“Take Me to Church”: Religious Membership as a Determinant of Intergenerational Mobility

By Elizabeth Morrissette

Both Suffolk County and Norfolk County, Massachusetts are part of the Greater Boston Metropolitan Area and are adjacent to one another, but the counties have vastly different expected economic outcomes for the children who are raised there. Children who grow up in Norfolk County have average expected incomes that are $12,000 higher than children who grow up in Suffolk County (“The Opportunity Atlas”).  Recent research in economics has taken an interest in explaining differences in intergenerational mobility outcomes for children growing up in different counties. One of the explanations researchers have explored is the relationship between social capital and intergenerational mobility–or an individual’s income relative to their parents–which they find to be positive (Chetty and Hendren 2017). Social capital provides individuals with networks that help them find employment, earn higher salaries than they would otherwise, and gain knowledge about positive economic behaviors.

In my thesis, I study religion as one specific element through which social capital might impact intergenerational mobility. Religion, as practiced through religious services and community gatherings, facilitates network building. My thesis establishes an association between religion and social capital through General Social Survey data, showing that religion could be a way that social capital influences intergenerational mobility.

My thesis proxies for intergenerational mobility using data on mean percentile rank in the national distribution of household income at the county-level. I use religious data from the Association of Religious Data Archives (ARDA) and connect it to data on intergenerational mobility from Opportunity Insights.  Analysis of this data reveals a positive, statistically significant relationship between religion and intergenerational mobility. This relationship remains when the regression controls for demographic factors and holds for various measures of intergenerational mobility.

I provide a causal analysis of the relationship between religious membership and intergenerational mobility using the presence of Catholic clergy scandals as an instrumental variable. These scandals impacted religious membership in areas where they occurred (Bottan and Perez-Truglia 2015). Using Catholic clergy scandals to instrument for religious membership does not exhibit statistical significance. Consequently, I examine the limitations of the instrumental variable analysis that would cause the instrument to be ineffective for this project.

My thesis also examines how income and race interact with religious membership, intergenerational mobility, and the relationship between the two. Using the data from the initial analysis and various Congregational Life Surveys, I find evidence that people of different races practice religion differently and that religious congregations lack income diversity, both of which potentially impact the relationship between religion and intergenerational mobility. My thesis finds that race and income are necessary factors to consider when having a complete discussion of the relationship between religious membership and intergenerational mobility.

My thesis finds that a correlational relationship exists between religious membership and intergenerational mobility, but I could not provide evidence of a causal relationship. This lack of a causal relationship could be explained through limitations with the instrument or the influence of socioeconomic factors like race and income. These potential influences merit further study.

 

Any questions may be directed to emorrissette@college.harvard.edu

Riding with Charlie: Public Transportation Policy and its Impact on Businesses and Road Safety in Massachusetts

By Pedro Farias

Can public transportation help local businesses and save lives and costs? My thesis seeks to understand this dual question by considering a natural experiment in Boston. From March 2014 to March 2016, the MBTA expanded public transportation service on weekends from 12:30am to 2:30am for certain routes. With data on MBTA service, I can understand which stops benefited from increase public transportation supply and on what days. Pairing this with Massachusetts crash data, Twitter data, and Yelp data during this period provides a way of understanding whether public transportation did reduce crashes and help local businesses. This could help guide urban policy as cities continue to gain in importance in the economy and our lives.

 

My thesis provides two main contributions. The first is evidence from a differences-in-differences design that businesses may benefit from late night service, as the number of Yelp reviews for businesses near stops with late night service increased between 2.5% and 8% and the number of late night tweets in areas with the service increased 4%, with these estimates statistically significant at the 99% level. Yelp and Twitter data serve as proxies to estimate changes in foot traffic (and thereby revenues) for local businesses, and the analysis indicates that businesses close to late night service stops did see an uptick in customers.

 

The second contribution is that the service helps reduce the number of car crashes by 4% on average, though this estimate is not statistically significant. Areas with a high proportion of young individuals and minorities experienced a stronger treatment effect of around 12%, with statistical significance varying based on each of the three empirical strategies employed, which include differences-in-differences, propensity score matching, and geographic proximity analysis.

 

I also calculate that the cost-savings resulting from a reduction in crashes could offset the cost of the late night service if the treatment effect led to 17% fewer car crashes. Indeed, the heterogenous treatment effect does reach this level in certain areas of the city, indicating there could be routes whose costs are offset by the reduction in car crashes, notwithstanding the additional benefits to local businesses.

 

My thesis shows that there could be relevant benefits to increasing the supply of public transportation, yet economic literature has not yet fully explored these benefits and other impacts of public transportation. Much work can still be done studying public transportation and crime, traffic, and business. I therefore hope this work will serve as a foundation for future exploration on the impact of public transportation in the city economy.

The Promise of a Cure: Measuring the Welfare Gain to Hemophilia A Patients from Gene Therapy

By Julian Ubriaco

US Prescription Drug Spending is on the Rise

US Prescription Drug Spending is on the Rise

Growing prescription drug spending is a core driver of rising healthcare costs in the US. Given that prescription drugs now make up nearly 15% of total healthcare spending, calls for price controls have become increasingly intense from the US Congress. However, as a student of economics, I feared the long-term effects of price controls (decreased R&D spending) would counteract any short-term cost savings. Thus, I decided to dedicate my thesis to uncovering just how great the value of a high-priced pharmaceutical may be.

