This thesis is composed of three essays, one in Choice Theory (Chapter 1) and two in Social Choice Theory (Chapters 2 and 3). All chapters consider situations where an issue has arisen with a number of alternative ways to deal with it, and some individual (henceforth, some choice correspondence) needs to choose one, or more, of these alternatives in order to deal with this situation.
In Chapter 1, we are interested in choice correspondences that satisfy some of the following properties: two versions of the independence of irrelevant alternatives (IIA and WIIA), as well as the weak axiom of revealed preference (WARP). Loosely speaking, we show that combinations of these properties can partially or completely determine the choice correspondences satisfying said properties.
In Chapters 2 and 3 choice made by the choice correspondence must be according to the preferences of a group of agents. Specifically, we are interested in choice correspondences satisfying some of the following properties.
- In Chapter 2: Pareto efficiency, population-monotonicity, and replacement domination.
- In Chapter 3: Pareto efficiency, strategy-proofness, and anonymity.
Loosely speaking, we show that combinations of these properties characterize target set correspondences (Chapter 2) and generalized median correspondences (Chapter 3).
This thesis consists of three research papers, with household finance as common topic. The first paper studies a lifetime combination of financial, work and health-related decisions made by households. The results, obtained from a dynamic life cycle model of allocations and welfare, show that households' lifetime decisions are challenging to match, even after accounting for the complex interactions between them. Whereas financial savings and pension claims are both well matched, the model overestimates health levels, and consequently life expectancy. Moreover, health is maintained through more spending, and less leisure than currently observed. As a consequence, observed post-retirement income is higher than expected, and explains the divergence in consumption after 65. The second part analyzes the homeowners' life cycle responses to financial, health and real estate shocks. After successfully matching the US households life cycle data using a unique structural life cycle model, the results show that asset rebalancing and time allocation decisions are shock-dependent. Unsurprisingly, shocks decrease the net worth and postpone the full retirement age, but in different magnitudes. Notice that when the shock is a real estate market collapse, the life cycle impact is bigger. Finally, the third research paper examines the impacts of conventional (i.e. man-made law) and Islamic (i.e. Sharia rules) financial literacies on the Pakistani households participation in the formal and informal financial sectors. Based on a statistical model, the results highlight that the conventional financial literacy positively and strongly affects the use of formal financial services, while the Islamic financial literacy has a weaker positive impact. Therefore, financial literacy programs could be a way to reduce financial exclusion.
Along the life-cycle, individuals go through a series of important events and turning-points that determine their health characteristics and trajectories, and shape their economic and social well-being. This thesis is about applying economic analysis and tools to understand how some of these turning-points affect one’s health and health behaviors. The three important events that I consider in my thesis are birth, schooling and retirement.
I show in the first chapter of my thesis that children born in Malawi in a year in which their mother experienced a negative economic shock had poorer subjective and objective health outcomes later in life. The second chapter looks at the effects of education on technology use and adoption among older adults in Europe. I show that persons who acquired more education due to a compulsory schooling reform are more likely to use the Internet and to have better computer skills later in life. The third paper of my thesis uses social security eligibility ages as instruments for retirement in econometric models for physical activity and longitudinal data from the USA. I find that retirement causes older persons to engage in more physical activity, especially among highly educated and wealthy individuals. Finally, the last chapter of my thesis highlights potential reporting heterogeneity in subjective survey measures based on Visual Analogue Scale (VAS) and cautions regarding the use of subjective measures in empirical studies for drawing conclusions on how health, health behaviors and well-being change over the life-cycle.
Along the life-cycle, individuals experience a series of major events that shape their health and ability to engage in economic and social activities. Understanding the effects of these events on individual’s life requires objective measures that are comparable across individuals. My thesis shows that health and health behaviors can be influenced by non-health-related causes occurring throughout life, such as economic shocks at birth, education and retirement. My thesis therefore identifies some of the events that causally determine health and contributes to the current understanding on how health evolves along the life-cycle.