ESSAYS ON RISK PREFERENCES, ALTRUISM, AND LIFE EVENTS

Author

Fitri Safira, Southern Illinois University CarbondaleFollow

Date of Award

5-1-2023

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

Watts, Alison

Abstract

In this applied microeconomics dissertation, we study the effect of religiosity and life events on risk preferences and how happiness affect altruism. We begin with the first chapter by examining the relationship between high-risk health behavior and religiosity. Religious beliefs can impact an individual's behavior, including their future health. The 2021 CDC analyses shows that sexually transmitted infections (STIs) are still common, with an estimated 1 in 5 people in the US having an STI, and 13% of persons in the US with age 12 years old and above consuming any illicit drugs. We estimate the effect of religiosity on high-risk health behavior using panel data from the General Social Survey and construct a high-risk health behavior index using the CDC high-risk behaviors. The religiosity index was developed by combining religiosity dimensions such as religious service attendance, prayer frequency, and religious affiliation. Ordered probit was performed to test the relationship between high-risk behavior and religiosity. The result indicates that religiosity is negatively associated with high-risk health behavior and is statistically significant. We confirmed that religious people are less likely to be involved in risky behaviors, especially for Catholics. We also find that individuals who switch religion are more likely to engage in high-risk health behaviors. In the second chapter, we examined the relationship between health and happiness and how happiness impacts altruism. The previous economics literature has shown that altruism can create a warm glow or cause happiness; we tested instead whether happy people are more altruistic. Using data from the General Social Survey (GSS) covering the period of 2002, 2004, 2012, and 2014, we employed a two-stage least square approach and performed OLS and ordered probit regression. We use health as an instrumental variable for happiness. Overall, the results indicate that happiness is associated with volunteer work and giving to charity and provide a basis for policy development to focus on promoting factors that contribute to happiness and wellbeing in order to foster pro-social behavior such as volunteering and donation to charity. Lastly, on the third chapter, we investigate how life events affect risk aversion using the German Socio-economic Panel (SOEP) Data. Our fixed effects estimation suggests that experiencing childbirth and losing parents decrease individuals' risk-taking propensity, while getting separated from a spouse or partner increases the willingness to take risks. We also find that changing jobs increases the willingness to take risks, and individuals who become self-employed tend to take more risks. Furthermore, we examine the average treatment effect on the treated (ATET) and find that for family-related events that are relatively beyond control, such as experiencing childbirth or the death of a child, parent, or spouse or partner, people tend to become more risk-averse. On the other hand, people tend to become less risk-averse for circumstances that are relatively within control, such getting married, separated, and divorced.