Essays in behavioral public economics

This dissertation has three chapters that study two main aspects of public economics. The title of my dissertation reflects the fact that an overarching theme in my research is in studying individual's behavior in order to learn how to improve public policy, beyond learning about how people behave in itself. My first two chapters study how relative concerns affect people's behavior. First, I show that people care about relative income (i.e., their position in the income distribution) when making location decisions using evidence from a field experiment. Second, I show that relative concerns are important in determining people's performance and participation. I do so by studying the behavior of swimmers around the time they have to change age category right after aging-up. I show that facing stronger competition not only worsens swimmer's performance, but also leads to higher dropouts. Finally, I obtain the first causal estimates showing how access to gambling affects crime, by studying the recent expansion of video gambling in Illinois. Taken together, these chapters provide evidence that advance our understanding of individual's preferences that can help inform public policy. Chapter 1: Choosing Your Pond: Location Choices and Relative Income We provide unique revealed-preference evidence that, when choosing where to live, individuals care about their position in the income distribution. We study the decisions of senior medical students in the National Resident Matching Program (NRMP). They must choose between programs that offer similar nominal incomes, but in cities with different costs of living and income distributions. We conduct a survey experiment with 1,100 NRMP participants to elicit their perceptions about cost of living and relative income in their prospective cities and their rank order submissions. To assess the direction of causality, we embed an information-provision experiment. We find evidence that, in addition to the cost of living, individuals care about their relative income. Moreover, we find substantial and meaningful heterogeneity by relationship status. We conduct a complementary survey experiment to assess the robustness of our results. The evidence is consistent with a combination of relative concerns and dating expectations. Chapter 2: Big Fish in a Small Pool? The Effect of Competition on Performance and Dropout We take advantage of a natural experiment to identify the effect of competing against better peers on dropout and performance: discrete changes in age-group swimming competitions. Using the universe of race times for U.S. club swimming competitions, we first document large discouragement effects where the hazard rate of dropping out rises by 50\% in category change years. Furthermore, we explore how these changes affect swimmer's performance. Using our rich data on times, we can track swimmers who compete both before and after aging up. Using a Regression Discontinuity Design, along with swimmer fixed-effects to account for swimmer ability, we find that on average swimmers are discouraged (i.e., swim slower) when facing faster competition. This average effect masks meaningful heterogeneity by swimmer ability: low-ability swimmers are not significantly affected, while middle- and high-ability swimmers are similarly discouraged. Chapter 3: Can't Stop the One-Armed Bandits: The Effects of Access to Gambling on Crime We examine the effects on crime and property values following state legislation in Illinois that legalized video gambling, but gave municipalities decision-making authority over whether to allow video gambling terminals within their local boundaries. Many jurisdictions adjacent to Chicago chose to allow the terminals, while the City of Chicago itself did not, thus creating a natural experiment with which to compare crime rates between areas closer to and farther from video gambling establishments. Using detailed incident-level crime data and a difference-in-differences strategy, we find that (i) access to gambling increases property and violent crimes; (ii) the crimes represent ``new'' rather than displaced incidents; and (iii) the effects are persistent over time.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2018

Author dc:creator

• Bottan, Nicolas Luis

Contributors dc:contributor

• Bernhardt, Dan
• Albouy, David
• Brown, Jeffrey
• Marx, Benjamin

• Public Economics
• Behavioral Economics

Statement dc:rights

• Copyright 2018 Nicolas Bottan

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/101303

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/101303