Maximilian D. Schmeiser

Expanding wallets and waistlines: the impact of family income on the BMI of women and men eligible for the Earned Income Tax Credit.

The rising rate of obesity has reached epidemic proportions and is now one of the most serious public health challenges facing the US. However, the underlying causes for this increase are unclear. This paper examines the effect of family income changes on body mass index (BMI) and obesity using data from the National Longitudinal Survey of Youth 1979 cohort. It does so by using exogenous variation in family income in a sample of low-income women and men. This exogenous variation is obtained from the correlation of their family income with the generosity of state and federal Earned Income Tax Credit (EITC) program benefits. Income is found to significantly raise the BMI and probability of being obese for women with EITC-eligible earnings, and have no appreciable effect for men with EITC-eligible earnings. The results imply that the increase in real family income from 1990 to 2002 explains between 10 and 21% of the increase in sample womens BMI and between 23 and 29% of their increased obesity prevalence.

The timing of the rise in U.S. obesity varies with measure of fatness

There are several ways to measure fatness and obesity, each with its own strengths and weaknesses. The primary measure for tracking the prevalence of obesity has historically been body mass index (BMI). This paper compares long-run trends in the prevalence of obesity when obesity is defined using skinfold thickness instead of BMI, using data from the full series of U.S. National Health Examination Surveys. The results indicate that when one uses skinfold thickness rather than BMI to define obesity, the rise in the prevalence of obesity is detectable 10-20 years earlier. This underscores the importance of examining multiple measures of fatness when monitoring or otherwise studying obesity.

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.

Flu and Finances: Influenza Outbreaks and Loan Defaults in US Cities, 2004–2012

OBJECTIVES We examined the association between influenza outbreaks in 83 metropolitan areas and credit card and mortgage defaults, as measured in quarterly zip code-level credit data over the period of 2004 to 2012. METHODS We used ordinary least squares, fixed effects, and 2-stage least squares instrumental variables regression strategies to examine the relationship between influenza-related Google searches and 30-, 60-, and 90-day credit card and mortgage delinquency rates. RESULTS We found that a proxy for influenza outbreaks is associated with a small but statistically significant increase in credit card and mortgage default rates, net of other factors. These effects are largest for 90-day defaults, suggesting that influenza outbreaks have a disproportionate impact on vulnerable borrowers who are already behind on their payments. CONCLUSIONS Overall, it appears there is a relationship between exogenous health shocks (such as influenza) and credit default. The results suggest that consumer finances could benefit from policies that aim to reduce the financial shocks of illness, particularly for vulnerable borrowers.

Risk Perception, Risk Tolerance and Consumer Adoption of Mobile Banking Services

The increasing availability of mobile banking has the potential to transform the way consumers interact with their financial institutions and expand access to financial services for previously underserved populations. However, given the sensitive nature of the information shared when using mobile banking, its adoption is impeded by consumer concerns about the overall security of the technology. This study uses a unique dataset to examine how consumers’ perceptions of the risks of using mobile banking, as well as their own personal level of risk tolerance, impact adoption of mobile banking. We find that consumers who believe that mobile banking is unsafe or who don’t know how safe it is adopt mobile banking at much lower rates than those who believe it is safe. We further find that consumers with higher levels of risk tolerance are more likely to adopt mobile banking, even after controlling for their perceptions of the riskiness of mobile banking.

The Effects of Female Labor Force Participation on Obesity

This paper assesses whether a causal relationship exists between recent increases in female labor force participation and the increased prevalence of obesity amongst women. The expansions of the Earned Income Tax Credit (EITC) in the 1980s and 1990s have been established by prior literature as having generated variation in female labor supply, particularly amongst single mothers. Here, we use this plausibly exogenous variation in female labor supply to identify the effect of labor force participation on obesity status. We use data from the National Health Interview Survey (NHIS) and replicate labor supply effects of the EITC expansions found in previous literature. This validates employing a difference-in-differences estimation strategy in the NHIS data, as has been done in several other data sets. Depending on the specification, we find that increased labor force participation can account for at most 19% of the observed change in obesity prevalence over our sample period. Our preferred specification, however, suggests that there is no causal link between increased female labor force participation and increased obesity.

The Importance of State Anti-Discrimination Laws on Employer Accommodation and the Movement of their Employees onto Social Security Disability Insurance

The rate of application for Social Security Disability Insurance (SSDI) benefits, as well as the number of beneficiaries has been increasing for the past several decades, threatening the solvency of the SSDI program. One possible remedy is to promote continued employment amongst those experiencing the onset of a work limiting disability through the provision of workplace accommodations. Using the Health and Retirement Study data linked to Social Security administrative records and a state fixed effects model, we find that the provision of workplace accommodation reduces the probability of application for SSDI following disability onset. We estimate that receipt of an accommodation reduces a worker’s probability of applying for SSDI by 30 percent over five years and 21 percent over 10 years. We then attempt to control for the potential endogeneity of accommodation receipt by exploiting exogenous variation in the implementation of state and federal anti-discrimination laws to estimate the impact of workplace accommodation on SSDI application in an instrumental variables (IV) model. While our coefficients continue to indicate that accommodation reduces SSDI application, we obtain implausibly large estimates of this effect. Overall our results imply that increasing accommodation is a plausible strategy for reducing SSDI applications and the number of beneficiaries.

Unlocking Home Equity: Credit Constraints, House Prices and the Federally Insured Reverse Mortgage

Households borrow against equity through different channels: closed end home equity loans or revolving lines of credit, cash-out refinancing, and — for senior homeowners — reverse mortgages. We jointly estimate the decision to extract equity through these channels, identifying the influence of credit constraints and house price dynamics on the proportion of seniors in a ZIP code extracting through a given channel from 2004 to 2012. As house prices increased, cash-out refinancing increased in credit-constrained areas, while HELOCs increased in less-credit-constrained areas. When house prices fell, reverse mortgage originations increased — particularly in credit-constrained areas.