Managing the Risk of Life

This study analyzes the role of individual’s and spouse’s survival expectations and knowledge about Social Security rules on the expected Social Security claiming age, taking into account the various incentives single and married individuals face. There is substantial heterogeneity in the level of knowledge about SS rules according to demographic characteristics. We find that single men and women who expect to be long-lived plan on delaying Social Security claiming. When we allow for differential effects of survival on knowledge about Social Security rules, subjective survivals matter only for single women who are knowledgeable. For single men, knowledge is not so important in their decisions. The claiming decision of married individuals is more complicated, because they are entitled to spouse’s and survivor’s benefits. Consistent with the incentives provided by Social Security rules, we find that married men base their expected claiming age on their spouse’s survival expectations but not on their own survival. For married women, both own and spouse’s subjective survivals positively influence the timing of claiming. Knowledge about Social Security rules affects the expected claiming age of both married men and women.

Individuals’ Responses to Social Security Reform

The Social Security trust fund is predicted to be depleted by 2041. While there are several viable reform proposals to restore long-term solvency of the Social Security system, one important element that is critical to the success of any reform remains unknown: how will individuals respond to, for example, a cut of their Social Security benefits. Will they work longer or save more or both, and to what extent will their response make up for the cut in benefits? In this paper we use data from the HRS Internet Survey where we asked respondents directly what they would do if everyone’s Social Security benefits were cut by 30 percent. At a qualitative level, we find important differences in the response by sex, marital status, and SES, among others. We conduct a detailed quantitative analysis of response to timing of Social security claiming and find that on average individuals would postpone claiming Social Security by 1.13 years. If this time was spent working by everyone then the annual Social Security benefit would drop on average by 20 percent rather than the initial 30 percent imposed by the reform. In other words the response to claim later and work longer would make up for one third of the initial cut in Social Security benefits.

Marrying Up: The Role of Sex Ratio in Assortative Matching

We investigate the effect of a change in the sex ratio on assortative matching in the marriage market using a large negative exogenous shock to the French male population due to WWI casualties. We analyze a novel data set that links marriage-level data to both French censuses of population and regional data on military mortality. We instrument the potentially endogenous sex ratio with military mortality, which exhibits exogenous geographic variation. We find that men married women of higher social class than themselves (married up) more in regions that experienced a larger decrease in the sex ratio due to higher military mortality. A decrease in the sex ratio from one man for every woman to 0.90 men for every woman increased the probability that men married up by 8.2 percentage points. These findings shed light on individuals’ preferences for spouses. Rather than preferring to marry spouses with similar characteristics, individuals seem to prefer to marry higher-class spouses, but cannot do so when the sex ratio is balanced.Marriage, sex ratio, assortative matching, social classes.

Criminal Prosecution and HIV-related Risky Behavior

We evaluate the consequences of prosecuting HIV+ people who expose others to the risk of infection. We show that the effect of aggressive prosecutions on the spread of HIV is a priori ambiguous. Aggressive prosecutions tax risky behavior and thus deter unsafe sex and limit the number of sexual partners. However, such penalties might also create unique incentives for having sex with more promiscuous partners such as prostitutes and consequently increase the spread of HIV. We test these predictions using unique nationally representative data on the sexual activity and prosecutions of HIV+ persons. We find that more aggressive prosecutions are associated with a reduction in the number of sexual partners and increased likelihood of safe sex. However, they are also associated with increased likelihood of having sex with prostitutes and not disclosing HIV+ status. Overall, our estimates imply that doubling the prosecution rate could decrease the number of new HIV infections by 12% over a ten-year period.

