Research

Environmental Economics

• “Heat and Observed Economic Activity in the Rich Urban Tropics,” (with E. Fesselmeyer,  A. Salvo, and R. Simorangkir) Economic Journal (2024), 134, pp. 3445–3460 

Abstract:  We use space-and-time resolved mobility data to assess how heat impacts Singapore, a rich city-state and arguably a harbinger of what is to come in the urbanizing tropics. Singapore’s offices, factories, malls, buses, and trains are widely air-conditioned, its public schools less so. We document increased attendance and commuting to workplaces, malls, and the more air-conditioned schools on hotter relative to cooler days, particularly by low-income residents with limited use of adaptive technologies at home. Investment by rich cities may attenuate heat’s pervasive negative consequences on productive outcomes, yet this may worsen the climate emergency in the long run. 

• “Willingness to Fight on: Environmental Quality in Dynamic Contests,” (with Jingfeng Lu and Alberto Salvo) RAND Journal of Economics, (2023), 54, pp. 189-239.

Abstract: We show that the prevalence of prolonged tennis contests drops sharply when the ambient environment deteriorates through heat or pollution. We develop a multi‐battle dynamic model to investigate how the disutility from a protracted competition shapes agents' willingness to fight on. Our theory predicts that a poor environment amplifies the momentum of a competitor's head start. We show how model primitives including preferences for environmental amenities can be inferred from battle‐to‐battle transition probabilities. We find that heat and pollution affect incentives to compete strategically. In a contest between equally able rivals at the median prize of $15,100, the value of a head start is $130‐370 higher in a degraded environment compared with a climate‐controlled one. 

Labor and Demographic Economics

• "The minimum wage and cross-community crime disparities ", (with Li Li) Journal of Population Economics (2024), 37(2), pp.1-37. 

Abstract: This study examines the heterogeneous impacts of minimum wages, which could affect low-income workers’ earnings and employment opportunities, on crime rates across neighboring communities. Using geo-tagged reported crime incident data from 18 major U.S. cities, we find that minimum wage increases reduce violent crime rates notably more in low-income communities than in high-income ones. On average, a one-dollar real minimum wage increase narrows the disparity in quarterly violent crime rates between low- and high-income communities by 12%. The impact varies considerably across different types of cities. The income effect resulting from raising the minimum wage is the main contributing factor. 

• “Differential fertility, school enrollment, and development,” (with Jie Zhang) Journal of Population Economics (2023), 36(4), pp 2205–2240

Abstract: This paper develops a model wherein parents choose the number of children, enroll some children in school at indivisible education costs, and receive supplemental earnings from uneducated children. The model accounts for the positive relationship between enrollment ratios and parental earnings and the N-shaped relationship between fertility and parental earnings in Brazil and Indonesia. When children’s living costs are high (low) relative to education costs and children’s earnings, fertility increases (decreases) with parental earnings due to a dominant income (substitution) effect. A decline in the ratio of child earnings to parental earnings or a rise in education subsidy rates can increase enrollment ratios and decrease fertility. Under progressive income taxes and favorable education subsidies for poor families, educated parents’ fertility could be higher than that of illiterate parents’ when incomes are low. However, the relationship will be reversed partially because of the rising education subsidy. 

Other Topics

• "Within-development density and housing prices in Singapore," (with  E. Fesselmeyer, and Louisa Poco) Journal of Regional Science (2024), 64(2), pp.406-427. 

Abstract:  This paper measures how much more households pay for less density in their immediate surroundings. Using transaction and administrative data and exploiting the introduction of a regulation that restricted the number of housing units for certain land lots, we find that households discount density: a 10% increase in within‐development density decreases the price per square meter by 5%. Further, the mean price per square meter of the average development increased by 1%–3% after the regulation was introduced, while the amount of built‐up space remained constant. The increase in total revenue suggests developers may underestimate the externality caused by density. 

