Beth A. Freeborn

Religious participation and risky health behaviors among adolescents

Previous studies have shown that adolescent religious participation is negatively associated with risky health behaviors such as cigarette smoking, alcohol consumption, and illicit drug use. One explanation for these findings is that religion directly reduces risky behaviors because churches provide youths with moral guidance or with strong social networks that reinforce social norms. An alternative explanation is that both religious participation and risky health behaviors are driven by some common unobserved individual trait. We use data from the National Longitudinal Study of Adolescent Health and implement an instrumental variables approach to identify the effect of religious participation on smoking, binge drinking, and marijuana use. Following Gruber (2005), we use a county-level measure of religious market density as an instrument. We find that religious market density has a strong positive association with adolescent religious participation, but not with secular measures of social capital. Upon accounting for unobserved heterogeneity, we find that religious participation continues to have a significant negative effect on illicit drug use. On the contrary, the estimated effects of attendance in instrumental variables models of binge drinking and smoking are statistically imprecise.

COMPETITION AND CROWDING OUT IN THE MARKET FOR OUTPATIENT SUBSTANCE ABUSE TREATMENT

U.S. markets for outpatient substance abuse treatment (OSAT) include for-profit, nonprofit, and public clinics. We study OSAT provision using new methods on equilibrium market structure in differentiated product markets. This allows us to describe clinics as heterogeneous in their objectives, their responses to exogenous market characteristics, and their responses to one another. Consistent with crowding out of private treatment, we find that markets with public clinics are less likely to have private clinics. In markets with low insurance coverage, low incomes, or high shares of nonwhite addicts, however, public clinics are relatively likely to be the sole willing providers of OSAT.

Arrest Avoidance: Law Enforcement and the Price of Cocaine

Contrary to one goal of drug law enforcement, cocaine prices decreased between the years 1986 and 2000. This paper discusses how arrest avoidance behavior may affect cocaine consumer and dealer response to law enforcement. Dealers avoid arrest by making quick and easy sales; thus, pure‐gram price is negatively related to dealer enforcement. Consumers avoid arrest by accepting high prices rather than searching for lower prices. Thus, pure‐gram price is positively related to consumer enforcement. Because the implications from arrest avoidance conflict with traditional models of how enforcement should affect prices, I also empirically examine the relationship. Using purchase‐level data from the Drug Enforcement Administration and legal penalty data, I find a negative, significant relationship between dealer enforcement and pure‐gram price and a positive, significant relationship between consumer enforcement and pure‐gram price. Both are consistent with the intuition of arrest avoidance.

Penalty Structures and Deterrence in a Two-Stage Model: Experimental Evidence

Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat or declining. We experimentally test a two-stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. We find that decreasing fine structures are more effective at reducing risky behavior. Additionally, our econometric analyses reveal a number of behavioral findings. Subjects are deterred by past convictions, even though the probability of detection is independent across decisions. Further, subjects appear to take the two-stage nature of the decision making task into account, suggesting that subjects consider both current and future penalties. Even controlling for the fine a subject faces for any given decision, being in a decreasing fine structure has a significant effect on deterrence.

Persuasive and Informative Advertising: A Classroom Experiment

The authors outline a pair of classroom activities designed to provide an intuitive foundation to the theoretical introduction of advertising in monopoly markets. The roles of both informative and persuasive advertising are covered. Each student acts as a monopolist and chooses the number of (costly) advertisements and the price. The experiments are intended for intermediate microeconomics or industrial organization courses, but might be used in any course that covers advertising models.

Determinants of Tacit Collusion in a Cournot Duopoly Experiment

We contribute to a growing literature that examines the relationship between the nature of strategic interaction and collusive behavior. We present results from a repeated Cournot duopoly experiment with treatments in which quantity choices are either strategic complements or substitutes. The initial underlying demand function allows for direct comparison with previous work utilizing a Bertrand duopoly setting. We find some evidence of collusion in the substitutes treatment, but no collusion in the complements treatment. We study an additional substitutes treatment to control for the absolute slope of the reaction functions across treatments, where we again find evidence of collusive behavior. However, using an alternate demand function parameterization where the goods are less closely related, we find no evidence of collusive behavior in either the substitutes or the complements treatment.

Behavioral Factors in Equity Allocation Decisions: A Large-Scale Experimental Study With Context

ABSTRACT Traditional models of rational behavior struggle to explain how individuals allocate their money over a variety of financial instruments, including annuities, the stock market, and risk-free bonds. This study uses a large and diverse data set from an investment experiment that is rich in context and captures some important features of actual financial decision making. The focus of the article is to build on the literature documenting behavioral explanations for investment choices by studying the equity allocation decision across different financial tools. The authors find evidence that risk aversion, inertia, and excessive extrapolation are associated with investment behavior even when it is clear that return rates are independent across decision-making periods. Further, subjects have an asymmetric response to positive versus negative returns. In addition to having a novel experimental design, the authors also examine behavior before and after the recent financial crisis. The authors find that the financial crisis indirectly affects the first-stage annuity take-up rate in the experiments vis-à-vis a higher average level of risk aversion after the start of the crisis.

PENALTY STRUCTURES AND DETERRENCE IN A TWO-STAGE MODEL: EXPERIMENTAL EVIDENCE: PENALTY STRUCTURES AND DETERRENCE

Multiperiod models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat or declining. We present the first experimental test of a two‐stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. This prediction is based on the belief that if the penalty for the first offenses is sufficiently low, the agent should commit the offense and continue to offend if undetected. Our results are consistent with the theoretical prediction that decreasing fine structures are more effective at reducing risky behavior.

Mechanisms for Reducing Criminal Recidivism: Experimental Evidence

We conduct laboratory experiments to investigate the effect of deterrence mechanisms on recidivism under controlled conditions. Experimental analysis allows for easier identification of recidivism than the use of empirical or field data. Specifically, we focus on the effect of variation in expected cost of behavior on the rate of recidivism and the number of times an individual re-offends after apprehension. We use a roadway speeding framework and find that the rate of recidivism and number of times an individual re-commits a proscribed act are strongly influenced by the expected penalty.

Competition and Crowding-Out among Public, Non-Profit, and For-Profit Organizations: Evidence from Outpatient Substance Abuse Treatment

U.S. markets for outpatient substance abuse treatment (OSAT) include clinics that are private for-profit, private non-profit, and public (i.e., government-run). We study the market structure of OSAT using recently-developed methods from the empirical industrial organization literature on equilibrium market structure in differentiated product markets. These methods allow us to describe OSAT clinics as heterogeneous in their objectives, their responses to exogenous market characteristics, and their responses to one another. We find that the presence of a public clinic in a market reduces the probability that a private clinic will also participate in the market, which is consistent with crowding-out between public and private provision of OSAT. Crowding out appears to be more prevalent in markets with larger white populations.