Working papers

Breaking Bad: How Health Shocks Prompt Crime.

with S. Andersen, and G. Parise. 

Presented at EDHEC Business School, HEC Paris, BI Norwegian Business School, Goethe University, and CEPR Household Finance Seminar.

Abstract: In this paper, we explore the impact of health shocks on criminal behavior. To identify causal effects, we rely on the random timing of cancer diagnoses to construct counterfactual crime rates based on yet-to-be-diagnosed individuals. We find that health shocks increase the probability of committing a crime by 13%. We uncover evidence for three channels governing this effect. Diagnosed individuals (i) seek illegal revenues to mitigate the loss in human capital, (ii) face lower expected cost of punishment through a lower survival probability, and (iii) revise their set of preferences. The documented effect is stronger for people who lack insurance through preexisting wealth, home equity, education, or spousal support. We show that welfare programs that alleviate the economic repercussions of health shocks can mitigate the ensuing negative externality.

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

Portfolio Network Effects: Family, Colleagues, or Neighbors? with S. Andersen and O. Balakina.

Experiments in Household Finance. S. Andersen, S. Dimmock, and K. Nielsen.