Browsing by Author "Thomas, Duncan"

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.

The essays in applied microeconomics contained within this dissertation examine prices in the developing economy contexts of Indonesia and the Philippines. Prices, observed and unobserved, are determined by and incentivize the behavior of all agents in the economy. Prices describe the interaction of individuals within a household and households within a market and reveal traits critical for development. Traits such as the efficiency of household resource allocations and the completeness of markets are analyzed in Central Java, Indonesia using a rich, longitudinal survey containing detailed price data used to estimate household demand systems. Unobserved, implicit prices of environmental goods are analyzed in the context of the Philippines. The valuation of environmental quality's implicit price is illustrated by comparing the health and human capital outcomes of the highly and least exposed. Exposure to environmental toxins can produce short and long-term damages to health and human capital reflecting undervaluation of the implicit price of environmental quality. The combined results of these essays on prices in development economics reveal allocation inefficiencies within the household and the economy and provide direction for development policy around the world.

This dissertation presents three essays on topics in development economics. Drawing on rich longitudinal data as well as measures of cognitive skills adapted from cognitive neuroscience, the chapters focus on health and human capital through the life course. The first essay isolates the causal impact of public health insurance on child health, measured by height-for-age, by exploiting the roll-out of Seguro Popular, a large-scale program that provides public health insurance to about half of Mexico’s population. Drawing on insights from the biology of human linear growth and using population-representative longitudinal data, we establish that Seguro Popular has had a modest impact on child nutritional status. These effects were larger after the program had been established for several years, suggesting that supply-side factors may have been critical impediments. The second essay turns to the relationship between executive function and labor market outcomes. This project describes how a widely used measure of executive function with foundations in cognitive neuroscience was implemented as part of a large-scale, population-representative survey in Indonesia. I find that higher cognitive functioning is associated with rewards in the labor market, particularly for women, and that executive function is related to labor force participation and the choice between wage work and self-employment. Motivated by the importance of executive function and human capital in later life, the third essay turns to the relationship between parental executive functioning and child outcomes. I find that parental executive function is strongly related to child executive function, and that better parental executive function is associated with better child nutritional outcomes, as measured by height-for-age and weight-for-height. The relationship between parents’ executive functioning and child outcomes depends both on the gender of the child and whether the child is first born or has older siblings. These results suggest that the relationships I observe between parental executive functioning and child development are not simply genetic but reflect parental choices and behaviors. Together, these chapters demonstrate the importance of bringing the tools from cognitive neuroscience to economics to further examine the role that specific cognitive skills like executive function play for success and well-being. They also highlight the critical importance of the early childhood household and environment for development, with long-lasting consequences for later life.

This dissertation consists of 3 essays on development economics, with an overarching theme that relates to the economics of the family, child human capital, and migration. The three essays combine rigorous empirical strategies with the use of uniquely rich longitudinal data, the Mexican Family Life Survey, to advance our understanding of individual, household and family behavior.

Using these population-level data, the first chapter is an evaluation of a prominent anti-poverty program, Oportunidades, on child nutrition. Oportunidades was a leading intervention in targeting resources towards women and linking public transfers to investments in child human capital, and currently serves about one quarter of the Mexican population. To isolate the impact of the program, I draw on evidence from the nutrition and biology literatures regarding the biology of child growth, in combination with the timing of the roll-out of the program and the panel dimension of the data. Consistent with previous evidence, this analysis finds positive and sizable effects on children who live in rural communities incorporated at the beginning of the intervention. In contrast, the impact of the program in rural localities incorporated later in time and in suburban and urban communities are, at best, very modest.

The second chapter uses extensive information on non-co-resident family members, and variation in the spatial dispersion among them, to study the extent to which Mexican families share resources across households and test different models of family behavior. I extend previous work by explicitly looking at families with different degrees of spatial dispersion among their members, including families with members spread across international borders. I adapt the collective model developed in the intra-household literature to model the family decision problem, and I analyze family behavior with respect to two sets of outcomes: household budget shares and child human capital indicators. The results suggest that the combination of looking at different degrees of spatial dispersion within families and different dimensions of family behavior is crucial to a precise understanding of inter-household decision-making.