In my quest for high-value therapies, I came across a glut of gene therapies in clinical development. By correcting the genetic cause of disease, gene therapy can eliminate recurring prescription drug spending through a single, potentially curative, intervention. Next, I searched for a disease with high per-patient expenditures and an advanced gene therapy candidate and settled on Hemophilia A. Hemophilia A, an inherited blood clotting disorder affecting roughly 15,000 Americans, is one of the most expensive diseases for payers and providers to treat; severe patients average roughly $700,000 in annual treatment expenditures with some patients incurring upwards of $1M annually.[1] Further, several gene therapies are being developed to treat hemophilia A, including Biomarin’s Valrox which is projected to enter the market in Q4 of 2020.[2]

I decided on the research question of quantifying the effect of the market entry of gene therapy on patient welfare. Most inquiries into the value of medical innovations are performed through a public health lens and quantify welfare gain as the number of quality-adjusted life years (QALY) saved times some fixed value of a QALY (typically around $100K); I depart from this approach by instead choosing to fit a micro-founded model of demand borrowed from the demand estimation techniques pioneered by the industrial organization subfield of economics and my mentor Ariel Pakes. Basically, by fitting a drug’s market share to its characteristics (price, efficacy, dosing frequency), I was able to estimate how many patients would choose the new gene therapy and how their welfare would increase from the new product.

Equipped with a research question, my next challenge was data. Fortunately, the CDC has amassed a national dataset on hemophiliacs that includes patient-level demographic and treatment information. Unfortunately, this dataset took me just 5 months to access!

After fitting my model, I found that patient demand is sensitive to a drug’s price, dosing frequency, and efficacy in reducing bleeds. I then simulated market entry of a gene therapy for hemophilia and found that demand was highly price-sensitive in the range of $2M to $3M per dose. When priced at $2.5M per dose, gene therapy reached an equilibrium market share of 34%, becoming the most popular treatment for severe cases of hemophilia A. At this price, the mean consumer surplus gain to the patients who chose gene therapy is $236K/year, leading to a total consumer surplus of $436M/year. As current prescription drug spending for severe hemophilia A patients is approximately $1.7B/year, consumer welfare will increase by 25% of current spending following gene therapy market entry, although total spending also increases. Overall, I concluded that gene therapy priced in the $2 – 2.5M range will provide substantial welfare gains to hemophilia patients, profits to firms, and reductions in long-term spending on hemophilia treatments. Thus, I argued for an expanded role of “transformative therapies” such as gene therapy in providing sustainable healthcare solutions over the longer term.

[1] Stacy E. Croteau et al., “Regional Variation and Cost Implications of Prescribed Extended Half‐life Factor Concentrates among US Haemophilia Treatment Centres for Patients with Moderate and Severe Haemophilia,” Haemophilia 25, no. 4 (2019): 668–75.

[2] “Therapeutic Categories Outlook,” Equity Research (Cowen, September 2019).

Changing Climate, Changing Behavior: Evaluating the Impact of Observability and Framing on Carbon Offset Donations

By Anli Chen

Climate change is an urgent global issue that requires collective effort from organizations and individuals alike to overcome. Carbon offsets, while an imperfect solution, are one of the most high-impact and low-barrier ways every individual can contribute. Yet, they are relatively unknown and extremely underutilized. My behavioral economics thesis tackles that challenge to both concretely engage the public and expand academic understanding of people’s motivations to offset.

My question:

What kind of behavioral interventions makes someone most likely to offset? And is such offsetting behavior linked to one’s belief about climate change and/or offsetting-related social norms?

 

Methods:
I run a large-scale field experiment in which students across 33 universities can donate to offset their holiday travel. Taking inspiration from existing research about using nudges and frames to encourage various socially beneficial behaviors, I examine whether carbon offsetting can similarly be encouraged via two mechanisms (both individually and interacted with each other):

  1. Observability: Research indicates that social-focused interventions that appeal to one’s desire to uphold a good reputation and fit in with social norms can be effective in changing behaviors. Thus, I evaluate whether participants were more likely to donate if their donation was made observable to others through complementary laptop stickers I designed that donors could “display to show their community their support for the cause”.
  2. Framing: In addition to the emissions reduction, the carbon offset project that would receive the donations had several “co-benefits”. I tested whether framing the project to highlight a human-focused co-benefit (e.g. reducing rates of respiratory illness) impacted donation rates differently relative to a nature focused co-benefit (e.g. reducing deforestation).

Picture of the two sticker designs (tailored to highlight either the nature or human frame) below!

I then conduct a follow-up Mechanical Turk survey on a different population to add nuance and test the generalizability of my results. Here, I ask:

  1. How does the effect of different levels of observability vary on offsetting?
  2. What relationship does offsetting have with participants’ beliefs about social norms (e.g. how popular they think offsetting is), as well as their attitudes about climate change?

 

Key Findings & Implications:
In my field experiment, I find that among 701 participants, 152 donors, and over $500 raised, the sticker does indeed significantly increase offsetting by 9%. Conversely, different frames did not significantly affect behavior.

My MTurk survey provided further support that observability matters, that it is tied to a desire to maintain or improve one’s reputation, and that – at least for my study participants – social norms matter more than how much one says they care about the environment: social norm beliefs were a stronger predictor of donations than one’s attitudes about climate change.

Overall, my thesis provides further insight on how to apply behavioral strategies to promote pro-environmental actions in real world contexts, as well as how and why such interventions – and associated beliefs and attitudes – can work to help our planet.

We gather here.

COVID-19 has scattered our students across the globe; but the internet makes us feel a whole lot closer.  Here, we inaugurate the Harvard Economics Undergraduate Senior Thesis Blog (Senior Synthesis, get it??), where you can read short summaries of the impressive research carried about by our students.  Though we can’t hold our usual Ec Senior Thesis Poster Session this year, we look forward to sharing our students’ research even more widely through this blog.  So, go on, enjoy!  Take a break from Netflix and check out what our amazing young economists explored and discovered on their thesis adventures.