may be due to individuals with greater economic resources being able to avoid crime by affording better transportation or security at work.

The third chapter, co-authored with Duncan Thomas, evaluates whether attitudes toward deferred gratification change after having children. For this study we also exploit the MxFLS, which elicits attitudes toward deferred gratification (commonly known as time discounting) by asking individuals to choose between hypothetical payments at different points in time. We implement a difference-in-difference estimator to control for all time-invariant heterogeneity and show that our results are robust to the inclusion of time varying characteristics likely correlated with child birth. We find that becoming a mother increases time discounting especially in the first two years after childbirth and in particular for those women without a spouse at home. Having additional children does not have an effect and the effect for men seems to go in the opposite direction. These heterogeneous effects suggest that child rearing may affect time discounting due to generated stress or not fully anticipated spending needs.

Specialist and primary care physicians' views on barriers to adequate preparation of patients for renal replacement therapy: a qualitative study.

BACKGROUND: Early preparation for renal replacement therapy (RRT) is recommended for patients with advanced chronic kidney disease (CKD), yet many patients initiate RRT urgently and/or are inadequately prepared. METHODS: We conducted audio-recorded, qualitative, directed telephone interviews of nephrology health care providers (n = 10, nephrologists, physician assistants, and nurses) and primary care physicians (PCPs, n = 4) to identify modifiable challenges to optimal RRT preparation to inform future interventions. We recruited providers from public safety-net hospital-based and community-based nephrology and primary care practices. We asked providers open-ended questions to assess their perceived challenges and their views on the role of PCPs and nephrologist-PCP collaboration in patients' RRT preparation. Two independent and trained abstractors coded transcribed audio-recorded interviews and identified major themes. RESULTS: Nephrology providers identified several factors contributing to patients' suboptimal RRT preparation, including health system resources (e.g., limited time for preparation, referral process delays, and poorly integrated nephrology and primary care), provider skills (e.g., their difficulty explaining CKD to patients), and patient attitudes and cultural differences (e.g., their poor understanding and acceptance of their CKD and its treatment options, their low perceived urgency for RRT preparation; their negative perceptions about RRT, lack of trust, or language differences). PCPs desired more involvement in preparation to ensure RRT transitions could be as "smooth as possible", including providing patients with emotional support, helping patients weigh RRT options, and affirming nephrologist recommendations. Both nephrology providers and PCPs desired improved collaboration, including better information exchange and delineation of roles during the RRT preparation process. CONCLUSIONS: Nephrology and primary care providers identified health system resources, provider skills, and patient attitudes and cultural differences as challenges to patients' optimal RRT preparation. Interventions to improve these factors may improve patients' preparation and initiation of optimal RRTs.

Recruiting young adults into a weight loss trial: report of protocol development and recruitment results.

Obesity has spread to all segments of the U.S. population. Young adults, aged 18-35 years, are rarely represented in clinical weight loss trials. We conducted a qualitative study to identify factors that may facilitate recruitment of young adults into a weight loss intervention trial. Participants were 33 adults aged 18-35 years with BMI ≥25 kg/m(2). Six group discussions were conducted using the nominal group technique. Health, social image, and "self" factors such as emotions, self-esteem, and confidence were reported as reasons to pursue weight loss. Physical activity, dietary intake, social support, medical intervention, and taking control (e.g. being motivated) were perceived as the best weight loss strategies. Incentives, positive outcomes, education, convenience, and social support were endorsed as reasons young adults would consider participating in a weight loss study. Incentives, advertisement, emphasizing benefits, and convenience were endorsed as ways to recruit young adults. These results informed the Cellphone Intervention for You (CITY) marketing and advertising, including message framing and advertising avenues. Implications for recruitment methods are discussed.

Brands, Close Relationships, and Consumer Well-Being

Consumers have relationships with other people, and they have relationships with brands similar to the ones they have with other people. Yet, very little is known about how brand and interpersonal relationships relate to one another. Even less is known about how they jointly affect consumer well-being. The goal of this research, therefore, is to examine how brand and interpersonal relationships influence and are influenced by consumer well-being. Essay 1 uses both empirical methods and surveys from individuals and couples to investigate how consumer preferences in romantic couples, namely brand compatibility, influences life satisfaction. Using traditional statistical techniques and multilevel modeling, I find that the effect of brand compatibility, or the extent to which individuals have similar brand preferences, on life satisfaction depends upon power in the relationship. For high power partners, brand compatibility has no effect on life satisfaction. On the other hand, for low power partners, low brand compatibility is associated with decreased life satisfaction. I find that conflict mediates the link between brand compatibility and power on life satisfaction. In Essay 2 I again use empirical methods and surveys to investigate how resources, which can be considered a form of consumer well-being, influence brand and interpersonal relations. Although social connections have long been considered a fundamental human motivation and deemed necessary for well-being (Baumeister and Leary 1995), recent research has demonstrated that having greater resources is associated with weaker social connections. In the current research I posit that individuals with greater resources still have a need to connect and are using other sources for connection, namely brands. Across several studies I test and find support for my theory that resource level shifts the preference of social connection from people to brands. Specifically, I find that individuals with greater resources have stronger brand relationships, as measured by self-brand connection, brand satisfaction, purchase intentions and willingness to pay with both existing brand relationships and with new brands. This suggests that individuals with greater resources place more emphasis on these relationships. Furthermore, I find that resource level influences the stated importance of brand and interpersonal relationships, and that having or perceiving greater resources is associated with an increased preference to engage with brands over people. This research demonstrates that there are times when people prefer and seek out connections with brands over other people, and highlights the ways in which our brand and interpersonal relationships influence one another.

