Theses and Dissertations from UMD
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Item Income Inequality and Household Debt: Assessing the Relationship Using Household Panel Data(2022) Brauer, Max; Graham, Carol; Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Is income inequality positively associated with household debt? Previous scholarship suggests that widening income inequality could stimulate household debt, particularly in advanced economies. Furthermore, this potential link could be associated with negative consequences including reduced GDP and secular stagnation, financial fragility and crisis, and decreased capabilities, mobility, and well-being. Yet, until recently, this “income inequality/household debt” link has been understudied. The first chapter discusses two theoretical bases for the link and synthesizes the burgeoning empirical research to identify gaps. Theoretically, income inequality could bolster credit supply because marginal propensity to save increases with income. But income inequality could also stimulate credit demand through the relative income hypothesis. Empirically, income inequality is positively associated with rising debt-to-income ratios (DTI) in developed countries. However, this empirical research generally lacks controls for an important omitted variable (financial deregulation) and an alternative explanation (wealth effects). Moreover, few studies explore changes in the intensive margin of household DTI, which has been the largest contributor to rising overall DTI and is most likely linked to negative consequences. The second chapter examines the relative impacts of various measures of state-level income inequality, financial deregulation, and wealth effects on both the intensive margin and overall DTI of United States households using household panel data from the Panel Study of Income Dynamics (PSID). Results indicate that income inequality is significantly, positively associated with household DTI, but only for the Gini coefficient and the top 10 percent income share. Yet for these measures, income inequality has the strongest and most significant impact on the intensive margin of household DTI as compared to alternative explanations. The third chapter explores a potential microfoundation for the income inequality/DTI link: whether subjective well-being is associated with household DTI. A long literature notes how income inequality and relative income preferences affect subjective well-being. If subjective well-being also affects debt, it could function as a measure of credit demand. Again using data from the PSID and a fixed effects method, results show that subjective well-being has a positive, significant, contemporaneous association with household DTIs. Such a positive association could indicate a “tunnel effect” -- that households with a positive, aspirational outlook take on increasing amounts of debt. However, reverse causality is a potential issue, and additional models designed to address reverse causality with a two-year lag do not find significant results, perhaps due to data limitations for lag specifications. The key finding of this dissertation is that income inequality is positively associated with household DTI, and, in fact, contributes more to driving indebted households deeper into debt than alternative explanations. Yet when viewed from the lens of subjective well-being, happier households are more likely to take on additional debt. These findings suggest that, in the United States, income inequality may lead some households to go deeper into debt as they ostensibly chase the “American dream” and aspire to the same living standards as higher income earners.Item Psychological Well-being and Health Gains in the Developing World: Evidence from Peru and Malawi(2018) Dickerson, Sarah; Graham, Carol; Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I assess the relationship between psychological well-being and health gains in Peru and Malawi. The first chapter consists of a comprehensive and systematic examination of research that frames the quantitative analyses found in the second and third chapters. It investigates literature on the relationship between maternal well-being and multiple dimensions of health in children and adolescents. It also explains how maternal depression may interact with poverty to worsen offspring’s outcomes. Then, it explores literature on the association between catastrophic health expenditure in Malawi and two of its potential predictors: unexplained happiness and access to antiretroviral therapy (ART), a treatment regimen for people living with HIV/AIDS. The second chapter assesses the impacts of maternal depression and life satisfaction on children in Peru. Using panel data from rounds three (2009-2010) and four (2013-2014) of Young Lives Peru, I find that children’s self-reported life satisfaction and health positively correlate with maternal life satisfaction and negatively associate with maternal depression. Furthermore, maternal life satisfaction predicts whether a female adolescent smokes, while maternal depression predicts smoking behavior and misinformation on pregnancy amongst male adolescents. The third chapter investigates the relationships between household catastrophic health expenditure in Malawi and two predictors, antiretroviral therapy (ART) and unexplained happiness. Using data from round two (2004-2005) and round three (2010-2011) of Malawi’s Integrated Household Survey, I find that proximity to ART-providing clinics and higher levels of psychological well-being associate with reduced likelihood of catastrophic health expenditure.Item Goodbye Lenin, Hello Europe? An Empirical Investigation of Subjective Well-being in Transition and Post-transition Economies(2014) Nikolova, Milena Veselinova; Graham, Carol L; Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I rely on self-reported objective and subjective data to study processes related to acquiring new opportunities and exercising choice in transition and post-transition countries, i.e., the economies in Central and Eastern Europe and the Former Soviet Union, which recently underwent or are still going through transitions to democracy and market economy. The departure point is the proposition that at the macro level, transition consists of marketization and democratization processes but at the individual level, transition generated a process of acquiring autonomy, i.e., taking charge of one's own life and making personal choices instead of relying on the government. Frustration and disillusionment may accompany this process, as it is often a difficult transformation involving uncertainty and volatility, sacrifices, and changing time use, norms, or reference