Evolution of Wealth and Consumption in the Aftermath of a Major Natural Disaster
By Ralph Lawton
Natural disasters can have catastrophic personal and economic effects, particularly in low-resource settings. Major natural disasters are becoming more frequent, so rigorous understanding of their effects on long-term economic wellbeing is fundamentally important in order to mitigate their impacts on exposed populations. In this paper, I investigate the effects of the 2004 Indian Ocean tsunami on real consumption and assets at the individual level. I also examine the heterogeneity of those impacts, and the related effects on inequality. Taking individual-specific heterogeneity into account with fixed effects, I find individuals living in heavily damaged areas experience major declines in real consumption and assets, and do not recover in the long term. These results are strikingly different than results that do not consider price effects, as well as previously published macroeconomic results. I also find significant heterogeneity by age, education-level, pre-tsunami socioeconomic status, and whether an individual went into a refugee camp. The tsunami resulted in large, long-term declines in asset inequality, and a temporary increase in consumption inequality that returns to near pre-tsunami levels in the long run.
Advisors: Professor Duncan Thomas, Professor Michelle Connolly | JEL Codes: D1, D15, H84
Competition and Innovation: Evidence from Third-Party Reprocessing in the Medical Device Industry
By Varun Prasad
Healthcare is projected to soon become the industry with the largest amount of spending on research and development in the world. While competition has the potential to catalyze the development of new healthcare technologies and drive down costs, increases in competition have also been thought to hinder innovation as a result of thinner profit margins and reduced incentives. I estimate whether and to what extent competition in the medical device industry promotes innovation. Using Food and Drug Administration data on medical device applications from 1976 to 2019, I examine how original equipment manufacturers respond to the entry of third-party reprocessed devices. I find that, when controlling for year and medical specialty, the introduction of a reprocessed device leads to an almost five-fold increase in new device applications by original manufacturers after both one and two years. These results suggest that an increase in competition within the medical device market has spurred innovation and the development of new technologies.
Advisors: Professor James Roberts, Professor David Ridley | JEL Codes: L1, D22, L65
Pricing and Pack Size Brand, Quantity, and Cost Considerations in Pricing Multipacks of Toothpaste
By Stephanie Wiehe
The US market for toothpaste, like many other goods, is shifting towards selling
in bulk. Multipacks of toothpaste require quantity discounts to incentivize consumers, making buying in bulk a great deal for the savings-minded toothpaste-shopper. It is more difficult to understand, however, producers’ willingness to sell multipacks of toothpaste, when margins are necessarily slimmer than single tubes due to quantity discounts. This paper explores the consumer’s decision in purchasing toothpaste as an interaction between savings on price and inventory considerations, like shopping and carrying costs. My model combines aspects of prior works on second degree price discrimination and quantity discounts with alterations to fit the intricacies of the market for toothpaste. The model’s predictions support the possibility of pack size as a tool for second degree price discrimination as shopping and carrying costs constitute two markets with different price elasticities of demand for single and multipacks of toothpaste. This work adds to the existing literature on storable goods and non-linear pricing and brings a new economics-based approach to a question faced by toothpaste producers.
Advisors: Professor Allan Collard-Wexler, | JEL Codes: L11; L42; D4
The Effect of Marriage on the Wages of Americans: Gender and Generational Differences
By William Song and Theresa Tong
A substantial body of literature on the wage effects of marriage finds that married American men earn anywhere from 10% to 40% higher wages than unmarried men on average, while married American women earn up to 7% less than unmarried women, even after controlling for traits such as background, education, and number of children. Because this literature focuses heavily on men born in a single time period, we study both men and women in two different generational cohorts of Americans (Baby Boomers and Millennials) from the National Longitudinal Surveys of Youth to examine how the wage effects of marriage differ between genders and across time. Using a fixed effects approach, we find that Millennial women—but not Baby Boomer women—experience an increase in wages after marriage, and we replicate the finding from the literature that men experience an increase in wages after marriage as well. However, after controlling for wage trajectory-based selection into marriage by using a modified fixed effects approach that allows wage trajectories to vary by individual, we find that the wage effects of marriage are no longer statistically significant for any group in our data, suggesting that the wage differences between married and unmarried individuals found in previous studies are primarily a result of selection.
Advisors: Professor Marjorie McElroy, Professor Michelle Connolly | JEL Codes: C33; D13; J12; J13; J22; J30
Asylum Determination within the European Union (EU): Whether Capacity and Social Constraints Impact the Likelihood of Refugee Status Determination
By Louden Paul Richason
This paper analyzes whether capacity and social constraints impact acceptance rates for asylum seekers in the European Union from 2000-2016. Theoretically people should receive asylum based on the criteria outlined in international law – a well founded fear of persecution – but the influx and distribution of applicants in the European Union suggests that this may not hold in practice. For a group of pre identified “legitimate” asylum cases, this paper finds that surges in applications in a country (i.e. capacity constraints) have a positive and statistically significant correlation with acceptance rates, while the percentage of migrants in a country (i.e. social constraints) has a negative and statistically significant correlation with acceptance rates. This suggests that the burden of proof becomes easier during a surge in total applications in a country. However, as the international migrant stock in that country increases, it is more difficult for that same group of applicants to receive asylum.
