Breaking Bad: How Health Shocks Prompt Crime.
Presented at Aarhus University, BI Norwegian Business School, EDHEC Business School, Goethe University Frankfurt, HEC Paris, London Business School, Nova School of Business and Economics, University of St Andrews, Stockholm School of Economics, and the CEPR Household Finance seminar series.
Media coverage: VoxEU
Abstract: We explore the impact of health shocks on criminal behavior by combining nearly four decades of health and criminal records for the entire Danish population. Exploiting plausibly exogenous variations in the timing of cancer diagnoses, we find that health shocks elicit a large and persistent increase in the probability of committing crime. Overall, we estimate that 1,000 diagnoses lead to 14 additional crimes per year perpetrated by either the recovering patients or their healthy spouses. We uncover evidence for two mechanisms explaining our findings. First, an economic motive leads diagnosed individuals to compensate for the loss of earnings on the legal labor market with property crimes. This effect is stronger for people that lack insurance through preexisting wealth, home equity, or marriage. Second, cancer patients face lower expected cost of punishment through a lower survival probability. Experimental evidence does not support a mechanism that operates through changes in preferences. Welfare programs that alleviate the economic repercussions of health shocks are effective at mitigating the ensuing negative externality on society.
Ambiguity Attitudes for Real-World Sources: Field Evidence from a Large Sample of Investors,
with Kanin Anantanasuwong, Roy Kouwenberg, and Olivia Mitchell. Download paper.
Presented at DIW Berlin, Society for Experimental Finance Conference, and EEA meeting.
Abstract: Empirical studies of ambiguity aversion mostly use artificial events such as Ellsberg urns to control for unknown probability beliefs. The present study is the first to measure ambiguity attitudes for real-world sources in a large sample of investors. We elicit ambiguity aversion and perceived ambiguity for a familiar company stock, a local stock index, a foreign stock index, and Bitcoin. Measurement reliability is higher than for artificial sources in previous studies. Ambiguity aversion is highly correlated for different assets, while perceived ambiguity varies more between assets. Ambiguity aversion and perceived ambiguity are related to actual investment choices, validating the measures.
Work in progress
Experiments in Household Finance. S. Andersen, S. Dimmock, and K. Nielsen.