Honors Theses 2024

Paul Cornell, Advisor: Elizabeth Cascio

House Price Capitalization of School Finance Reform in New Jersey

Abstract: I estimate the effects of increases in school district spending on property sale prices in New Jersey using variation in district finances spurred by the Abbott v. Burke New Jersey Supreme Court rulings. My empirical approach compares trends in the sale prices of homes near school district boundaries that border a district affected by the Abbott rulings. I limit my sample to 1995-2007, the period shortly after per-pupil spending in Abbott districts surpassed spending in other districts. I find that homes on the Abbott sides of these boundaries appreciated faster than homes on the non-Abbott sides. Specifically, I find that relative sale prices increased by 18%—or about $25,000—between 1995 and 2007. At plausible discount rates, I attribute half of this variation to changes in per-pupil current expenditure. These estimates imply near dollar-for-dollar capitalization of discounted per-pupil current expenditure on per-pupil sale prices.

Morgan Chamberlin, Advisor: James Feyrer

Farming The Wind: Wind Power and Agriculture

Abstract: I quantify wind farm rent and royalty payments in the United States from 2005 to 2022. I find that each new installed megawatt of wind energy is associated with between $9,000 and $27,000 in rent and royalty income paid to landowners per year. The majority of wind installations are built on farmland, with payments going to farmers and ranchers. Using a unique dataset of agricultural outcomes, I explore how farmers and ranchers spend their rent and royalty income. I find that farmers spend more than their wind payments on farm assets, including farm machinery, trucks, combines, and agricultural land. These findings suggest that wind turbine rent and royalty payments help liquidity constrained farmers and ranchers take out loans and make substantial farm investments. Effects are consistent with anecdotal evidence from farmers and empirical evidence on farm investments from fracking rent and royalty payments.

Tejas Parekh, Advisors: Dr. Melinda Petre and Professor Douglas Staiger

Medicaid and Mental Health: The Effect of Insurance Coverage on Mental Health Diagnoses Rates Across States

Abstract: In this research paper, I study the impact of insurance coverage on mental health diagnoses rates across the United States. As the mental health crisis worsens across the USA, the efficacy of policy solutions, such as insurance coverage expansion, has increasingly been championed and scrutinized (Center on Budget and Policy Priorities, 2021; NPR, 2023; Vox, 2023). Using instrumental variables and difference-in-differences methodologies, I examine how insurance coverage, through the instrument of Affordable Care Act (ACA) Medicaid expansion, affects mental health diagnoses rates in U.S. states across four primary categories: 1. Stress, anxiety, and depression-related disorders, 2. Conduct-related disorders, 3. Personality-related disorders, and 4. Other disorders. In particular, I leverage the Substance Abuse and Mental Health Services Administration (SAMHSA)'s Mental Health-Client Level Data (MH-CLD) and the Census Bureau's American Community Survey (ACS) to evaluate the relationship between
insurance coverage and mental health diagnoses. Although there is suggestive evidence that a rise in insurance coverage is associated with a rise in mental health diagnoses, the results are too imprecise to support a definitive relationship. These findings highlight the need for further scholarship on the vital role of insurance coverage in providing access to mental health diagnoses, and thus treatment.

Rohit Garimella, Advisors: Jonathan Zinman and Bruce Sacerdote

Does Media Coverage Make Banks More Susceptible to Contagion Effects? Evidence from the Silicon Valley Banking Crisis

Abstract: During 2023, the fall of Silicon Valley Bank spurred a series of failures and return losses for banks throughout the US financial system. In this paper, I analyze one mechanism of the heterogeneity of the contagion effects of the crisis. In particular, I test whether the visibility of banks in media makes them more susceptible to deposit losses during the crisis period. To measure media visibility, I count the number of times a given bank is mentioned in newspaper articles from January 1 to February 28, 2023, an immediate pre-crisis period. I further test whether there exist mechanisms of protection against the impact of increased information spillovers due to visibility. I find that, while the existence of media coverage does not significantly impact deposit flow during the crisis period, greater intensity of coverage led to larger deposit losses. Further, I find that banks with large social media presence are protected from the negative impact of coverage intensity. Banks with greater intensity of coverage also have a higher likelihood of facing a large loss of deposits. Future work may extend this analysis to historical crises and pay closer attention to the heterogeneity of news sources in order to continue to develop an understanding of depositor behavior during financial crises.

Federico Cigolot, Advisor: Treb Allen

Why Join the Belt and Road Initiative? - Modeling Trade Dynamics and Welfare Outcomes

Abstract: I investigate the economic factors influencing countries to join the Chinese Belt and Road Initiative (BRI). First, I explore how observed trade interactions with BRI members, as well as with China and the USA, affect these decisions. Second, I develop a general equilibrium trade model to estimate the welfare impacts arising from the reduced trade costs associated with BRI membership. My results indicate a strong relationship between a country's trade volume with BRI nations and its propensity to join the initiative, both in terms of exports and imports. However, when considering welfare gains, I find that the likelihood of joining the BRI increases only for countries with substantial exports to BRI members. Bilateral trade relations with China and the USA appear to have minimal influence on the decision to join the BRI.

Krishnachandra Nair, Advisors: James Feyrer and Doug Staiger

The Real Determinants of National Health Spending: Income Level, Life Expectancy, and Healthcare System

Over the last 50 years, health spending as a share of GDP has more than doubled worldwide. Previous literature has explained this result by suggesting that healthcare is a luxury good. Estimates for the income elasticity of healthcare, however, provide mixed support for this theory. We resolve this conflict by newly identifying that the
income elasticity of healthcare differs for public and private spending, has fallen over time, and varies based on income level, life expectancy, and healthcare system. Our results suggest that healthcare is a normal good, so the recent stabilization in health spending may have been socially beneficial.