Consumption Decisions When People Value Conformity

In this paper we assume that for some commodities individuals may wish to adjust their levels of consumption from their normal Marshallian levels so as to match the consumption levels of a group of other individuals, in order to signal that they conform to the consumption norms of that group. Unlike Veblen’s concept of conspicuous consumption this can mean that some individuals may reduce their consumption of the relevant commodities. We model this as a three-stage game in which individuals first decide whether or not they wish to adhere to a norm, then decide which norm they wish to adhere to, and finally decide their actual consumption. We present a number of examples of the resulting equilibria, and then discuss the potential policy implications of this model.

Institutions, Behavior and Evolution

The three articles constituting this thesis are for reasons of content or method related to the following three fields in economics: Behavioral Economics, Evolutionary Game Theory and Formal Institutional Economics. A core element of these fields is the concept of individual preferences. Preferences are of central importance for the conceptional framework to analyze human behavior. They form the foundation for the theory of rational choice which is defined by the determination of the choice set and the selection of the most preferred alternative according to some consistency requirements. The theory of rational choice is based on a very simplified description of the problem of choice (object function and constraints). However, that choices depend on many more factors is for instance propagated by psychological theories and is supported by many empirical and experimental studies. This thesis adds to a better understanding of individual behavior to the extent that the evolution of certain characteristics of preferences and their consequences on human behavior forms the overarching theme of the dissertation. The long-term effect of evolutionary forces on a particular characteristic of importance in the theoretical, empirical and experimental economic literature, the concept of inequality aversion, is subject of the article “The evolution of inequality aversion in a simplified game of life” (Chapter 4). The contribution of the article is the overcoming of a restriction of former approaches to analyze the evolution of preferences in very simple environments. By classifying human interaction into three central economic games, the article provides a first step towards a simplified and sufficiently complete description of the interaction environment. Within such an environment the article characterizes the evolutionary stable preference distribution. One result shows, that the interaction of the aforementioned three classes can stabilize a preference of inequality aversion in the subpopulation which is favored in the problem of redistribution. The two remaining articles are concerned with social norms, which dissemination is determined by medium-run forces of cultural evolution. The article “The impact of market innovations on the evolution of social norms: the sustainability case.“ (Chapter 2) studies the interrelation between product innovations which are relevant from a sustainability perspective and an according social norm in consumption. This relation is based on a conformity bias in consumption and the attempt to avoid cognitive dissonances resulting from non-compliant consumption. Among others, it is shown that a conformity bias on the consumption side can lead to multiple equilibria on the side of norm adoption. The article “Evolution of cooperation in social dilemmas: signaling internalized norms.” (Chapter 3) studies the emergence of cooperation in social dilemmas based on the signaling of social norms. The article provides a potential explanation of cooperative behavior, which does not rely on the assumption of structured populations or on the unmotivated ability of social norms to restrict individual actions or strategy spaces. A comprehensive result of the single articles is the explanation of the phenomenon of partial norm adaption or dissemination of preferences. The plurality of the applied approaches with respect to the proximity to the rational choice approach and regarding the underlying evolutionary mechanics is a particular strength of the thesis. It shows the equality of these approaches in their potential to explain the phenomenon of cooperation in environments that provide material incentives for defective behavior. This also points to the need of a unified framework considering the biological and cultural coevolution of preference patterns.

Essays on Microeconometrics

My dissertation has three chapters which develop and apply microeconometric tech- niques to empirically relevant problems. All the chapters examines the robustness issues (e.g., measurement error and model misspecification) in the econometric anal- ysis. The first chapter studies the identifying power of an instrumental variable in the nonparametric heterogeneous treatment effect framework when a binary treat- ment variable is mismeasured and endogenous. I characterize the sharp identified set for the local average treatment effect under the following two assumptions: (1) the exclusion restriction of an instrument and (2) deterministic monotonicity of the true treatment variable in the instrument. The identification strategy allows for general measurement error. Notably, (i) the measurement error is nonclassical, (ii) it can be endogenous, and (iii) no assumptions are imposed on the marginal distribution of the measurement error, so that I do not need to assume the accuracy of the measure- ment. Based on the partial identification result, I provide a consistent confidence interval for the local average treatment effect with uniformly valid size control. I also show that the identification strategy can incorporate repeated measurements to narrow the identified set, even if the repeated measurements themselves are endoge- nous. Using the the National Longitudinal Study of the High School Class of 1972, I demonstrate that my new methodology can produce nontrivial bounds for the return to college attendance when attendance is mismeasured and endogenous.