Institutional Persistence in Eastern Europe: Economic and Political Legacies of Empires and Communism

This dissertation seeks to advance our understanding of the roles that institutions play in economic development. How do institutions evolve? What mechanisms are responsible for their persistence? What effects do they have on economic development?

I address these questions using historical and contemporary data from Eastern Europe and Russia. This area is relatively understudied by development economists. It also has a very interesting history. For one thing, for several centuries it was divided between different empires. For another, it experienced wars and socialism in the 20th century. I use some of these exogenous shocks as quasi-natural social experiments to study the institutional transformations and its effects on economic development both in the short and long run.

This first chapter explores whether economic, social, and political institutions vary in their resistance to policies designed to remove them. The empirical context for the analysis is Romania from 1690 to the 2000s. Romania represents an excellent laboratory for studying the persistence of different types of historical institutional legacies. In the 18th and 19th centuries, Romania was split between the Habsburg and Ottoman Empires, where political and economic institutions differed. The Habsburgs imposed less extractive institutions relative to the Ottomans: stronger rule of law, a more stable and predictable state, a more developed civil society, and less corruption. In the 20th century, the Romanian Communist regime tried deliberately to homogenize the country along all relevant dimensions. It was only partially successful. Using a regression discontinuity design, I document the persistence of economic outcomes, social capital, and political attitudes. First, I document remarkable convergence in urbanization, education, unemployment, and income between the two former empires. Second, regarding social capital, no significant differences in organizational membership, trust in bureaucracy, and corruption persist today. Finally, even though the Communists tried to change all political attitudes, significant discontinuities exist in current voting behavior at the former Habsburg-Ottoman border. Using data from the parliamentary elections of 1996-2008, I find that former Habsburg rule decreases by around 6 percentage points the vote share of the major post-Communist left party and increases by around 2 and 5 percentage points the vote shares of the main anti-Communist and liberal parties, respectively.

The second chapter investigates the effects of Stalin’s mass deportations on distrust in central authority. Four deported ethnic groups were not rehabilitated after Stalin’s death; they remained in permanent exile until the disintegration of the Soviet Union. This allows one to distinguish between the effects of the groups that returned to their homelands and those of the groups that were not allowed to return. Using regional data from the 1991 referendum on the future of the Soviet Union, I find that deportations have a negative interim effect on trust in central authority in both the regions of destination and those of origin. The effect is stronger for ethnic groups that remained in permanent exile in the destination regions. Using data from the Life in Transition Survey, the chapter also documents a long-term effect of deportations in the destination regions.

The third chapter studies the short-term effect of Russian colonization of Central Asia on economic development. I use data on the regions of origin of Russian settlers and push factors to construct an instrument for Russian migration to Central Asia. This instrument allows me to interpret the outcomes causally. The main finding is that the massive influx of Russians into the region during the 1897-1926 period had a significant positive effect on indigenous literacy. The effect is stronger for men and in rural areas. Evidently, interactions between natives and Russians through the paid labor market was an important mechanism of human capital transmission in the context of colonization.

The findings of these chapters provide additional evidence that history and institutions do matter for economic development. Moreover, the dissertation also illuminates the relative persistence of institutions. In particular, political and social capital legacies of institutions might outlast economic legacies. I find that most economic differences between the former empires in Romania have disappeared. By the same token, there are significant discontinuities in political outcomes. People in former Habsburg Romania provide greater support for liberalization, privatization, and market economy, whereas voters in Ottoman Romania vote more for redistribution and government control over the economy.

In the former Soviet Union, Stalin’s deportations during World War II have a long-term negative effect on social capital. Today’s residents of the destination regions of deportations show significantly lower levels of trust in central authority. This is despite the fact that the Communist regime tried to eliminate any source of opposition and used propaganda to homogenize people’s political and social attitudes towards the authorities. In Central Asia, the influx of Russian settlers had a positive short-term effect on human capital of indigenous population by the 1920s, which also might have persisted over time.

From a development perspective, these findings stress the importance of institutions for future paths of development. Even if past institutional differences are not apparent for a certain period of time, as was the case with the former Communist countries, they can polarize society later on, hampering economic development in the long run. Different institutions in the past, which do not exist anymore, can thus contribute to current political instability and animosity.

Consumer Behavior and Firm Competition

Understanding consumer behavior is critical for firms' decision making. How consumers make decisions about what they want and buy directly affect the profits of firms. Therefore, it is important to consider consumer behaviors and incorporate them into the model when studying the optimal strategy of firms and competition between firms. In this dissertation, I study rich and interesting consumer behaviors and their impact on firms' strategy in two essays. The first essay considers consumers' shopping cost which leads to their preference for one-stop shopping. I examine how store visit costs and consumer knowledge about a product affect the strategic store choice of consumers and, in turn, the pricing, customer service and advertising decisions of competing retailers. My analysis offers insights on how specialty stores can compete with big-box retailers. In the second essay, I focus on a well-established psychology phenomenon, cognitive dissonance. I incorporate the idea of cognitive dissonance into a model of spatial competition and examine its implications for selling strategy. I provide new insight on the profitability of advance selling and spot selling as well as the pricing of bundle and its components. Collectively, two essays in this dissertation introduce novel ways to model consumer behaviors and help to understand the impact of consumer behaviors on firm profitability and strategy.