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.

Reckoning With Apartheid: The Conundrum of Working Through the Past, An Introduction

From April 26-29, 1994, South Africa held its first universal, democratic elections. Witnessed by the world, South Africans of all races waited patiently in line to cast their ballots, signaling the official and symbolic birth of the “new” South Africa. The subsequent years, marked initially with euphoric hopes for racial healing enabled by institutional processes such as the Truth and Reconciliation Commission (TRC), have instead, most recently, inspired deep concern about epidemic levels of HIV/AIDS, violent crime, state corruption, and unbridled market reforms directed at everything from property to bodies to babies. Now, seemingly beleaguered state officials deploy the mantra “TINA” (There Is No Alternative [to neoliberal development]) to fend off criticism of growing income and wealth disparities. To coincide, more or less, with the anniversary of 1994—less to commemorate than to signal something about the trajectory of the past twenty years—we are proposing an interdisciplinary, special theme section of Comparative Studies in South Asia, Africa, and the Middle East (CSSAAME) entitled “The Haunted Present: Reckoning After Apartheid” (tentative title). The special theme section is framed around questions of reckoning in the double sense of both a moral and practical accounting for historical injury alongside the challenges and failures of the no-longer “new” South Africa. Against accounts depicting the liberation era as non-violent and peaceable, more nuanced analysis we argue suggests not only that South Africa’s “revolution” was marked by both collective and individual violence—on the part of the state and the liberation movements—but that reckoning with the present demands of scholars, the media, and cultural commentators that they begin to grapple more fully with the dimensions and different figurations of South Africa’s violent colonial history. Indeed, violence and reckoning appear as two central forces in contemporary South African political, economic, and social life. In response, we are driven to pose the following questions: In the post-apartheid period, what forms of (individual, structural) violence have come to bear on South African life? How does this violence reckon with apartheid and its legacies? Does it in fact reckon with the past? How can we or should we think about violence as a response to the (failed?) reckoning of state initiatives like the TRC? What has enabled or enables aesthetic forms—literature, photography, plastic arts, and other modes of expressive culture—to respond to the difficulties of South Africa’s ongoing transition? What, in fact, would a practice or ethic of reckoning defined in the following way look like? ˈrekəniNG/ noun: • the action or process of calculating or estimating something: last year was not, by any reckoning, a particularly good one; the system of time reckoning in Babylon • a person’s view, opinion, or judgment: by ancient reckoning, bacteria are plants • archaic, a bill or account, or its settlement • the avenging or punishing of past mistakes or misdeeds: the fear of being brought to reckoning there will be a terrible reckoning (Oxford English Dictionary) Looking back on the period, just before 1994, is sobering indeed. At the time, many saw in the energies and courage of those fighting for liberation the possibilities of a post-racial, post-conflict society. Yet as much as the new was ushered in, old apartheid forms lingered. Recalling Nadine Gordimer’s invocation of Gramsci’s “morbid symptoms” more and more it seems “the old is dying and the new cannot be born” (Gramsci cited in Gordimer 1982). And even as the new began to emerge other forces—both internal and external to South Africa—redefined the conditions for transformation. The so-called “new” South Africa, as Jennifer Wenzel has argued, was really more than anything “the changing face of old oppressions” (Wenzel 2009:159). The implications for our special theme section of CSSAAME are many. We begin by exploring the gender, race, and class dimensions of contemporary South African life by way of its literatures, histories, and politics, its reversion to custom, the claims of ancestors on the living, in brief, the various cultural expressive modes in which contemporary South Africa reckons with its past and in so doing accounts, day by day, for the ways in which the present can be lived, pragmatically. This moves us some distance from the exercise in “truth and reconciliation” of the earlier post-transition years to consider more fully the nature of post-conflict, the suturing of old enmities in the present, and the ways of resolving those lingering suspicions both ordinary and the stuff of the dark night of the soul (Nelson 2009:xv).

