UC Berkeley

This dissertation studies how the past influences our future choices. Leveraging insights from psychology, I study the role of past actions in forming habits and the role of past experiences in altering beliefs and preferences. I explore implications of these findings for individuals, firms, and the macroeconomy.

In the first chapter, I ask - how should organizations incentivize routine behaviors? I use a cue-based model of habit formation to describe hand hygiene behavior in hospitals and suggest implications for intervention to change behavior. Hand hygiene is the best way to prevent healthcare-associated infections which affect millions of patients and cost billions of dollars each year. However, many studies find that healthcare workers comply with hand hygiene guidelines less than half of the time. Leveraging a unique dataset that tracks compliance behavior of 13,606 workers in 123M hand hygiene opportunities, I document patterns of behavior consistent with a cue-based theory of habit. High compliers benefit from automatic hand washing and are buffered from the negative impacts of cognitive load. However, habits are broken when high compliers are taken out of their normal routines. The findings have implications for how hospitals should design, target, and implement hand hygiene interventions.

In the second chapter, in joint work with Ulrike Malmendier, we ask whether the past can explain some of the vast differences in homeownership rates across countries and cohorts. We argue that macroeconomic histories individuals have personally experienced in their home country over the past decades play a significant role in their decision to become a homeowner. We present novel survey data that reveals inflation protection as a key motivation to buy rather than rent a home. We then show that higher exposure to inflation predicts home ownership, controlling for other known determinants of homeownership as well as any differences across countries and over time. First, we find that immigrants' country-of-origin inflation experiences strongly predict their homeownership rates in the US. Second, analyzing data from 22 European countries, we estimate that a one log-point increase in personally experienced inflation predicts a 18pp increase in the average individual's likelihood of homeownership. As predicted by our model, the effects are strongest in countries with predominantly fixed-rate mortgages.