Consumer Economic Behavior and the Role of Information: Three Case Studies

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Date

2014-10-13

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Publisher

Virginia Tech

Abstract

The economics of information is a relatively new and important field of economics. This dissertation analyzes the role of information in three case studies within three different branches of economics: health economics, environmental economics, and finance and banking. First I analyze parental nutritional label usage and its effect of children's dietary outcomes (i.e. Health Eating Index and Body Mass Index). I show that parental usage of nutritional labels is associated with a better quality of their children's diet as well as an overall improvement in their health as measured by their Body Mass Index. Secondly, I study the behavioral effect of length of residency on water demand in the arid cities of Reno and Sparks in Nevada. In this case, I observe that social interaction among households affects their water usage. In particular, newcomers' watering behaviors are influenced by the prevailing social norms among neighbors that have lived in the arid area for a longer period of time. Finally, I compare the performance of local versus larger national and regional lending institutions in the years leading to the 2007 mortgage crisis. I find that local or community lenders have a significantly lower foreclosure rate during these years. Local lenders presumably base their origination decisions on an interpersonal relationship with their customers. This provides them with information that is not contained within the standard risk metrics generally used in loan applications. I discuss the policy implications of these results for each case study.

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Keywords

information, nutritional label, social norms, length of residency, community lenders

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