groups. This dissertation consists of three separate but related essays. Specifically, Chapter 1 taps into the relationship between capabilities and subjective well-being. Chapter 2 directly builds on that by exploring the well-being consequences of the pursuit of new opportunities through migration. Finally, Chapter 3 investigates the life satisfaction effects of joining the European Union, which was a process that provided citizens in transition economies with new rights and opportunities. The research questions in these three essays relate to broader inquires about the well-being implications of the process of learning to be in charge of one's own life. A fundamental, yet not well-understood determinant of human well-being is the capacity to exercise choice and live a fulfilling life. Chapter 1 explores how actual and perceived manifestations of this capacity relate to subjective well-being dimensions. The chapter furnishes evidence that in transition economies and other world regions, capabilities and subjective well-being are related and both objective and subjective capabilities are more important for life evaluations than for emotional states. Capabilities are also generally less important for the happiest respondents. We further demonstrate that the same set of capabilities and means has a slightly different relative importance for different well-being dimensions across different regions. We also show novel evidence related to the least well-understood subjective well-being dimension: eudaimonic happiness, which relates to having meaning and purpose in life. Finally, our results demonstrate that while employment arrangements contribute to happiness overall, they are also associated with stress and anger. The second chapter uses Gallup World Poll data, statistical matching, and difference-in-differences to assess the effects of migration on the well-being of migrants from transition economies living in advanced countries. In addition to increasing household income, migration enhances subjective well-being. While all migrants realize income gains, there is a substantial well-being migration premium for the unhappiest movers. Moreover, by voting with their feet, migrants not only exercise choice but also enhance their perceived opportunities, including satisfaction with freedom and standard of living. Based on the results, migration can be seen as a development mechanism as it enhances migrants' means, well-being, and capabilities. The third chapter provides novel evidence about the perceived well-being effects of EU accession in the ten post-communist countries which joined the European Union between 2004 and 2007 (EU-10). Using difference-in-differences, the main finding is that EU accession had no immediate influence on the perceived well-being of Bulgarians and Romanians (EU-2) in 2007 but was positively related to life satisfaction in 2008-2009, with some variation by socio-demographic groups. In addition, there were EU-related well-being gains in most of the EU-8 countries, which were experienced shortly after joining. Taken at face value, the results suggest that EU membership has immediate perceived well-being effects in the more advanced transition members and is associated with well-being gains only after a lag in the less advanced ex-communist members. From a policy perspective, these results are relevant to countries aspiring to EU membership such as the Western Balkans and the Ukraine. The chapter also suggests that the increased control of corruption and EU aid were associated with higher life satisfaction in Bulgaria and Romania, although a greater share of EU imports had the opposite influence. In the EU-8, better governance, economic growth, and EU imports had a positive influence on life satisfaction, while the control of corruption had a marginally significant negative association. This dissertation's results have several policy implications. First, given that public policy has a role in assisting those lacking choice and freedoms by providing them with equal opportunities, the results in Chapter 1 may ultimately have importance in that arena. The findings suggest that the same set of opportunities and means may have a different meaning and value in different contexts or among different cohorts. Therefore, policies aiming to enhance opportunities may have a differential impact on subjective well-being across groups. For example, if policymakers aim to enhance subjective well-being, they may choose to invest in objective capabilities and means (such as income, employment, and education). Alternatively, for normative reasons, decision-makers may choose to equalize capabilities of all kinds for all citizens despite the differential weights that different put on them and the differential impact on subjective well-being. Second, immigrant well-being is not only a pivotal part of each nation's well-being but immigrant dissatisfaction may also be symptomatic of deeper social problems such as social exclusion and discrimination. While policy debates and the extant literature tend to focus on the distributional consequences of immigrants on natives in the destination countries, Chapter 2 finds that migration has positive effects on the incomes, subjective well-being, and perceived opportunities of migrants from transition economies living in advanced countries, implying that migration can be a development mechanism enhancing individual well-being. Yet, arguably migration is not a comprehensive development strategy as it does not solve deeply-rooted social problems such as corruption, poor economic policies, and market and government failures in the sending countries. Third, Chapter 3's findings are relevant to policymakers in the Western Balkans and the Eastern Partnership countries, which aspire to EU membership. Like Bulgaria and Romania, these candidate countries are less advanced and less prepared for membership than accession countries in previous enlargements. Therefore, if accepted into the EU, citizens in these countries will likely experience the subjective well-being gains after a lag. The results also have implications for the EU's enlargement and integration policies.Item Essays on Subjective Well-Being: Applications in International Migration, Poverty Alleviation Programs, and Inequality of Opportunity(2012) Chindarkar, Namrata; Graham, Carol; Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation examines questions pertaining to international migration, participation in poverty alleviation programs, and inequality of opportunity using a subjective well-being approach. The theoretical objective of this dissertation is two-fold - (i) to examine subjective well-being as a factor that induces individuals to