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.

Young caregivers in the end-of-life setting: a population-based profile of an emerging group.

PURPOSE: Little is known about young caregivers of people with advanced life-limiting illness. Better understanding of the needs and characteristics of these young caregivers can inform development of palliative care and other support services. METHODS: A population-based analysis of caregivers was performed from piloted questions included in the 2001-2007 face-to-face annual health surveys of 23,706 South Australians on the death of a loved one, caregiving provided, and characteristics of the deceased individual and caregiver. The survey was representative of the population by age, gender, and region of residence. FINDINGS: Most active care was provided by older, close family members, but large numbers of young people (ages 15-29) also provided assistance to individuals with advanced life-limiting illness. They comprised 14.4% of those undertaking "hands-on" care on a daily or intermittent basis, whom we grouped together as active caregivers. Almost as many young males as females participate in active caregiving (men represent 46%); most provide care while being employed, including 38% who work full-time. Over half of those engaged in hands-on care indicated the experience to be worse or much worse than expected, with young people more frequently reporting dissatisfaction thereof. Young caregivers also exhibited an increased perception of the need for assistance with grief. CONCLUSION: Young people can be integral to end-of-life care, and represent a significant cohort of active caregivers with unique needs and experiences. They may have a more negative experience as caregivers, and increased needs for grief counseling services compared to other age cohorts of caregivers.

A neural biomarker of psychological vulnerability to future life stress.

We all experience a host of common life stressors such as the death of a family member, medical illness, and financial uncertainty. While most of us are resilient to such stressors, continuing to function normally, for a subset of individuals, experiencing these stressors increases the likelihood of developing treatment-resistant, chronic psychological problems, including depression and anxiety. It is thus paramount to identify predictive markers of risk, particularly those reflecting fundamental biological processes that can be targets for intervention and prevention. Using data from a longitudinal study of 340 healthy young adults, we demonstrate that individual differences in threat-related amygdala reactivity predict psychological vulnerability to life stress occurring as much as 1 to 4 years later. These results highlight a readily assayed biomarker, threat-related amygdala reactivity, which predicts psychological vulnerability to commonly experienced stressors and represents a discrete target for intervention and prevention.

Gender and racial/ethnic differences in addiction severity, HIV risk, and quality of life among adults in opioid detoxification: results from the National Drug Abuse Treatment Clinical Trials Network.

PURPOSE: Detoxification often serves as an initial contact for treatment and represents an opportunity for engaging patients in aftercare to prevent relapse. However, there is limited information concerning clinical profiles of individuals seeking detoxification, and the opportunity to engage patients in detoxification for aftercare often is missed. This study examined clinical profiles of a geographically diverse sample of opioid-dependent adults in detoxification to discern the treatment needs of a growing number of women and whites with opioid addiction and to inform interventions aimed at improving use of aftercare or rehabilitation. METHODS: The sample included 343 opioid-dependent patients enrolled in two national multi-site studies of the National Drug Abuse Treatment Clinical Trials Network (CTN001-002). Patients were recruited from 12 addiction treatment programs across the nation. Gender and racial/ethnic differences in addiction severity, human immunodeficiency virus (HIV) risk, and quality of life were examined. RESULTS: Women and whites were more likely than men and African Americans to have greater psychiatric and family/social relationship problems and report poorer health-related quality of life and functioning. Whites and Hispanics exhibited higher levels of total HIV risk scores and risky injection drug use scores than African Americans, and Hispanics showed a higher level of unprotected sexual behaviors than whites. African Americans were more likely than whites to use heroin and cocaine and to have more severe alcohol and employment problems. CONCLUSIONS: Women and whites show more psychopathology than men and African Americans. These results highlight the need to monitor an increased trend of opioid addiction among women and whites and to develop effective combined psychosocial and pharmacologic treatments to meet the diverse needs of the expanding opioid-abusing population. Elevated levels of HIV risk behaviors among Hispanics and whites also warrant more research to delineate mechanisms and to reduce their risky behaviors.