UC Irvine

Chapter 1 studies partial mortgage prepayment, or curtailment. Many fixed-rate mortgage borrowers in the United States voluntarily pay down low-rate debt even when safe assets pay more. We study this behavior after the 2022 rate hikes, when safe rates rose above many existing mortgage rates and extra principal payments became financially costly. More than one in five borrowers whose mortgage rate was below the safe rate prepaid in a typical month, generating $4.6 billion in present-value losses from 2022--2024. Prepayment is persistent and almost unresponsive to interest rate spreads, but it responds to cash flow shocks, including stimulus payments and increases in ARM payments. It is not concentrated among inattentive or unsophisticated households: prepayers have higher credit scores, are more likely to hold stocks and retirement accounts, and borrowers who refinanced when rates were low are just as likely to prepay. Prepayment nearly doubles towards the end of the mortgage, as the balance approaches zero. The findings point to debt aversion---a preference for reducing debt even when returns are negative---as a first-order force in household borrowing.Chapter 2 studies the effect of a near-universally received, unconditional, cash transfers on health behaviors. We examine how receipt of the Alaska Permanent Fund Dividend (APFD) -- a large, near universal, and annually recurring cash transfer to Alaska residents -- affects the timing and quantity of health care consumption. We firstly determine if receipt of the APFD heightens risky behaviors by examining the timing and quantity of drug- and alcohol-related hospital admissions. We then study if receipt of the APFD promotes the consumption of "health-improving" behaviors, specifically hip and knee replacements, cataract surgery and tonsillectomies, by relaxing pre-existing liquidity constraints. We do not find that the APFD affects the consumption of health-improving behaviors, as measured. However, there is evidence of "dangerous liquidity" for certain health behaviors. Alcohol-related emergency department admissions sharply increase by approximately 15.7 percent within one week of the APFD disbursement; we do not observe changes in amphetamine, opioid, or cocaine consumption. Further, we do not find that individuals increase their alcohol or drug consumption around the date the APFD is announced, only around the date of APFD disbursement, consistent with the importance of liquidity for certain risky behaviors.Chapter 3 studies studies the effect of an exogenous opioid supply shock -- the 2010 reformulation of OxyContin -- on criminal activity and the incidence of homelessness. Prior literature has shown that this reformulation had unintended consequences, namely that it resulted in massive spikes in heroin and synthetic opioid use. Using geographic variation in the ex-ante "intensity" of OxyContin prior to the reformulation, I use a difference-in-differences framework to study how increases in illicit opioid use affects crime from 2006-2019. I find that highly exposed areas saw large increases in arrests for heroin possession, but no increases in arrests for the sale of heroin. Further, increases in illicit opioid use has largely no effect on both income-generating and non-income generating crimes. On the other hand, I show evidence that increases in heroin and fentanyl use are associated with an 8% increase in the incidence of homelessness. These results show that funds earmarked for drug-related crime prevention programs could be more wisely spent on alleviating homelessness.