The second chapter, which is a part of a coauthored project with Federico Bugni, considers the problem of inference in dynamic discrete choice problems when the structural model is locally misspecified. We consider two popular classes of estimators for dynamic discrete choice models: K-step maximum likelihood estimators (K-ML) and K-step minimum distance estimators (K-MD), where K denotes the number of policy iterations employed in the estimation problem. These estimator classes include popular estimators such as Rust (1987)’s nested fixed point estimator, Hotz and Miller (1993)’s conditional choice probability estimator, Aguirregabiria and Mira (2002)’s nested algorithm estimator, and Pesendorfer and Schmidt-Dengler (2008)’s least squares estimator. We derive and compare the asymptotic distributions of K- ML and K-MD estimators when the model is arbitrarily locally misspecified and we obtain three main results. In the absence of misspecification, Aguirregabiria and Mira (2002) show that all K-ML estimators are asymptotically equivalent regardless of the choice of K. Our first result shows that this finding extends to a locally misspecified model, regardless of the degree of local misspecification. As a second result, we show that an analogous result holds for all K-MD estimators, i.e., all K- MD estimator are asymptotically equivalent regardless of the choice of K. Our third and final result is to compare K-MD and K-ML estimators in terms of asymptotic mean squared error. Under local misspecification, the optimally weighted K-MD estimator depends on the unknown asymptotic bias and is no longer feasible. In turn, feasible K-MD estimators could have an asymptotic mean squared error that is higher or lower than that of the K-ML estimators. To demonstrate the relevance of our asymptotic analysis, we illustrate our findings using in a simulation exercise based on a misspecified version of Rust (1987) bus engine problem.

The last chapter investigates the causal effect of the Omnibus Budget Reconcil- iation Act of 1993, which caused the biggest change to the EITC in its history, on unemployment and labor force participation among single mothers. Unemployment and labor force participation are difficult to define for a few reasons, for example, be- cause of marginally attached workers. Instead of searching for the unique definition for each of these two concepts, this chapter bounds unemployment and labor force participation by observable variables and, as a result, considers various competing definitions of these two concepts simultaneously. This bounding strategy leads to partial identification of the treatment effect. The inference results depend on the construction of the bounds, but they imply positive effect on labor force participa- tion and negligible effect on unemployment. The results imply that the difference- in-difference result based on the BLS definition of unemployment can be misleading

due to misclassification of unemployment.

Heterogeneous discounting in consumption-investment problems. Time consistent solutions

[cat] En aquest treball s'analitza un model estocàstic en temps continu en el que l'agent decisor descompta les utilitats instantànies i la funció final amb taxes de preferència temporal constants però diferents. En aquest context es poden modelitzar problemes en els quals, quan el temps s'acosta al moment final, la valoració de la funció final incrementa en comparació amb les utilitats instantànies. Aquest tipus d'asimetria no es pot descriure ni amb un descompte estàndard ni amb un variable. Per tal d'obtenir solucions consistents temporalment es deriva l'equació de programació dinàmica estocàstica, les solucions de la qual són equilibris Markovians. Per a aquest tipus de preferències temporals, s'estudia el model clàssic de consum i inversió (Merton, 1971) per a les funcions d'utilitat del tipus CRRA i CARA, comparant els equilibris Markovians amb les solucions inconsistents temporalment. Finalment es discuteix la introducció del temps final aleatori.

Heterogeneous discounting in consumption-investment problems. Time consistent solutions

[cat] En aquest treball s'analitza un model estocàstic en temps continu en el que l'agent decisor descompta les utilitats instantànies i la funció final amb taxes de preferència temporal constants però diferents. En aquest context es poden modelitzar problemes en els quals, quan el temps s'acosta al moment final, la valoració de la funció final incrementa en comparació amb les utilitats instantànies. Aquest tipus d'asimetria no es pot descriure ni amb un descompte estàndard ni amb un variable. Per tal d'obtenir solucions consistents temporalment es deriva l'equació de programació dinàmica estocàstica, les solucions de la qual són equilibris Markovians. Per a aquest tipus de preferències temporals, s'estudia el model clàssic de consum i inversió (Merton, 1971) per a les funcions d'utilitat del tipus CRRA i CARA, comparant els equilibris Markovians amb les solucions inconsistents temporalment. Finalment es discuteix la introducció del temps final aleatori.

