Who commits crime? Theoretically, risk tolerant and impatient people are more likely to commit crime because they care less about the risks of apprehension and punishment. By linking experimental data on risk tolerance and impatience of young men to administrative crime records, we find empirical support for this hypothesis. For example, crime rates are 8-10 pp. higher for the most risk tolerant people compared to the most risk averse. A theoretical implication is that those who are most prone to commit crime are also those who are least responsive to stricter law enforcement. Risk tolerance and impatience significantly predict property crime while self-control is a stronger predictor of crimes of passion (violent, drug, and sexual offenses).
We link survey data on Danish people’s perceived income positions and fairness views on inequality within various reference groups to administrative records on their reference groups, income histories, and life events. People are, on average, well-informed about the income levels of their reference groups. Yet, lower-ranked respondents in all groups tend to overestimate their own position among others because they believe others’ incomes are lower than is the case, while the opposite holds for higher-ranked respondents. Misperceptions of positions in reference groups relate to proximity to other individuals, transparency norms, and visible signals of income. People view inequalities within their co-workers and education groups as significantly more unfair than overall inequality, yet underestimate inequality the most exactly within these groups. Views on the fairness of inequalities are strongly correlated with an individual’s current position, move with shocks like unemployment or promotions, and change when experimentally showing people their actual positions. However, the higher perceived unfairness of income differences within co-workers and education groups stays unchanged. The theoretical framework shows that this can have important implications for redistribution policy.
Field of Study and Financial Problems: How Economics Reduces the Risk of Default
The Review of Financial Studies, 2023, 36(11), pp. 4677-4711
[Djøfbladet (in Danish)]
This paper documents how extensive economic education can reduce the risk of getting into financial trouble by comparing people who enter business and economics programs with people who enter other higher education programs. To identify the causal effect, I exploit GPA admission thresholds that quasi-randomize applicants near the thresholds into different higher education programs. I find that admission to an economics program reduces the probability of loan default and delinquency by one half. This large reduction is associated with changes in financial behavior, but it is not associated with differences in the level or stability of people’s income.