• "Declining discount rates in Singapore's market for privately developed apartments,"   (with E. Fesselmeyer and A. Salvo) Journal of Applied Econometrics (2021), 37(2), pp.330-350. 

Abstract: Singapore's market for new privately developed apartments exhibits wide quasi‐experimental variation in ownership tenure. We develop an empirical model in which prices are decomposed into the utility of housing services and a factor that shifts with asset tenure and the discount rate schedule, which we discipline to vary smoothly over time. We estimate discount rates that decline over time and, to accommodate the observed price differences, fall to 0.5–1.5% p.a. by year 400. The finding that households making sizable transactions do not entirely discount benefits accruing centuries from today is relevant, with the appropriate risk adjustment, for evaluating climate‐change investments. 

• "Heat impacts college student grades even in rich Singapore," (with Hongyan Li, Alberto Salvo, and Rhita Simorangkir)

Abstract: The rich city-state of Singapore has invested heavily to adapt to its current tropical climate. We access all student-level undergraduate course records between 2005 and 2019 at one of its leading universities and find that even here, fluctuations in heat impact human capital formation. We find that an in-sample shift in de-seasoned weather from the coolest to the hottest semester reduces undergraduates’ semester-long course performance by 1.5%. Using quasi-random variation, we find some evidence that access to dorm air conditioning alleviates part of the impact of ambient heat on student learning. Our study, which is inclusive of routine human behavior, suggests either a practical limit to adaptation or that adaptation can go further. We find larger heat impacts among students from temperate nations pursuing their undergraduate studies at this Asian educational hub, pointing to some scope for acclimatization. Whether through physiology or behavior, male learners are more vulnerable to heat than females.

• "Intentional Bequest Motives and the Choice of Annuity,"  (with Changcheng Song, and Shenghao Zhu)

Abstract:  This paper identifies the intentional bequest motive by exploiting the choices between two compulsory partial annuity plans with committed bequests in Singapore: a lower-bequest higher-payout plan, and a higher-bequest lower-payout plan. About 20% of our sample chose the higher-bequest option, supporting the existence of the intentional bequest motive. The bequest motive is driven by altruism and the joy of giving. Structural estimation and simulation show that people with bequest motives leave 8% – 18% more bequests than those without, which implies that the ratio of the annual inheritance flow to national income is about 10%.

• "How You Pay Drives What You Choose: Health Savings Accounts versus Cash in Health Insurance Plan Choice," (with Jonathan Gruber, Mengyun M Lin, and Junjian Yi)

Abstract: A marked feature of health insurance plan choice is inconsistent choices through the overweighting of premiums relative to out-of-pocket spending. We show that this source of inconsistency disappears when both types of spending come from the same source of designated funds. We focus on the MediSave program in Singapore, whereby residents can pay their health insurance premiums with cash or MediSave funds, but are subject to limits that vary by age and over time. By exploiting variations in those limits, we consistently find that when individuals are able to pay their health insurance premiums with MediSave funds, they are less price sensitive and more willing to enroll in more generous plans—which results in lower spending levels and variance, and lower adverse selection in the market. The results suggest a strong role for mental accounting in insurance decisions.

• "The Economic and Fiscal Impacts of Conscription: Evidence from Taiwan," (with Kamhon Kan, Siddharth George, and Jianing Zhang)

Abstract: This study investigates the economic and fiscal impacts of conscription in Taiwan, focusing on the latest changes in mandatory military service duration based on birth dates. Utilizing data from the Manpower Survey, Manpower Utilization Survey, and National Health Insurance, we analyze the effects on labor market outcomes, education, and earnings. Our findings reveal that conscription at a critical stage of young adults' lives significantly influences their subsequent labor market performance. Regression analysis indicates that males born after 1994 are less likely to serve in the military and more likely to be employed, with a notable positive impact on their earnings. These results contribute to the broader understanding of conscription's role in shaping economic trajectories, highlighting important policy implications for countries considering changes to their military service requirements.