The third chapter offers an in-depth description and analysis of the determinants of the incidence and magnitude of cross-border remittances by Mexican migrants living in the United States. While the investigation of international remittances has a long history in both the scientific and policy literatures, developing a full understanding of the motivations for and the impact of these transfers has been constrained by inadequate data. In this analysis I use recently-collected and extremely rich longitudinal data on migrants, and their families in Mexico, to predict transfers behavior. Results suggest that important differences exist between male and female transfers patterns, and that key variables related to the degree of connection of the migrant with Mexico (and the U.S.), such as the location of family members, expectations about returning to Mexico, or savings/assets holdings, are all important in explaining remittances patters.

As a member of the team that implemented the third wave of the Mexican Family Life Survey, this thesis is part of a broader collaborative research agenda with both colleagues and advisors. In particular, Chapter 1 is in collaboration with Maria Genoni, Graciela Teruel, Luis Rubalcava, and Duncan Thomas. The programming, analysis, and writing of this chapter, as well as any errors in this work, are my own.

The severity of man-made disasters has been increasing recently and is expected to further increase with climate change. For example, the number of conflicts and their associated fatalities have risen by 105\% and 286\% since 2010, respectively. With the internet and technological advancement, disasters significantly affect individual welfare both directly and indirectly. I study how the end of a man-made disaster affects labor market outcomes over time and how disasters affect risk preferences in the long run and time use in the short run. In Chapter 1, I study the causal impact of peace on labor market outcomes using the sudden and unexpected end of the Aceh Insurgency in Indonesia in a difference-in-differences framework. In Chapter 2, the intergenerational effects of early life exposure to the Korean War on risk preferences are examined in a difference-in-differences-type model with both structural and reduced-form estimation methods. In Chapter 3, I take the 2014 $Sewol$ ferry disaster as a natural experiment to examine the causal effects of an exogenous psychological shock on time use.

This dissertation investigates the economic behavior of families in developing settings. Utilizing uniquely rich, longitudinal survey data from Indonesia, it demonstrates the complexity of market environments facing rural households, as well as the importance of extended family networks in determining the health and well-being of young children. These essays serve as an illustration of advances in development economics that are possible when fundamental models are revisited and examined with new longitudinal data. The results of these exercises are important not only for updating economic models of behavior, but for what they reveal about the complexities of decision making, and for the effective design and evaluation of development policy around the world.

Between 2015 and 2019, approximately 1.8 million Venezuelans fled into neighboring Colombia, increasing Colombia’s population by almost 4%. In this dissertation, I study the effects of this large and unprecedented migration wave on Colombian labor market outcomes and attitudes towards foreigners. In Chapter 1, I study the economic effects of the migration using variation in the migration rate across 79 metropolitan areas, labor survey data, and an instrumental variable strategy based on historical migration rates. I find that Venezuelan migration caused a moderate decrease in the hourly wages of native Colombians that is most concentrated among low-wage and informal workers. Existing studies of this migration wave using similar methods and data have estimated different magnitudes for this wage effect, and I demonstrate the differences in specification that drive these discrepancies. In Chapter 2, I study the consequences of migrant occupational downgrading by estimating an aggregate production function that incorporates imperfect substitutability between migrants and natives and migrant occupational downgrading. I find that downgrading concentrates economic competition among less educated natives and decreases output in both the short- and long-term, thus affecting both wage equality and productivity. In Chapter 3, I study the effect of migration on trust towards foreigners using a nationwide survey on social preferences. While migration has no effect on trust on average, the effect is positive in municipalities that are more urbanized, have greater access to high-quality public goods, and where there is more residential integration between migrants and natives.

This study was conducted using data that was collected as part of the National Income Dynamic Study(NIDS). We hypothesized that in the NIDS study conducted in South Africa this phenomenon would be observed as a rise in the first blood pressure and a drop to normal on the second reading. We then set out to investigate whether this phenomenon would be more pronounced among those with limited access to medical services such as those in the rural areas, those from low-income homes, the population with little or no education and lastly the black or colored population. Our analysis revealed that the white coat effect did indeed exist significantly among black races and the colored race but was not dependent on sex, education level, or income level. Based on the inaccuracies that come from the white coat effect and the resulting preference for home or ambulatory blood pressure readings we then set out to investigate whether those with home blood pressure monitors would have better blood pressure control than those individuals without home blood pressure monitors. This investigation was carried out in Zimbabwe for 10 weeks and will go on for a year. From the 10week results, it would seem those individuals with home blood pressure monitors achieved better blood pressure control than individuals without home blood pressure monitors. It seems this was a function of a higher number of clinic visits that were made by those with home blood pressure monitors compared to individuals who did not have home blood pressure monitors.