Advisors: Professor Suzanne Shanahan, Professor Michelle Connolly | JEL Codes: D73, D78, F22, H12, J11, J15, K37, O52
Is Inclusionary Zoning a Proper Remedy for the Affordable Housing Crisis? —A Case Study of IZ Programs in New Jersey and North Carolina
By Xinchen Li
The recent decade witnessed a worsening of the affordable housing crisis across the
country. Inclusionary zoning (IZ) has been a popular municipal remedy for the crisis.
However, it is unclear whether IZ actually adds to the affordable housing stock, and
whether it achieves its goal at the expense of average homeowners. Through a case
study of New Jersey and North Carolina, this paper aims to address these two questions.The results suggest that there is no statistically significant positive relationship between the presence of IZ and the housing price in the two states, but its beneficiary effects are also debatable.
Advisors: Professor Christopher Timmins | JEL Codes: D10 ; R2; R21
Overreaction in the Financial Times Stock Exchange (FTSE)
By Yusuke Ewan Tanaka Legard
The Overreaction Hypothesis suggests that investors overreact to unexpected news in the financial world, which leads to a mispricing of equities. This paper investigates the presence of overreaction in the Financial Times Stock Exchange (FTSE) between 1995 and 2018. The empirical methodology studies the monthly returns of equities in the FTSE 100. The empirical results are consistent with the overreaction hypothesis and indicate the presence of overreaction within the FTSE. Furthermore, the results highlight whether the information revolution has exacerbated or lessened overreaction. The results suggest that investor overreaction has not altered, for better or worse, since the information revolution.
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Advisors: Professor Emma Rasiel, Professor Kent Kimbrough | JEL Codes: E7; E70; D83
Social Capital and Financial Development after Economic Shocks: Evidence from Italy after the Financial Crisis of 2007-2009
By Sujay Rao & Ethan Lampert
Like traditional forms of capital, social capital – an intangible measure of an individual’s social networks, trust in institutions, and participation in civic life – has implications for personal and financial behavior. Individuals from educated, well established backgrounds with fruitful family ties may be more amenable to opening new lines of credit or investing in stock markets due to their trust in and connectedness with society. But what happens after a major economic shock, such as the financial crisis of 2008? Using Italy as a case study and panel data from the Survey of Household Income and Wealth, we find that social capital has significant effects on an individual’s credit card usage, informal borrowing, and choice to invest in securities.
Advisors: Professor Grace Kim, Professor Michelle Connolly, Professor Giovanni Zanalda | JEL Codes: G01, G2, O1, D1, D14
The Impact of Originality in a Transitioning Movie Industry
By Jacob Graber-Lipperman
The thesis explores the increasing success of non-original films distributed through traditional theatrical releases, and asks whether new distributors, such as Netflix, may serve as better platforms for original content. A dataset incorporating the top 100 highest-grossing films at the domestic box office each year from 2000 to 2018, as well as a smaller subset including 82 titles distributed by Netlix, was utilized to investigate these issues. The results confirm non-original content has performed increasingly well over time for theatrical releases, especially within the past four years, while original content has performed poorly, especially during this recent time period. Additionally, the research suggests the stark difference in performance observed for non-original and original content in traditional distribution models may not appear for titles released through the newer streaming platforms. This paper thus hopes to motivate future study into the effect of streaming platforms on consumer purchasing behavior of films as new distribution technology within the movie industry continues to proliferate.
Advisor: Professor Kent Kimbrough | JEL Codes: D1, D10, D19
Does Media Coverage of Sexual Assault Cases Cause Victims to Go to the Police? Evidence from FBI Data and Google Trends
By Harry Elworthy
This paper investigates the effect that national news coverage of prominent sexual assaults has on the reporting decisions of sexual assault victims. Estimates are based on time series data of reports made to police stations in the US from 2008 to 2016 and Google Trends data of search volume, along with an identification strategy that uses a number of individual high profile sexual assault allegations and related events as instruments. By removing assaults that occurred on the day that they were reported, I estimate the effect of coverage only on the reporting of assaults, and not on assaults themselves. A significant positive effect of news coverage on sexual assault reporting is found using several specifications. Back-of-the-envelope calculations suggest that there were between 31 and 121 additional reports of sexual assault for each of the 38 high profile events captured. No evidence is found to suggest that these additional reports of sexual assault have different arrest rates to other reports, indicating that there are not a significant number of false reports. This paper adds to current literature on the sexual assault reporting decision by considering the effect of news coverage and by using different methods of inference to previous papers.
Advisor: Professor Patrick Bayer | JEL Codes: D91, J16, K42, L86, Z13
