UC Santa Barbara

This dissertation consists of three essays in applied microeconomics. While the topics vary, the three papers are united in their use of causal inference techniques and their relevance to policy: each paper either evaluates effects of an existing policy or examines whether new policies are needed for consumer protection.

The first essay examines the effects of access to Buy Now, Pay Later (BNPL) on financial well-being. Many American consumers have limited access to credit, raising the question of whether an increase in credit access would make them better off. Fully rational individuals would use an increase in credit access to smooth consumption, yet real consumers may make financial mistakes by accumulating debts they cannot repay. I study the effects of making BNPL accessible to American consumers, including those who otherwise have limited access to credit. This paper provides the first causal evidence of how access to BNPL affects severe measures of financial distress and credit scores. Using credit bureau data and a two-way fixed effects identification strategy that exploits geographic and temporal variation in availability of BNPL at a large retailer, I find that access to BNPL reduces financial distress arising from late or missed debt payments. The total amount past due decreases by 2.4% and the number of current delinquencies decreases by 0.2%. Heterogeneity analysis reveals that these effects are strongest among consumers with “fair” credit scores, the second-lowest credit score category. I also find that BNPL access increases credit scores by an average of 1.6 points and increases use of non-BNPL credit. These results suggest that access to BNPL reduces financial distress rather than causing consumers to accumulate unsustainable debts.

The second essay studies how public financing for political campaigns affects political participation and campaign contributions. Seattle’s Democracy Vouchers program provides a unique form of public financing for political campaigns in which voters decide how to allocate public funding across candidates. This paper is the first to study the effects of public financing for political campaigns on political participation. I estimate that the Democracy Vouchers program increases voter turnout by 4.9 percentage points, suggesting that public financing programs can increase political participation. I also find that campaigns become more reliant on small contributions. For city council candidates, dollars from small contributions under $100 increase by 156% while dollars from large contributions over $250 decrease by 93%.

The third essay examines how legalizing marijuana affects fertility. State-level marijuana legalization has unintended consequences, including its effect on fertility. Marijuana use is associated with behaviors that increase fertility as well as physical changes that lower fertility. In this paper, I provide the first causal evidence of the effects of recreational marijuana legalization on birth rates using a difference-in-differences design that exploits variation in marijuana legalization across states and over time. The main result is that legalizing recreational marijuana decreases a state’s birth rate by an average of 2.78%. Heterogeneity analysis shows that the largest decrease in the birth rate occurs among women close to the end of their child-bearing years. I find suggestive evidence of increases in days of marijuana use per month and in the probability of being sexually active. Together, these findings show that the physical effects of marijuana use have the dominant effect on fertility. Finally, I examine the effects of medical marijuana legalization on fertility and find a smaller, statistically insignificant decrease in the birth rate, which is consistent with the smaller increase in marijuana use that results from medical legalization.