make critical decisions and (ii) to examine whether seeking agency or a better life affects subjective well-being. Chapter 1 examines the effect of life satisfaction on intention to migrate abroad using survey data on 18 Latin American countries. Three key findings emerge that support life satisfaction as a significant driver of intention to migrate abroad. First, the findings suggest that reporting high life satisfaction is negatively associated with intention to migrate abroad controlling for education and other background factors. Second, I find a consistently negative and significant effect of the interaction between high life satisfaction and education suggesting that more educated individuals reporting high life satisfaction are less likely to consider migrating abroad as compared to more educated individuals reporting low life satisfaction. And third, even after controlling for relative deprivation the negative effect of the high life satisfaction and education interaction term on intention to migrate abroad remains statistically significant suggesting that international migration decisions of those with higher education are not solely driven by economic motives. In addition, I find that those who are highly educated (college and higher) are more likely to consider migrating abroad, controlling for life satisfaction and relative deprivation, mainly due to weak economic outlook of and low wages in the home country. Chapter 2 uses non-experimental regression models and quasi-experimental propensity score matching models to examine the effect of being a recipient of livelihood protecting in-kind social transfers and livelihood promoting microfinance on subjective and objective economic well-being. I find that being a microfinance recipient has significant positive effect on subjective economic well-being of the very poor households. This implies that being a recipient of livelihood promoting poverty alleviation programs makes poor households "feel less poor". Further, being a microfinance recipient also has a significant positive effect on the consumption or objective economic well-being of the very poor households. Disaggregating the positive effect on consumption reveals that being a microfinance recipient significantly increases human capital development expenditures, particularly education and health. In contrast, there is a significant negative effect on the subjective economic well-being of recipients of livelihood protecting social transfers, but the effect does not hold for households that are very poor. Therefore, there is seemingly a stigma associated with receiving social transfers. Contrary to expectation, being a social transfers recipient has a negative effect on consumption, which is possibly due to a substitution effect. Chapter 3 uses the Human Opportunity Index (HOI) to measure the degree of inequality of opportunity for rural-urban migrant children as compared to urban and rural children in China. I find that migrant children face significantly more inequality of opportunity in basic opportunities as compared to their urban and rural counterparts. Specifically, they experience high levels of inequality of opportunity in education and in basic services such as water and sanitation. With respect to completing primary education on time, only about half of all opportunities needed to ensure universal access are both available and allocated equitably for migrant children as compared to urban and rural children. Similarly, for water and sanitation, opportunities available and equitably distributed are significantly less for migrant children as compared to urban and rural children. Further, within the sub-group of migrants, recent migrants, that is, those who have been residing in the urban area for less than three years are worse-off when compared to migrants who have lived in the city for longer periods of time. Testing the association between migrant childrens' HOI and the subjective well-being of their households suggests that an increase in the HOI is positively and significantly associated with household well-being measured in terms of subjective standard of living and feelings of upward mobility. This implies that improving the outcomes for migrant children could be a policy tool for improving the well-being of migrant households.Item Essays on inequality, social mobility and redistributive preferences in Transition Economies(2012) Cojocaru, Alexandru; Graham, Carol; Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation I rely on attitudinal and subjective well-being data from Transition Economies to examine several aspects of the relationship between inequality, social mobility and citizens' preferences for government involvement in redistributive policies. In the second chapter I suggest that if aversion to inequality is driven by social mobility considerations or by differences in status between self and relevant others, then aggregate statistical indices of inequality will be unable to capture in a meaningful way changes in status implicit in inequality dynamics. An alternative test of inequality aversion that derives from the experimental literature is adopted, that is better able to capture status driven aversion to inequality. The third chapter investigates empirically the link between the prospects of upward mobility (POUM) and preferences for redistribution. The POUM hypothesis is tested while directly accounting for other factors affecting preferences for redistribution such as risk aversion, beliefs regarding effort and luck as determinants of success, past economic mobility, or religious preferences. The chapter then looks at what shapes individuals' beliefs vis-a-vis future economic mobility. In particular, I examine the role of perceived inequality of opportunity, conceptualized in the spirit of John Rawls. The fourth chapter is concerned with the body of literature that suggests that relative status is an important determinant of well-being by looking at the effect of one's income relative to some reference group on self-reported life satisfaction. In most of these studies the data come from developed countries, while the reference group of the individual is unknown, and thus imposed by the researcher. This essay looks instead at self-reported relative deprivation based on data from six countries from different parts of Eastern Europe and Former Soviet Union and which are at different levels of economic development. The relative salience of several reference groups is examined. Given the cross-sectional nature of the data, an instrumental variable strategy is employed to establish a causal link between relative deprivation and the level of satisfaction with the household's standard of living.