Essays in consumption, behavioral and applied microeconomics

This dissertation consists of three self-contained chapters which broadly address issues related to individual and household decision making. The first essay investigates household budgeting and cash flow management decisions. Specifically, I focus on household consumption decisions when there is a mismatch between the frequency at which their income (pay) arrives and the frequency for which they make their consumption decisions. Exploiting monthly variation in income arising from bi-weekly pay schedules, I find that household expenditures respond significantly to such variation with the response coming almost entirely from durables. These responses cannot be explained by the presence of binding liquidity constraints. I consider several behavioral explanations including time inconsistency with sophistication, mental accounting, and a new model of budgeting heuristics in which individuals naively extrapolate their current income into the future. The second essay, joint with Judd Kessler and Katherine Milkman, explores public recognition in a charitable giving context and provides new empirical evidence on how public recognition can increase pro-social behavior. Using observational data on alumni giving to a large university, we find that the enactment of recognition programs for consecutive giving increased both the probability of giving and the dollar amount donated directly to the University. Furthermore, such recognition crowded in donations to other University priorities. Exploiting differences in the timing of various recognition programs, we find that while individual value public recognition generally, they value recognition more so when such recognition can be used to convey information regarding personal traits of the donor. Finally, the third essay, joint with Jeremy Tobacman, examines the determinants of intrinsic motivation. While intrinsic motivation has important applications in many areas, it is often difficult to separate intrinsic motivation from extrinsic motivation due to potential correlation between pecuniary and non-pecuniary incentives. Using an online word-hunting game, we isolate the role of performance as a source of intrinsic motivation and study how past performance affects an individual\u27s persistence of play. Using individual variation in the ability to exploit the presence of prefixes and suffixes, we estimate the causal effect of past performance on the length of a game spell (continued play) and the probability of ending a spell. We find that higher past performance significantly increases spell length and significantly decreases the probability of a spell ending