Essays in Applied Economics

Essay 1 studies physician agency problems, which arise whenever physicians fail to maximize their patients\u27 preferences, given available information. These agency problems are well documented, but the magnitude of their welfare consequences for patients---the losses from suboptimal treatment choice induced by agency---are unclear. I infer patient drug preference from their compliance decisions. I begin by showing that initial prescriptions respond to physician financial incentives to control costs and to pharmaceutical detailing, but compliance does not, pointing to agency problems. I then develop and estimate a model of physician-patient interactions where physician write initial prescriptions, but patients choose whether to comply. Fully eliminating agency problems increases compliance by 6.5 percentage points, and raises patient welfare by 22\% of drug spending. Contracts that better align doctor and patient preferences can improve patient welfare, but attain only half the gains from eliminating agency completely. Although physician agency problems reduce patient welfare, eliminating them is thus likely difficult. Essay 2, co-authored with Alexander M. Gelber and Damon Jones, studies frictions in adjusting earnings to changes in the Social Security Annual Earnings Test (AET) using a panel of Social Security Administration microdata on one percent of the U.S. population from 1961 to 2006. Individuals continue to bunch at the convex kink the AET creates even when they are no longer subject to the AET, consistent with the existence of earnings adjustment frictions in the U.S. We develop a novel estimation framework and estimate in a baseline case that the earnings elasticity with respect to the implicit net-of-tax share is 0.23, and the fixed cost of adjustment is \$152.08. Essay 3 studies the impact of health expenditure risk on annuitization. Theoretical research suggests that such risk can have an ambiguous influence on the annuitization decisions of the elderly. I provide empirical evidence on this linkage, by estimating the impact of supplemental Medicare insurance (Medigap) coverage on the annuity demand of older Americans. Medigap coverage has a strong impact on annuitization: the extensive margin elasticity is 0.39, the overall elasticity of private annuity income with respect to Medigap coverage is 0.56. These results are robust to controls for health, wealth, and preferences, as well as other robustness tests. They suggest that medical expenditure risk has a large impact on underannuitization

The strength of negative plant–soil feedback increases from the intraspecific to the interspecific and the functional group level

One of the processes that may play a key role in plant species coexistence and ecosystem functioning is plant–soil feedback, the effect of plants on associated soil communities and the resulting feedback on plant performance. Plant–soil feedback at the interspecific level (comparing growth on own soil with growth on soil from different species) has been studied extensively, while plant–soil feedback at the intraspecific level (comparing growth on own soil with growth on soil from different accessions within a species) has only recently gained attention. Very few studies have investigated the direction and strength of feedback among different taxonomic levels, and initial results have been inconclusive, discussing phylogeny, and morphology as possible determinants. To test our hypotheses that the strength of negative feedback on plant performance increases with increasing taxonomic level and that this relationship is explained by morphological similarities, we conducted a greenhouse experiment using species assigned to three taxonomic levels (intraspecific, interspecific, and functional group level). We measured certain fitness‐related aboveground traits and used them along literature‐derived traits to determine the influence of morphological similarities on the strength and direction of the feedback. We found that the average strength of negative feedback increased from the intraspecific over the interspecific to the functional group level. However, individual accessions and species differed in the direction and strength of the feedback. None of our results could be explained by morphological dissimilarities or individual traits. Synthesis. Our results indicate that negative plant–soil feedback is stronger if the involved plants belong to more distantly related species. We conclude that the taxonomic level is an important factor in the maintenance of plant coexistence with plant–soil feedback as a potential stabilizing mechanism and should be addressed explicitly in coexistence research, while the traits considered here seem to play a minor role

Soil functional responses to drought under range-expanding and native plant communities

1. Current climate warming enables plant species and soil organisms to expand their range to higher latitudes and altitudes. At the same time, climate change increases the incidence of extreme weather events such as drought. While it is expected that plants and soil organisms originating from the south are better able to cope with drought, little is known about the consequences of their range shifts on soil functioning under drought events. 2. Here, we test how range-expanding plant species and soil communities may influence soil functioning under drought. We performed a full-factorial outdoor mesocosm experiment with plant communities of range expanders or related natives, with soil inocula from the novel or the original range, with or without summer drought. We measured litter decomposition, carbon mineralization and enzyme activities, substrate-induced respiration, and the relative abundance of soil saprophytic fungi immediately after drought and at 6 and 12 weeks after rewetting. 3. Drought decreased all soil functions regardless of plant and soil origin except one; soil respiration was less reduced in soils of range-expanding plant communities, suggesting stronger resistance to drought. After rewetting, soil functioning responses depended on plant and soil origin. Soils of native plant communities with a history of drought had more litter mass loss and higher relative abundance of saprophytic fungi than soils without drought and soils of range expanders. Functions of soil from range expanders recovered in a more conservative manner than soils of natives, as litter mass loss did not exceed the control rates. At the end of the experiment, after rewetting, most soil functions in mesocosms with drought history did not differ anymore from the control.4. We conclude that functional consequences of range expanding plants and soil biota may interact with effects of drought, and that these effects are most prominent during the first weeks after rewetting of the soil

Soil functional responses to drought under range-expanding and native plant communities

Current climate warming enables plant species and soil organisms to expand their range to higher latitudes and altitudes. At the same time, climate change increases the incidence of extreme weather events such as drought. While it is expected that plants and soil organisms originating from the south are better able to cope with drought, little is known about the consequences of their range shifts on soil functioning under drought events. Here, we test how range-expanding plant species and soil communities may influence soil functioning under drought. We performed a full-factorial outdoor mesocosm experiment with plant communities of range expanders or related natives, with soil inocula from the novel or the original range, with or without summer drought. We measured litter decomposition, carbon mineralization and enzyme activities, substrate-induced respiration and the relative abundance of soil saprophytic fungi immediately after drought and at 6 and 12 weeks after rewetting. Drought decreased all soil functions regardless of plant and soil origin except one; soil respiration was less reduced in soils of range-expanding plant communities, suggesting stronger resistance to drought. After rewetting, soil functioning responses depended on plant and soil origin. Soils of native plant communities with a history of drought had more litter mass loss and higher relative abundance of saprophytic fungi than soils without drought and soils of range expanders. Functions of soil from range expanders recovered in a more conservative manner than soils of natives, as litter mass loss did not exceed the control rates. At the end of the experiment, after rewetting, most soil functions in mesocosms with drought history did not differ anymore from the control. We conclude that functional consequences of range-expanding plants and soil biota may interact with effects of drought and that these effects are most prominent during the first weeks after rewetting of the soil. A free Plain Language Summary can be found within the Supporting Information of this article.</p

Timing of simulated aboveground herbivory influences population dynamics of root-feeding nematodes

Plant damage inflicted by aboveground herbivores can occur at different stages of plant development and can induce plant responses that affect the growth of belowground herbivores. This study explores impacts of aboveground herbivory at different plant development stages on the population dynamics of root-feeding nematodes