Alcohol consumption and breast cancer risk among Hispanic and non-Hispanic women in New Mexico

Breast cancer incidence and mortality rates for Hispanic women are lower than for non-Hispanic white (NHW) women, but recently rates have increased more rapidly among Hispanic women. Many studies have shown a consistent increased breast cancer risk associated with modest or high alcohol intake, but few included Hispanic women. Alcohol consumption and risk of breast cancer was investigated in a New Mexico statewide population-based case-control study. The New Mexico Tumor Registry ascertained women, newly diagnosed with breast cancer (1992–1994) aged 30–74 years. Controls were identified by random digit dialing and were frequency-matched for ethnicity, age-group, and health planning district. In-person interviews of 712 cases and 844 controls were conducted. Data were collected for breast cancer risk factors, including alcohol intake. Recent alcohol intake data was collected for a four-week period, six months prior to interview. Past alcohol intake included information on alcohol consumption at ages 25, 35, and 50. History of alcohol consumption was reported by 81% of cases and 85% of controls. Of these women, 42% of cases and 48% of controls reported recent alcohol intake. Results for past alcohol intake did not show any trend with breast cancer risk, and were nonsignificant. Multivariate-adjusted odds ratios for recent alcohol intake and breast cancer suggested an increased risk at the highest level for both ethnic groups, but estimates were unstable and statistically nonsignificant. Low level of recent alcohol intake (<148 grams/week) was associated with a reduced risk for NHW women (Odds Ratio (OR) = 0.49 95% Confidence Interval (CI) 0.35–0.69). This pattern was independent of hormone-receptor status. The reduced breast cancer risk for low alcohol intake was present for premenopausal (OR = 0.29, 95% CI 0.15–0.56) and postmenopausal NHW women (OR = 0.56, 95% CI 0.35–0.90). The possibility of an increased risk associated with high alcohol intake could not be adequately addressed, because there were few drinkers with more than light to moderate intake, especially among Hispanic women. An alcohol-estrogen link is hypothesized to be the mechanism responsible for increased breast cancer risk, but has not been consistently substantiated. More studies are needed of the underlying mechanism for an association between alcohol intake and breast cancer. ^

(Table 2, page 50) Toolik lake sediment chemistry (0-1 cm interval)

The sediments within Toolik Lake in arctic Alaska are characterized by extremely low rates of organic matter sedimentation and unusually high concentrations of iron and manganese. Pore water and solid phase measurements of iron, manganese, trace metals, carbon, nitrogen, phosphorus, and sulfur are consistent with the hypothesis that the reduction of organic matter by iron and manganese is the most important biogeochemical reaction within the sediment. Very low rates of dissolved oxygen consumption by the sediments result in an oxidizing environment at the sediment-water interface. This results in high retention of upwardly-diffusing iron and manganese and the formation of metal-enriched sediment. Phosphate in sediment pore waters is strongly adsorbed by the metal-enriched phases. Consequently, fluxes of phosphorus from the sediments to overlying waters are very small and contribute to the oligotrophic nature of the Toolik Lake aquatic system. Toolik Lake contains an unusual type of lacustrine sediment, and in many ways the sediments are similar to those found in oligotrophic oceanic environments.

Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?

This paper studies life-cycle preferences over consumption and health status. We show that cost-effectiveness analysis is consistent with cost-benefit analysis if the Lifetime utility function is additive over time, multiplicative in the utility of consumption and the utility of health status, and if the utility of consumption is constant over time. We derive the conditions under which the lifetime utility function takes this form, both under expected utility theory and under rank-dependent utility theory, which is currently the most important nonexpected utility theory. If cost-effectiveness analysis is consistent with cost-benefit analysis, it is possible to derive tractable expressions for the willingness to pay for quality-adjusted life-years (QALYs). The willingness to pay for QALYs depends on wealth, remaining life expectancy, health status, and the possibilities for intertemporal substitution of consumption. (C) 1999 Elsevier Science B.V. All rights reserved.

