How Consumers Make Impulse Purchases and the Influence of Peers and a Market-Based Setting
By Arjan Saraon
Many organizations are designed to protect, educate and helping consumer with their financial decision–making. This paper examines the valuation of various non–essential goods in both a marketplace setting and slider–based setting, and in both a neutral influence and social influence condition. In a marketplace valuation setting, it is found that prices and price–searching behavior are the most significant predictors of a decision to checkout a good. In the slider–based valuation setting, it is found that the condition and a psychological impulsive measure are the most significant indicators of willingness–to–pay. Price–searching behavior indicated that the influence of responsible peers is as effective at reining in impulsive decisions as the more conventional, neutral method. Finally, a phenomena of paying more in the marketplace schema compared to the slider based schema appeared, despite the incentives being exactly the same. This was likely due to anchoring effects of the presented prices and list price.
Advisor: Alison Hagy, Kent Kimbrough, Rachel Kranton | JEL Codes: D12, | Tagged: Behavioral economics, Impulse Purchasing, Anchoring Effect, Market-based Valuation, Price-searching
Program Characteristics and Economic Conditions That Affect WIC Participation
By Amy Tingle
WIC is one of the most expansive food assistance programs in the United States. Despite extensive research demonstrating the health benefits of participation, there is a sizable gap between those that are eligible and those that enroll. This paper studies how economic conditions and program characteristics affect both eligibility and coverage rates using post recession data from 2010–2013. The results show that the average monthly food benefit is positively correlated with take–up. They also indicate that the unemployment rate is correlated with eligibility but not take–up, meaning that in times of economic downturn, people enroll at the same rate as before.
Advisor: V. Joseph Hotz | JEL Codes: D04, D60 | Tagged: Participation in Federal Assistance, WIC Program
Proposing an Alternative to the European Central Bank’s Fiscal Convergence Criteria
By Junaid Arefeen
The recent onset of the sovereign debt crisis in the Eurozone has brought the viabil-ity of the Eurozone as a currency area into question. The unsustainable debt and deficit balances accumulated by several Eurozone nations since the adoption of the common currency in 1999, and the consequent incidence of high levels of sovereign default risk in the euro-area, indicate that the fiscal convergence criteria employed by the European Central Bank to monitor the fiscal discipline and sustainability of its members have been largely ine↵ectual. This paper draws upon the theory of optimum currency areas, and proposes a set of business cycle convergence criteria that can be employed as an alternate means to minimize the risk of fiscal imbalances and sovereign default. Economic theory suggests that a currency union with convergent business cycles will be insulated from asymmetric shocks, removing the need for countries to rely wholly on their fiscal policies when dealing with negative shocks (as would be the case in a currency union with non-synchronous countries su↵ering from negative asymmetric shocks). Therefore, as the risk of fiscal imbalances is minimized, a currency union with synchronous business cycles is expected to have low incidences of sovereign default risk. This paper tests this economic intuition empirically, and employs a multivariable panel regression model to determine the relationship between business cycle convergence and sovereign default risk (proxied using sovereign yield spreads). The regressions reveal that the degree of business cycle convergence is one of the main determinants of yield di↵erentials, and the relationship between the two is negative (as expected). The consistency of the results to numerous robustness checks provide a strong case for substituting the current fiscal convergence criteria with measures that assess the degree of business cycle convergence.
Advisors: Andrea Lanteri, Cosmin Ilut, Kent Kimbrough | JEL Codes: E32, E43, F34, F44, F45 | Tagged: Cycle Convergence, Optimum Currency Area, Sovereign Default Risk
Variations in Turkey’s Female Labor Market: The Puzzling Role of Education
By Rachel Anderson
Although Turkey ranks among the world’s 20 largest economies, female labor force participation in Turkey is surprisingly low. Relative to other developed countries, however, the proportion of Turkish women in senior management is high. One explanation for these contrasting pictures of Turkey’s female labor force is education. To better understand how women’s education and household characteristics explain variations in Turkey’s female labor market, I use annual Turkish Household Labour Force Survey data from 2004–2012 to estimate five probabilities: the likelihood that a woman (1) participates in the labor force, or is employed in an (2) agricultural, (3) blue collar, (4) lower white collar, or (5) upper white collar job. I find that labor force participation is relatively high among female primary school graduates, who are most likely to work in agricultural and blue collar jobs. Highly educated married women are the most likely group to participate in upper white collar jobs, and families favor sending single daughters over wives to work during periods of reduced household income.
Advisor: Kent Kimbrough, Timur Kuran | JEL Codes: C51, J21, J23 | Tagged: Employment, Labor-force Participation, Occupation Women