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.

Restorative Justice and Political Forgiveness: A Comparative Study of Truth and Reconciliation Commissions

This research project involves a comparative, cross-national study of truth and reconciliation commissions (TRCs) in countries around the world that have used these extra-judicial institutions to pursue justice and promote national reconciliation during periods of democratic transition or following a civil conflict marked by intense violence and severe human rights abuses. An important objective of truth and reconciliation commissions involves instituting measures to address serious human rights abuses that have occurred as a result of discrimination, ethnocentrism and racism. In recent years, rather than solely utilizing traditional methods of conflict resolution and criminal prosecution, transitional governments have established truth and reconciliation commissions as part of efforts to foster psychological, social and political healing.

The primary objective of this research project is to determine why there has been a proliferation of truth and reconciliation commissions around the world in recent decades, and assess whether the perceived effectiveness of these commissions is real and substantial. In this work, using a multi-method approach that involves quantitative and qualitative analysis, I consider the institutional design and structural composition of truth and reconciliation commissions, as well as the roles that these commissions play in the democratic transformation of nations with a history of civil conflict and human rights violations.

In addition to a focus on institutional design of truth and reconciliation commissions, I use a group identity framework that is grounded in social identity theory to examine the historical background and sociopolitical context in which truth commissions have been adopted in countries around the world. This group identity framework serves as an invaluable lens through which questions related to truth and reconciliation commissions and other transitional justice mechanisms can be explored. I also present a unique theoretical framework, the reconciliatory democratization paradigm, that is especially useful for examining the complex interactions between the various political elements that directly affect the processes of democratic consolidation and reconciliation in countries in which truth and reconciliation commissions have been established. Finally, I tackle the question of whether successor regimes that institute truth and reconciliation commissions can effectively address the human rights violations that occurred in the past, and prevent the recurrence of these abuses.

King Democracy: Do Democratic Nations Mitigate Conflict Over Transboundary Freshwater Resources Better Than Other Nations?

The prospect of water wars and conflict over water are ideas that are frequently dramatized in media and also studied by scholars. It is well-established that bona fide wars are not started over water resources, but conflict over water does exist and is not well understood. One would suppose, as scholars often do, that dyads composed of two democratic nations would be the best at mitigating conflict and promoting cooperation over freshwater resources. General conflict research supports that supposition, as does the argument that democracies must be best at avoiding conflicts over resources because they excel at distributing public goods. This study provides empirical evidence showing how interstate dyads composed of various governance types conflict and cooperate over general water and water quantity issues relative to each other. After evaluating the water conflict mitigating ability of democratic-democratic, democratic-autocratic, and autocratic-autocratic dyads, this study found that democracy-autocracy dyads are less likely to cooperate over general water issues and water quantity issues than the other two dyad types. Nothing certain can be said about how the three dyad types compare to each other in terms of likelihood to conflict over water quantity issues. However, two-autocracy dyads seem to be most likely to cooperate over water quantity issues. These findings support the established belief that democratic-autocratic pairs struggle to cooperate while also encouraging greater scrutiny of the belief that democracies must be best at cooperating over water resources.