Holger Sieg

Charitable Giving, Income, and Taxes: An Analysis of Panel Data

This study implies that taxes affect the level of contributions by way of a price effect and an income effect, each of which has two components, a transitory one and a persistent one. The findings suggest that persistent shocks in incomes have a larger impact on charitable donations than do their transitory counterparts. The most important behavioral aspect for considerations of tax policy is the persistent price effect, since transitory effects are passing. Through this effect tax reforms can have a long-lasting influence on charitable giving.

Interjurisdictional Sorting and Majority Rule: An Empirical Analysis

The goal of this paper is to provide a comprehensive empirical analysis of majority rule and Tiebout sorting within a system of local jurisdictions. The idea behind the estimation procedure is to investigate whether observed levels of public expenditures satisfy necessary conditions implied by majority rule in a general equilibrium model of residential choice. The estimator controls for observed and unobserved heterogeneity among households, observed and unobserved characteristics of communities, and the potential endogeneity of prices and expenditures, as well as the self-selection of households into communities of their choice. We estimate the structural parameters of the model using data from the Boston Metropolitan Area. The empirical findings reject myopic voting models. More sophisticated voting models based on utility-taking provide a potential explanation of the main empirical regularities.

Peer Effects, Financial Aid, and Selection of Students into Colleges and Universities: An Empirical Analysis

The goal of this paper is to develop predictions regarding market consequences of peer effects in higher education and to offer empirical evidence about the extent to which those predictions are borne out in the data. We develop a model in which colleges seek to maximize the quality of the educational experience provided to their students. From this model we deduce predictions about the hierarchy of schools that emerges in equilibrium, the allocation of students by income and ability among schools, and about the pricing policies that schools adopt. In the empirical analysis, we use both university-level data provided primarily by Petersons and student-level data from the National Postsecondary Student Aid Study obtained from the NCES. The findings of this paper suggest that there is a hierarchy of school qualities which is characterized by substantial stratification by income and ability. The evidence on pricing by ability is supportive of positive peer effects in educational achievement from high ability at the college level. However, the evidence on pricing also suggests that more highly ranked schools exercise some degree of market power. This is reflected in the substantial variation of price with income coupled with discounts to more able students that are modest at best.

Interjurisdictional housing prices in locational equilibrium

Abstract In this study, we discuss how to construct interjurisdictional housing price indexes that are consistent with locational equilibrium theory. In theoretical models, housing is assumed to be homogeneous, which provides problems in empirical analysis. We provide conditions that allow us to treat heterogeneous housing as if it were homogeneous. The same conditions that allow us to develop a quantity index for housing, also imply that we can estimate interjurisdictional housing price indexes using hedonic price regressions. Locational equilibrium models impose a number of restrictions regarding the co-movement of housing price indexes, local public goods, and mean income levels. We propose to use these properties of locational equilibrium models to evaluate the different price index estimates. We estimate a variety of price indexes using a unique panel data set of housing transactions in Southern California. Our empirical results, by and large, support our approach.

Estimating a Bargaining Model with Asymmetric Information: Evidence from Medical Malpractice Disputes

This article uses a unique data set on medical malpractice disputes in Florida to estimate the parameters of a bargaining game with asymmetric information. The main findings of the article suggest that the bargaining game can replicate most of the qualitative and quantitative features of the data. The article also simulates alternative policy regimes to quantify the effects of possible tort reforms, such as imposing limits on contingency fees and caps on jury awards.

Consumer Demand Under Price Uncertainty: Empirical Evidence from the Market for Cigarettes

We develop a demand model for goods that are subject to habit formation. We show that consumption plans of forward-looking individuals depend on preferences, current period prices, and individual beliefs about the evolution of future prices. Moreover, an increase in price uncertainty reduces consumption along the optimal path. With smoking as our application, we test the predictions of our model using a unique data set of prices for cigarettes and the restricted-use version of the National Education Longitudinal Study. Our estimation results suggest that teenagers who live in metropolitan areas with a large amount of cigarette price volatility have, on average, significantly lower levels of cigarette consumption.

Drs. muth and mills meet dr. Tiebout: Integrating location-specific amenities into multi-community equilibrium models

We consider the problem of integrating spatial amenities into locational equilibrium models with multiple jurisdictions. We provide sufficient conditions under which models that assume a single housing price in each community continue to apply in the presence of location-specific amenities that vary both within and across communities. If these conditions are satisfied, the models, estimation methods, and results in Epple and Sieg (1999) are valid in the presence of (potentially unobserved) location-specific amenities. We also show how to construct sufficient statistics that capture location specific spatial heterogeneity. We apply these techniques using data from the Pittsburgh metropolitan area. We find that these amenity measures capture proximity to important local employment centers as well as heterogeneity in school quality within a given school district.

On the Demographic Composition of Colleges and Universities in Market Equilibrium

Achieving diversity in the racial and ethnic makeup of the student body is one of the objectives that a college pursues in making decisions about admission and financial aid. There has been a tremendous amount of debate about policies that colleges should adopt, or be proscribed from adopting, with respect to diversity. Rather than join this largely normative debate, we adopt a positive focus, investigating how colleges’ quests for ethnic and racial diversity affect admission and financial aid policies, the college quality hierarchy, and the distribution of whites and nonwhite students across colleges of differing qualities. We provide a theoretical framework for investigating the effects of preferences for diversity augmented with results from a parallel computational model calibrated to U.S. data. The effects of efforts to achieve diversity in colleges depend not only on the weight that colleges give to diversity, but also on the value that prospective students place on diversity. Diversity may be of concern to no one, only to colleges, to both colleges and students, or to colleges and a subset of students. We first describe a baseline model without preferences for diversity and then examine three alternatives in which preferences for racial diversity are present.

Evaluating Education Programs That Have Lotteried Admission and Selective Attrition

We study the effectiveness of magnet programs in an urban district that ration excess demand by admission lotteries. Differential attrition arises since students who lose the lottery are more likely to pursue options outside the school district than students who win the lottery. When students leave the district, important outcome variables are often not observed. The treatment effects are not point-identified. We exploit known quantiles of the outcome distribution to construct informative bounds on treatment effects. We find that magnet programs improve behavioral outcomes but have no significant effect on achievement.

The Effectiveness of Private Benefits in Fundraising of Local Charities

This article provides an empirical analysis of the role that private benefits play in explaining charitable donations to large cultural and environmental organizations. We develop a multiple discrete choice model with differentiated products. We estimate the model using a unique data set of donor lists for the 10 largest cultural and environmental charitable organizations in the Pittsburgh metropolitan area. We find that some private benefits such as invitations to private dinner parties and special events are effective tools for fundraising. Our policy simulations suggests that the composition of private benefits has a potentially large impact on donor behavior.