Reckoning With Apartheid: The Conundrum of Working Through the Past

From April 26-29, 1994, South Africa held its first universal, democratic elections. Witnessed by the world, South Africans of all races waited patiently in line to cast their ballots, signaling the official and symbolic birth of the “new” South Africa. The subsequent years, marked initially with euphoric hopes for racial healing enabled by institutional processes such as the Truth and Reconciliation Commission (TRC), have instead, most recently, inspired deep concern about epidemic levels of HIV/AIDS, violent crime, state corruption, and unbridled market reforms directed at everything from property to bodies to babies. Now, seemingly beleaguered state officials deploy the mantra “TINA” (There Is No Alternative [to neoliberal development]) to fend off criticism of growing income and wealth disparities. To coincide, more or less, with the anniversary of 1994—less to commemorate than to signal something about the trajectory of the past twenty years—we are proposing an interdisciplinary, special theme section of Comparative Studies in South Asia, Africa, and the Middle East (CSSAAME) entitled “The Haunted Present: Reckoning After Apartheid” (tentative title). The special theme section is framed around questions of reckoning in the double sense of both a moral and practical accounting for historical injury alongside the challenges and failures of the no-longer “new” South Africa. Against accounts depicting the liberation era as non-violent and peaceable, more nuanced analysis we argue suggests not only that South Africa’s “revolution” was marked by both collective and individual violence—on the part of the state and the liberation movements—but that reckoning with the present demands of scholars, the media, and cultural commentators that they begin to grapple more fully with the dimensions and different figurations of South Africa’s violent colonial history. Indeed, violence and reckoning appear as two central forces in contemporary South African political, economic, and social life. In response, we are driven to pose the following questions: In the post-apartheid period, what forms of (individual, structural) violence have come to bear on South African life? How does this violence reckon with apartheid and its legacies? Does it in fact reckon with the past? How can we or should we think about violence as a response to the (failed?) reckoning of state initiatives like the TRC? What has enabled or enables aesthetic forms—literature, photography, plastic arts, and other modes of expressive culture—to respond to the difficulties of South Africa’s ongoing transition? What, in fact, would a practice or ethic of reckoning defined in the following way look like? ˈrekəniNG/ noun: • the action or process of calculating or estimating something: last year was not, by any reckoning, a particularly good one; the system of time reckoning in Babylon • a person’s view, opinion, or judgment: by ancient reckoning, bacteria are plants • archaic, a bill or account, or its settlement • the avenging or punishing of past mistakes or misdeeds: the fear of being brought to reckoning there will be a terrible reckoning (Oxford English Dictionary) Looking back on the period, just before 1994, is sobering indeed. At the time, many saw in the energies and courage of those fighting for liberation the possibilities of a post-racial, post-conflict society. Yet as much as the new was ushered in, old apartheid forms lingered. Recalling Nadine Gordimer’s invocation of Gramsci’s “morbid symptoms” more and more it seems “the old is dying and the new cannot be born” (Gramsci cited in Gordimer 1982). And even as the new began to emerge other forces—both internal and external to South Africa—redefined the conditions for transformation. The so-called “new” South Africa, as Jennifer Wenzel has argued, was really more than anything “the changing face of old oppressions” (Wenzel 2009:159). The implications for our special theme section of CSSAAME are many. We begin by exploring the gender, race, and class dimensions of contemporary South African life by way of its literatures, histories, and politics, its reversion to custom, the claims of ancestors on the living, in brief, the various cultural expressive modes in which contemporary South Africa reckons with its past and in so doing accounts, day by day, for the ways in which the present can be lived, pragmatically. This moves us some distance from the exercise in “truth and reconciliation” of the earlier post-transition years to consider more fully the nature of post-conflict, the suturing of old enmities in the present, and the ways of resolving those lingering suspicions both ordinary and the stuff of the dark night of the soul (Nelson 2009:xv).