Case fatality after an acute cardiac event: the effect of smoking and alcohol consumption

The objective of this study was to use a population-based register of acute cardiac events to investigate the association between survival after an acute event and history of smoking and alcohol consumption. The population was all residents of the Lower Hunter Region of Australia aged 25 to 69 years who suffered myocardial infarction or sudden cardiac death between 1986 and 1994. Among 10,170 events, 2504 resulted in death within 28 days. After adjusting for sex, age and medical history, current smokers had a similar risk of dying after an acute cardiac event to never-smokers [odds ratio (OR)=1.10, 95% confidence interval (CI) 0.94-1.29]. People who consumed more than 8 alcoholic drinks per day on more than 2 days per week (OR=1.93, 95% CI 1.39-2.69) and former moderate to heavy drinkers (OR=4.59, 95% CI 3.65-5.76) were more likely to die than people who were nondrinkers. The results of this large community study, suggesting no effect of smoking on case fatality and an increased risk of death after an acute cardiac event for heavy drinkers and former moderate to heavy drinkers, highlight the importance of a population view of case fatality. These results can also shed some light on reasons for the paradoxical results from clinical trials. (C) 2001 Elsevier Science Inc. All rights reserved.

Domestic objects and the taste epiphany - A resource for consumption methodology

The presentation of an aesthetic identity involves the accomplishment of a coherent, plausible narrative which links one's choices to desired characteristics of the self. As symbolic evidence of a person's taste, material culture is a vital component of a successful narrative. Via case studies of pivotal household objects, this paper uses face-to-face interview data as a way of investigating processes of aesthetic choice. Household objects are interpreted as material elements imbricated in the presentation of a socially plausible and internally consistent aesthetic self. Narrative analysis, and the concept of the epiphany-object, are proposed as useful ways of accounting for tastes in domestic material culture. Methodological questions of truth-telling and authenticity in the face-to-face context are considered, and the sociological problem of taste is scrutinized in light of ideas about social accountability and textual identity.

Coffee and alcohol consumption and the risk of pancreatic cancer in two prospective United States cohorts

Although most prospective cohort studies do not support an association between coffee consumption and pancreatic cancer, the findings for alcohol are inconsistent. Recently, a large prospective cohort study of women reported statistically significant elevations in risk of pancreatic cancer for both coffee and alcoholic beverage consumption. We obtained data on coffee, alcohol, and other dietary factors using semiquantitative food frequency questionnaires administered at baseline (1986 in the Health Professionals Follow-Up Study and 1980 in the Nurses’ Health Study) and in subsequent follow-up questionnaires. Data on other risk factors for pancreatic cancer, including cigarette smoking, were also available. Individuals with a history of cancer at study initiation were excluded from all of the analyses. During the 1,907,222 person-years of follow-up, 288 incident cases of pancreatic cancer were diagnosed. The data were analyzed separately for each cohort, and results were pooled to compute overall relative risks (RR). Neither coffee nor alcohol intakes were associated with an increased risk of pancreatic cancer in either cohort or after pooling the results (pooled RR, 0.62; 95% confidence interval, 0.27–1.43, for >3 cups of coffee/day versus none; and pooled RR, 1.00; 95% confidence interval, 0.57–1.76, for >=30 grams of alcohol/day versus none). The associations did not change with analyses examining different latency periods for coffee and alcohol. Similarly, no statistically significant associations were observed for intakes of tea, decaffeinated coffee, total caffeine, or alcoholic beverages. Data from these two large cohorts do not support any overall association between coffee intake or alcohol intake and risk of pancreatic cancer.

Interval training program optimization in highly trained endurance cyclists

Purpose: The purpose of this study was to examine the influence of three different high-intensity interval training (HIT) regimens on endurance performance in highly trained endurance athletes. Methods: Before, and after 2 and 4 wk of training, 38 cyclists and triathletes (mean +/- SD; age = 25 +/- 6 yr; mass = 75 +/- 7 kg; (V)over dot O-2peak = 64.5 +/- 5.2 mL.kg(-1).min(-1)) performed: 1) a progressive cycle test to measure peak oxygen consumption ((V)over dotO(2peak)) and peak aerobic power output (PPO), 2) a time to exhaustion test (T-max) at their (V)over dotO(2peak) power output (P-max), as well as 3) a 40-kin time-trial (TT40). Subjects were matched and assigned to one of four training groups (G(1), N = 8, 8 X 60% T-max P-max, 1:2 work:recovery ratio; G(2), N = 9, 8 X 60% T-max at P-max, recovery at 65% HRmax; G(3), N = 10, 12 X 30 s at 175% PPO, 4.5-min recovery; G(CON), N = 11). In addition to G(1) G(2), and G(3) performing HIT twice per week, all athletes maintained their regular low-intensity training throughout the experimental period. Results: All HIT groups improved TT40 performance (+4.4 to +5.8%) and PPO (+3.0 to +6.2%) significantly more than G(CON) (-0.9 to + 1.1 %; P < 0.05). Furthermore, G(1) (+5.4%) and G(2) (+8.1%) improved their (V)over dot O-2peak significantly more than G(CON) (+ 1.0%; P < 0.05). Conclusion: The present study has shown that when HIT incorporates P-max as the interval intensity and 60% of T-max as the interval duration, already highly trained cyclists can significantly improve their 40-km time trial performance. Moreover, the present data confirm prior research, in that repeated supramaximal HIT can significantly improve 40-km time trial performance.

