Carly Urban

Is Smoking Inferior?: Evidence from Variation in the Earned Income Tax Credit

In this paper we estimate the causal income elasticity of smoking participation, cessation, and cigarette demand conditional upon participation. Using an instrumental variables (IV) estimation strategy, we find that smoking appears to be a normal good among low-income adults: Higher-instrumented income is associated with an increase in the number of cigarettes consumed and a decrease in smoking cessation. The magnitude and direction of the changes in the income coefficients from our OLS to IV estimates are consistent with the hypothesis that correlational estimates between income and smoking-related outcomes are biased by unobservable characteristics that differentiate higher-income smokers from lower-income smokers.

State Mandated Financial Education and the Credit Behavior of Young Adults

In the U.S., a number of states have mandated personal finance classes in public school curricula to address perceived deficiencies in financial decision-making competency. Despite the growth of financial and economic education provided in public schools, little is known about the effect of these programs on the credit behaviors of young adults. Using a panel of credit report data, we examine young adults in three states where personal financial education mandates were implemented in 2007: Georgia, Idaho, and Texas. We compare the credit scores and delinquency rates of young adults in each of these states pre- and post-implementation of the education to those of students in a synthetic control state and then bordering states without financial education. We find that young people who are in school after the implementation of a financial education requirement have higher relative credit scores and lower relative delinquency rates than those in control states.

Protecting Minority Homeowners: Race, Foreclosure Counseling and Mortgage Modifications

Millions of minority homeowners are at risk of losing their homes as a result of the housing crisis due to mortgage foreclosure and home repossession. One consumer-oriented policy response to this crisis is mortgage default counseling for borrowers. This study examines the rate at which minority borrowers seek default counseling and the resulting correlation between counseling and the probability that a borrower obtains a modification of his/her original mortgage contract terms. The results suggest that African Americans are more likely to be counseled, relative to Whites. However, Latinos or other non-White groups are no more or less likely to be counseled. The probability of loan modifications among counseled African Americans is also higher than other counseled borrowers. These results suggest that counseling policies and the public subsidy of default counseling may be one approach for promoting consumer financial well-being of these households, but also suggest counseling efforts might be better designed for other minority groups. These results also have implications for the application of counseling to other mortgage decisions, such as refinance.

Mandatory Mediation and the Renegotiation of Mortgage Contracts

There is debate over why lenders are unwilling to modify more mortgages, ranging from structural to macroeconomic factors. This paper introduces the information problem that borrowers and lenders face and examines third party mediation as a mechanism to overcome this problem. Mediation offers both borrowers and lenders the opportunity to gain information about the potential for modifying the terms of the loan. Based on a difference in difference analysis of loans in four metropolitan statistical areas before and after at least one county imposed mediation and one did not, mediation policies appear to have positive effects on the rate of loan modifications. The use of mediation in states with judicial foreclosure proceedings may be an effective policy to increase the use of loan modifications and offers evidence that a lack of information may introduce additional barriers to modifications.

The Role of Information on Retirement Planning: Evidence from a Field Study

Many households neglect the pivotal task of planning for retirement. Proposals to stimulate employees to save for retirement in the workplace include tax subsidies, which are costly, and using automatic defaults, which may not complement the heterogeneous preferences of savers. This randomized field study shows that an information‐based intervention increases reported retirement plan participation, emergency savings, and using a budget. Employees offered access to education increased actual retirement deferrals by

Perspectives on evaluation in financial education: Landscape, issues, and studies

26 per month. These results suggest that retirement education programs may be an effective strategy to increase retirement planning and saving behavior.

Local Economic Gains from Primary Election Spending

ABSTRACT This review discusses the heterogeneity in the effectiveness of financial education programs that occurs because of the unique conditions for programs and methods to evaluate them. The authors define six groups served by financial education: children, youth, college students and young adults, working adults, military personnel, and low-income consumers. They then discuss research and evaluation literature for each group with a critical eye on program purpose, content, and evaluation. They also present findings affecting multiple groups on four issues: student loans, homeownership, retirement planning, and financial advising. The accumulated evidence on the effectiveness of financial education is positive, although the results are nuanced and sometimes limited. The authors argue that understanding this broad landscape in studying financial education is critical for future research and evaluation.

Rolling the Dice on Foreclosure Prevention: Differences Across Mortgage Servicers in Loan Modifications and Loan Cure Rates

This article asks how government and private consumption spending affect earnings in service sectors. To do this, we exploit the variation across states and time in the money spent while campaigning for a partys Presidential primary nomination. We create a novel data set combining the date each state held its primary from 1976 to 2008, the date in each election cycle in which only one candidate remained, and quarterly state earnings by sector. Using an instrumental variable strategy, we find that hosting a primary election increases earnings, particularly in the retail and accommodation sectors. These results remain consistent when using data on primary campaign expenditures across states in the 2004 and 2008 elections.

Dollars on the Sidewalk: Should U.S. Presidential Candidates Advertise in Uncontested States?

Abstract Mortgage servicing has garnered increased attention since the foreclosure crisis. As the interface between borrowers and investors, servicers make the decision to either grant a loan modification or to foreclose. This study examines servicer loan modification practices for a national sample of delinquent subprime loans, and assesses the extent to which those practices are associated with foreclosures. The research reveals significant differences across servicers in loan cure rates, which are related to servicers’ propensity to offer loan modifications and to the level of relief offered to borrowers. The observed differences across servicers and the implications of this heterogeneity for foreclosure prevention underscore the importance of additional data, research, and policies that can increase the uniformity and transparency of servicing practices.