Subjective expectations in the context of HIV/AIDS in Malawi

In this paper we present a newly-developed interactive elicitation methodology to collect probabilistic expectations in a developing country context with low levels of literacy and numeracy, and we evaluate the feasibility and success of this method for a wide range of outcomes in rural Malawi. We find that respondent's answers about subjective expectations respect basic properties of probabilities, and vary meaningfully with observable characteristics and past experience. From a substantive point of view, the elicited expectations indicate that individuals are generally aware of differential risks. For example, individuals with less income and less land feel rightly at more risk of financial distress than people with higher SES, or people who are divorced or widow feel rightly at more risk of being infected with HIV than currently married individuals. While many expectations---including also the probability of being currently infected with HIV---are well-calibrated compared to actual probabilities, mortality expectations are substantially over-estimated compared to lifetable estimates. This overestimation may lead individuals to underestimate the benefits of adopting HIV risk-reduction strategies. The skewed distribution of expectations about condom use also suggests that a small group of innovators are the forerunners in the adoption of condoms within marriage for HIV prevention.AIDS/HIV, Malawi, probabilistic expectations, risk perception, subjective expectations, Sub-Saharan Africa, survey methodology

Marrying Up: The Role of Sex Ratio in Assortative Matching

We assemble a novel dataset to study the impact of male scarcity on marital assortative matching and other marriage market outcomes using the large shock that WWI caused to the number of French men. Using a difference-in-differences approach, we find that post war in regions with higher mortality rates: men were less likely to marry women of lower social classes; men were more likely and women less likely to marry; out-of-wedlock births increased; divorce rates decreased; and the age gap decreased. These findings are consistent with men improving their position in the marriage market as they become scarcer.

Measuring Subjective Expectations in Developing Countries: A Critical Review and New Evidence

The majority of economic decisions taken by individuals are forward looking and thus involve their expectations of future outcomes. Understanding the expectations that individuals have is thus of crucial importance to designing and evaluating policies in health, education, finance, migration, social protection, and many other areas. However, the majority of developing country surveys are static in nature and do not contain information on the subjective expectations of individuals. Possible reasons given for not collecting this information include fears that poor, illiterate individuals do not understand probability concepts, that it takes far too much time to ask such questions, or that the answers add little value. This paper provides a critical review and new analysis of subjective expectations data from developing countries and refutes each of these concerns. The authors find that people in developing countries can generally understand and answer probabilistic questions, such questions are not prohibitive in time to ask, and the expectations are useful predictors of future behavior and economic decisions. The paper discusses the different methods being tried for eliciting such information, the key methodological issues involved, and the open research questions. The available evidence suggests that collecting expectations data is both feasible and valuable, suggesting that it should be incorporated into more developing country surveys.Subjective Expectations; Survey Methodology; Development.

Marrying Up: The Role of Sex Ratio in Assortative Matching

By observing the large negative exogenous shock to the French male population from to WWI casualties, we study the effect of a change in the sex ratio on marital assortative matching by social class. First, we analyzed a novel data set that links marriage-level to French population and military mortality. Then, we calculated the sex ratio in a region with military mortality, which exhibits exogenous geographic variation. Ultiamtely, we found that men married women of higher social class than themselves more often in regions that experienced a larger decrease in the sex ratio. A decrease in the sex ratio of man to woman from 1.00 to 0.90 increased the probability that men married up by 8 percent. These findings provide insight into individuals’ preferences for spouses. Men appear to prefer to marry higher-class spouses, but cannot do so when the sex ratio is balanced.Marriage, sex ratio, assortative matching, social classes

Eliciting probabilistic expectations with visual aids in developing countries : how sensitive are answers to variations in elicitation design ?

Eliciting subjective probability distributions in developing countries is often based on visual aids such as beans to represent probabilities and intervals on a sheet of paper to represent the support. The authors conducted an experiment in India that tested the sensitivity of elicited expectations to variations in three facets of the elicitation methodology: the number of beans, the design of the support (pre-determined or self-anchored), and the ordering of questions. The results show remarkable robustness to variations in elicitation design. Nevertheless, the added precision offered by using more beans and a larger number of intervals with a predetermined support improves accuracy.Economic Theory&Research,Information Security&Privacy,Markets and Market Access,Statistical&Mathematical Sciences,Crops&Crop Management Systems