Longitudinal surveys have revolutionized empirical research and our understanding of the dynamic processes that affect the economic prosperity, health and well-being of the population. This dissertation explores and provides evidence, through three empirical applications, on the costs and benefits of designing, implementing and using data from a new, innovative longitudinal survey, the Mexican Family Life Survey (MxFLS). The survey, which is representative of the Mexican population living in Mexico in 2002, is designed to follow movers within Mexico and also those who move to the United States. This design lies at the center of the contributions of my research to the scientific literature.

Attrition is the Achilles heel of longitudinal surveys. The first essay of the dissertation focuses on the cost of attrition for scientific knowledge. Following the same individual through time allows a researcher to trace the evolution of a respondent's behaviors and outcomes in a dynamic framework; however, if attrition is selected on unobserved characteristics, the advantage of using panel data could be severely hindered. Exploring different methods to adjust for attrition, this essay provides evidence of limitations of standard post-survey adjustments strategies that are the standard in the literature. These approaches, exploit only baseline characteristics of the respondents and, conditional on those characteristics, treat attriters as missing at random. I provide evidence that this assumption is substantively important and rejected in the MxFLS in spite of the fact that attrition in that survey is low relative to other nationally-representative surveys conducted in the United States and abroad.

The second essay in this dissertation exploits the fact that MxFLS follows movers within Mexico and those who move across the Mexico-US border to provide new insights into the mechanisms that underlie the selectivity of migrants within Mexico, how they differ from migrants who move from Mexico to the U.S. and how those who return contrast with the migrants who remain in the U.S. more permanently. The results provide evidence that human capital is predictive of migration within Mexico and to the United States, but that there is little indication that the decision to stay in the United States is highly correlated with education. In contrast, having relatives in the United States is not only a powerful predictor of migration to the United States, but it is also predictive of successful economic assimilation.

The third essay exploits a different dimension of the longitudinal survey in order to address an important question regarding the impact of unanticipated crime and violence on population well-being. To wit, the essay rigorously examines the impact of the recent surge in violent crime in Mexico on the labor market outcomes, migration, and wealth of the Mexican population. The timing of the last two waves of the MxFLS paired with the panel nature of the survey, allows the comparison of outcomes of the same individual in periods of low and high violence, which removes the potentially endogenous time-invariant unobserved heterogeneity between respondents. Moreover, due to the fact that the MxFLS was designed to follow migrant respondents, this study is able to directly test whether there is a systematic migratory response to crime. The results from this analysis find that crime predicts migration and it negatively affects the labor outcomes of self-employed individuals. In addition, the negative effects on the labor outcomes have translated into reductions in per capita expenditure at the household level, which suggests that the recent wave of violence in Mexico may have long-term consequences on the wealth and well-being of Mexican households.

The focus of this dissertation is to help explore, disentangle, and mechanize the role of the social and physical environment during gestation on the in utero child's later life outcomes. Specifically this work uses theoretical underpinnings adopted from the medical and epidemiological literature to inform the use of various applied econometric techniques on population representative data to rigorously examine the impact of a mother's mental and physical wellbeing during pregnancy on the human capital endowment and long-term economic outcomes of the in utero child. After a brief introduction, the second chapter reexamines the pioneering work by Douglas Almond (2006), which is thought to establish that in utero exposure to an adverse disease environment has a large, negative impact on health and socioeconomic prosperity that reaches well into adulthood. The analysis in this section casts doubt on the identification strategy used in that seminal work, and suggests that conclusions about the deleterious impact of in utero exposure to the influenza pandemic on socioeconomic prosperity in adulthood are, at best, premature. The third and fourth chapters delve into the topic of the impact of a mother's mental health during pregnancy on the birth outcomes of the in utero child. Utilizing two traumatic and unanticipated events, the terrorist attacks of September 11th, 2001 and the surge in Mexican Drug War violence, these chapters provide strong evidence that exposure to increased maternal anxiety has a significant negative impact on the early-life health of the in utero child.