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Title: Essays in Behavioral Economics and Public Policy
Authors: Homonoff, Tatiana Alexandra
Advisors: Farber, Henry
Lee, David
Contributors: Economics Department
Keywords: behavioral economics
consumer finance
loss aversion
public finance
public policy
tax salience
Subjects: Economics
Issue Date: 2013
Publisher: Princeton, NJ : Princeton University
Abstract: My dissertation uses insights from the field of behavioral economics to suggest how to design more effective public policies. Chapter 1 examines a simple element of incentive design - whether an incentive takes the form of a fee for bad behavior or a reward for good behavior - to assess how the framing of an incentive impacts the policy's effectiveness. I address this question through the evaluation of two policies aimed at reducing consumption of disposable grocery bags: a five-cent tax on disposable bag use and a five-cent bonus for reusable bag use. I find that the tax decreased disposable bag use by a substantial amount while the bonus generated virtually no effect on behavior, evidence consistent with a model of loss aversion. Chapter 2, coauthored with Jacob Goldin, evaluates another component of incentive design - whether a tax is included in the posted price or taken at the register - to assess how the form of a tax affects the distribution of a tax's burden. Previous research suggests that consumers under-react to register taxes versus posted taxes, implying that a tax's salience does affect behavior. We expand on this analysis by allowing different income groups to differ in their attentiveness to the register tax. We find that while low-income consumers respond to both types of taxes, high-income consumers ignore register taxes. This implies that levying a greater proportion of a commodity tax at the register shifts the tax's burden away from low-income consumers, making the tax less regressive. Chapter 3, also coauthored with Jacob Goldin, examines the effect of payday loan bans on borrowing behavior. While payday lenders offer access to credit to liquidity-constrained consumers, these loans have very high interest rates and evidence suggests that customers often borrow more than they can afford, possibly due to behavioral biases. Concerns about chronic indebtedness have caused several states to regulate the use of payday loans. We find that, while these regulations are effective at reducing the use of payday loans, this reduction is almost completely offset by the use of other high-interest credit products, though fewer customers use these loans to cover recurring expenses.
Alternate format: The Mudd Manuscript Library retains one bound copy of each dissertation. Search for these copies in the library's main catalog
Type of Material: Academic dissertations (Ph.D.)
Language: en
Appears in Collections:Economics

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