Three Essays in Economics: Recidivism, Economic Decision Making, and Biases in Beliefs

My dissertation covers topics in the economics of crime and the interesction between behavioral and development economics. The first chapter provides causal evidence that sentencing low-level offenders in the State of Michigan to prison rather than probation lowers their future criminal behavior but only through incapacitation, that is, during the time they spend in prison. We identify two sources of incapacitation: primary, from the original sentence, and secondary, from higher rates of future imprisonment among those who were initially sentenced to prison. The second chapter studies how economic decision making changes along the transition from college to the labor market. By collecting panel data from students in a university in Colombia, we are able to track changes occurring after students who are in their last semester of college receive and accept a job offer, and after they receive a paycheck relative to a comparison group of students who remain in college. We find evidence that students who transition to the labor market are less present-biased, more generous, and report having lower stress about finances and higher access to resources after the job offer. After starting to work and receiving a paycheck, they perform worse on cognitive tasks and report being more worried and frustrated than students in the comparison group. This suggests that there may be greater cognitive load associated with becoming more independent and earning money. We also highlight the role of incorporating phychological measures in experimentally-elicited preference tasks. Even though it seems that last-semester students become less risk averse when receiving and accepting a job offer, this result vanishes when controlling for psychological factors. In the third chapter, we study gender differences in beliefs regarding performance and in the updating process in the developing country context. Students in the sample are enrolled in a test-preparation course to take a high-stakes college entrance exam. They are randomized into receiving or not receiving feedback about their relative ability in the five areas covered by the exam. The findings suggest that there are substantial biases in assessing own ability. Across all areas of the test, between 50 and 70 percent of the students fail to correctly predict the quartile in which their score will be. Moreover, women are more biased and more likely to underestimate their performance in math and overestimate in text analysis relative to men. I show evidence that feedback may help close the gender in gap in confidence as women report being more positive about their chances of admission to this university while the men seem less sure of this outcome.PhDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttps://deepblue.lib.umich.edu/bitstream/2027.42/138594/1/cfrancob_1.pd