Hypotensive Response Magnitude and Duration in Hypertensives: Continuous and Interval Exercise

Background: Although exercise training is known to promote post-exercise hypotension, there is currently no consistent argument about the effects of manipulating its various components (intensity, duration, rest periods, types of exercise, training methods) on the magnitude and duration of hypotensive response. Objective: To compare the effect of continuous and interval exercises on hypotensive response magnitude and duration in hypertensive patients by using ambulatory blood pressure monitoring (ABPM). Methods: The sample consisted of 20 elderly hypertensives. Each participant underwent three ABPM sessions: one control ABPM, without exercise; one ABPM after continuous exercise; and one ABPM after interval exercise. Systolic blood pressure (SBP), diastolic blood pressure (DBP), mean arterial pressure (MAP), heart rate (HR) and double product (DP) were monitored to check post-exercise hypotension and for comparison between each ABPM. Results: ABPM after continuous exercise and after interval exercise showed post-exercise hypotension and a significant reduction (p < 0.05) in SBP, DBP, MAP and DP for 20 hours as compared with control ABPM. Comparing ABPM after continuous and ABPM after interval exercise, a significant reduction (p < 0.05) in SBP, DBP, MAP and DP was observed in the latter. Conclusion: Continuous and interval exercise trainings promote post-exercise hypotension with reduction in SBP, DBP, MAP and DP in the 20 hours following exercise. Interval exercise training causes greater post-exercise hypotension and lower cardiovascular overload as compared with continuous exercise.

Does readiness to change predict subsequent alcohol consumption in medical inpatients with unhealthy alcohol use?

We studied whether readiness to change predicts alcohol consumption (drinks per day) 3 months later in 267 medical inpatients with unhealthy alcohol use. We used 3 readiness to change measures: a 1 to 10 visual analog scale (VAS) and two factors of the Stages of Change Readiness and Treatment Eagerness Scale: Perception of Problems (PP) and Taking Action (TA). Subjects with the highest level of VAS-measured readiness consumed significantly fewer drinks 3 months later [Incidence rate ratio (IRR) and 95% confidence interval (CI): 0.57 (0.36, 0.91) highest vs. lowest tertile]. Greater PP was associated with more drinking [IRR (95%CI): 1.94 (1.02, 3.68) third vs. lowest quartile]. Greater TA scores were associated with less drinking [IRR (95%CI): 0.42 (0.23, 0.78) highest vs. lowest quartile]. Perception of Problems' association with more drinking may reflect severity rather than an aspect of readiness associated with ability to change; high levels of Taking Action appear to predict less drinking. Although assessing readiness to change may have clinical utility, assessing the patient's planned actions may have more predictive value for future improvement in alcohol consumption.

Coffee consumption and digestive tract cancers.

The relationship between coffee drinking and the risk of digestive tract neoplasms was analyzed in a case-control study of 50 cases of cancer of the mouth or pharynx, 209 of the esophagus, 397 of the stomach, 455 of the colon, 295 of the rectum, 151 of the liver, 214 of the pancreas, and 1944 control subjects admitted for acute, non-digestive tract disorders. There was no significant or consistent association between coffee and cancers of the mouth or pharynx, esophagus, stomach, liver, or pancreas. In particular, for pancreatic cancer, the multivariate relative risks for the intermediate and upper tertiles were 1.05 and 1.01, respectively. There were significant inverse trends in risk with measures of coffee consumption for colon and rectal cancers, the multivariate relative risks according to tertiles of coffee consumption being 0.86 and 0.64 for colon and 0.97 and 0.66 for rectum. This apparent protection is in agreement with some (but not all) previous epidemiological evidence and finds a possible biological interpretation in terms of interference on bile secretion, causing reduced bile acid and neutral sterol concentrations in the bowel. In conclusion, the results of this study, the major interest of which lies in the opportunity of drawing up an overall pattern of risk for various digestive neoplasms, offer further reassurance as regards the effects of coffee on digestive tract carcinogenesis.