Department of Economics, UCSD

We use administrative records on the universe of Danish households to characterize survivors’ mental health following their spouse’s death. We provide visually clear evidence for the immediate, large, and lingering adverse impacts and focus on studying the role of income security in driving the immediate effects. We find that, for both males and females, a large share of the spike in the take-up of mental health medication upon spousal death can be explained by the income loss imposed by the shock. Our results imply that safety net policies can improve survivors’ mental health via the immediate liquidity they provide. (JEL D12, D91, G51, H55, I12, I38, J16)

We use novel Medicare data that link spouses to examine how one spouse's sudden incapacitation affects their partner's need for formal care. A spouse's health shock causes their partner to be 18% more likely to visit a skilled nursing facility. That pattern reflects both a change in health and a shift from informal care to formal care. After one spouse is incapacitated, the other spouse becomes less sensitive to the price of formal care. We explore the implications for optimal health insurance contracts, showing that these within-household spillovers imply that the optimal health insurance contract should provide more generous coverage to those whose spouses are incapacitated relative to those whose spouses are available to provide care.

Abstract: Export activity shapes workers’ experience-wage profiles. Using employer-employee and customs data for Brazilian manufacturing, we document that workers’ experience-wage profiles are steeper at exporters than at non-exporters and, among exporters, steeper at exporters shipping to high-income destinations. We develop and quantify a model featuring worker-firm wage bargaining, export-market entry by multi-worker firms, and human capital accumulation by workers to interpret the data. Human capital growth can explain one-half of the differences in wage profiles between exporters and non-exporters. We show that increased human capital per worker can account for one-half of the overall gains in real income from trade openness.

Decision-makers sometimes rely on past data to learn statistical relationships between variables. However, when predicting a target variable, they must adjust how they aggregate past information depending on the observables available. If agents have information on all observables, it is optimal to understand how the observables jointly predict the target, while with only one observable, they should focus on the unconditional correlation. An experiment examining this process shows that predictions that require the use of unconditional correlations are more challenging for decision-makers.

A manager has access to expert advisers. The manager selects at most one project and can implement it only if one expert provides support. The game in which the manager consults experts simultaneously typically has multiple equilibria including one in which at least one expert supports the manager’s favorite project. We describe the set of outcomes that survive iterative deletion of weakly dominated strategies. These outcomes typically exclude the manager’s most preferred equilibrium outcome. We introduce sequential procedures and compare their performance to the simultaneous game. In general, sequential consultation may be superior or inferior to simultaneous consultation.

The classic third degree price discrimination (3PD) model requires the knowledge of the distribution of buyer valuations and the covariate to set the price conditioned on the covariate. In terms of generating revenue, the classic result shows that 3PD is at least as good as uniform pricing. What if the seller has to set a price based only on a sample of observations from the underlying distribution? Is it still obvious that the seller should engage in 3PD? This paper sheds light on these fundamental questions. In particular, the comparison of the revenue performance between 3PD and uniform pricing is ambiguous overall when prices are set based on samples. This finding is in the nature of statistical learning under uncertainty: a curse of dimensionality, but also other small sample complications.

Methane seeps are highly productive ecosystems that provide carbon sequestration services, host diverse communities including endemic species, and serve as habitats for commercial fisheries. Little is known about the economic value the public places on them. Discrete Choice Experiments (DCEs) are administered to a sample of Costa Rican taxpayers to evaluate their willingness to pay (WTP) in monetary terms using tradeoffs made in a survey context involving three of the main attributes of methane seep ecosystems to provide insights for future conservation and management efforts. Extensive effort is devoted to understanding how Costa Ricans view different aspects of the deep sea. We find that they associate it with strange animals, natural resources, the unknown, and being far from reach. Perhaps surprisingly, they underestimate how much they know about the deep sea. We find that WTP for methane seep protection is the highest for programs that protect seeps with endemic species, followed by seeps with high climate change mitigation potential and commercial fishing habitat. Higher-income groups and women are more likely to prefer options that increase the current level of protection. We discuss how science communication and community engagement contribute to care expressed toward the deep sea.