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This dissertation is comprised of three papers on health and household behavior. Two of the papers focus on the influence of family on health outcomes. The third paper examines household member preferences and their association with outcomes for other individuals within the family unit. The first paper tests the relationship of adult-child and elderly-parent contact frequency on elderly cognitive functioning (dementia) using the Health and Retirement Study (HRS). The paper examines various mechanisms through which the intensity of contact with adult, nonresident children impacts elderly cognitive functioning. An instrumental variables model is used to account for the endogeneity in the level of parent-child contact. Results indicate a positive association between intensity of contact from nonresident adult children and mothers' cognitive functioning; however, no causal relationship is found suggesting that higher levels of contact are due to selection. The second paper examines the prediction of stated, altruistic, preferences on an individual's revealed preferences, observed intergenerational family transfers. Measures of altruism toward children and parents are constructed, using hypothetical questions in the 1996 wave of the HRS that assess individuals' willingness to transfer income to others, and evaluated for their additional explanatory power, within traditional models of intergenerational transfers, on observable transfer behavior. Results indicate that higher levels of altruistic preferences are associated with higher probabilities of transfers and larger transfer amounts from respondents to children; however, transfers to parents do not appear to be related to the altruism measure. The final paper investigates the link between relationship status and body mass index. There are four hypotheses (selection, protection, social obligation and marriage market) that might explain the relationship between marital status transitions and changes in Body Mass Index (BMI). Using the National Longitudinal Survey of Youth 1979, individual fixed effects models are estimated to examine associations between the change in log BMI, and the incidence of overweight and obesity, and changes in relationship status. There is no support for the marriage protection hypothesis. Rather evidence supports the social obligation and marriage market hypotheses-BMI increases for both men and women during marriage and in the course of a cohabiting relationship.
This dissertation presents three essays on household finance. All three focus on contemporary U.S. consumer credit markets, with particular attention paid to how market organization and firm incentives mediate the way firms interact with customers and the types of contracts they offer. The first essay examines the question of whether securitization was responsible for poor underwriting standards during the recent mortgage crisis. The second essay attempts to quantify the effect of Fannie Mae and Freddie Mac's intervention in the conforming mortgage market on equilibrium outcomes such as price and contract structure. The third essay investigates how mutual ownership of a firm by its customers can limit that firm's incentive to offer contracts meant to take advantage of customers' behavioral biases.
Abstract: My research emphasizes the role of interrelated preferences in determining economic choices within a household. In this regard, I study both intergenerational interactions (between parents and children) and intragenerational interactions (between spouses). These linkages have important implications on individual economic behavior such as savings, labor supply, investment in human capital, and bequests which in turn affects aggregate savings and growth.
This dissertation centers on the role of adverse shocks to household balance sheets in understanding consumer default behavior. The first chapter studies the role of foreclosure contagion: the role of proximate foreclosures in causally triggering other nearby residential defaults and foreclosures. I find that foreclosure activity causally increases nearby rates of consumer defaults. This paper uses an instrument further examined in the second essay which analyzes the role for adverse selection and moral hazard in mortgage markets; using as a distinction the initial and post-reset interest rates paid on Adjustable-Rate Mortgage contracts. The final essay analyzes the role for cancer diagnosis shocks on household default behavior.