Essays in economic policy and human behavior

This dissertation is composed of three chapters. While the chapters pertain to very different contexts, an overarching theme is the analysis of human behavior in response to policies that are inherently economic. The first chapter is the product of joint work with Justin Holz and Rafael Jimenez Duran. It studies repugnance towards price gouging. Emergencies like natural disasters or pandemics trigger sharp price increases for essential products. Anti-price gouging laws are ubiquitous and people take costly actions to report violators to law-enforcement agencies, which suggests that they value punishing sellers that spike prices in these situations. This chapter uses a field experiment to understand individuals' willingness to report sellers who increase the price of personal protective equipment at the height of the COVID-19 pandemic. We argue that reporting decisions contain information about repugnance to price gouging and find that willingness to pay to report is non-trivial and heterogeneous. We also find evidence that repugnance is partly due to distaste for seller profits, depending on the product. These results suggest that regulation discussions would benefit from incorporating repugnance into welfare and from addressing products separately. The second chapter focuses in the use of temporary driving restrictions as a tool for air quality management in Mexico City. Road congestion is understood to be a major source of urban air pollution and is also associated with other large non-health-related costs. Millions of people live in cities in which the number of cars on the road is controlled by allowing or prohibiting the use of a car on a given day depending on its license plate number. The empirical evidence available suggests little benefit from these programs; the policy increases the marginal cost of using the road for some users while decreasing it for others and incentivizes the acquisition of extra vehicles. This chapter studies the effect of temporary increases in the stringency of the restrictions as an add-on policy intended to alleviate extreme pollution events. The increased restrictions are triggered by Ozone levels surpassing a pre-specified threshold. This, coupled with the fact that said threshold was modified several times between 2005 and 2018, allows us to identify the effect of the policy. We document a sizable increase in the average speed of cars in the city during restricted days. This suggests the policy does alleviate congestion. We also observe a reduction on Carbon Monoxide and Ozone concentration, but these results are not robust to changes in the specification's functional form. While we cannot explicitly quantify welfare effects, the minor improvements are unlikely to compensate the major disruption in the commuter network without serious investment in public transit alternatives. The third chapter, co-authored with Enrique Seira and Alan Elizondo, investigates the role of information disclosure on financial markets as tool for consumer protection. We implement a randomized control trial in the Mexican credit card market for a large population of indebted cardholders and measure the impact of disclosures of interest rate and time required to pay outstanding debt on default, indebtedness, account closings, and credit scores; these disclosures are required by law in the United States. We also test the effect debiasing warning messages and social comparison information has on the same outcomes. We find that providing salient interest rate disclosures had no effects, while comparisons and debiasing messages had only modest and short-lived effects at best. We conduct extensive external validity exercises in several banks, with different disclosures, and with actual policy mandates. We conclude the null result is robust

Keywords: Economics.
Advisor: Jackson Matthew O. 
Goulder Lawrence H. (Lawrence Herbert)
Morten Melanie