© Jesse Rothstein 2024
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Journal of Financial Economics 164.
Read the supplementary materials, access the replication archive, or link to the journal page.
Rising interest rates can create “mortgage rate lock” for homeowners with fixed rate mortgages, who can hold onto their low rates as long as they stay in their homes but would have to take on new mortgages with higher rates if they moved. We show mobility rates fell in 2022 and 2023 for homeowners with mortgages, as market rates rose. We observe both absolute declines and declines relative to homeowners without mortgages, who are unaffected by mortgage rate lock. Mobility declines are not explained by changes in home values. Overall, our estimates imply that rising interest rates reduced mobility in 2022 and 2023 for households with mortgages by 16% and caused $20bn of deadweight loss.
Behavioural Public Policy 8(3).
Read the pre-publication version or policy brief (with Samantha Fu and Elizabeth Linos).
As US college costs continue to rise, governments and institutions have quadrupled financial aid. Yet, the administrative process of receiving financial aid remains complex, raising costs for families and deterring students from enrolling. In two large-scale field experiments (N = 265,570), we test the impact of nudging high-school seniors in California to register for state scholarships. We find that simplifying communication and affirming belonging each significantly increase registrations, by 9% and 11%, respectively. Yet, these nudges do not impact the final step of the financial aid process – receiving the scholarship. In contrast, a simplified letter that affirms belonging while also making comparable cost calculations more salient significantly impacts college choice, increasing enrollment in the lowest net cost option by 10.4%. Our findings suggest that different nudges are likely to address different types of administrative burdens, and their combination may be the most effective way to shift educational outcomes.
Industrial and Labor Relations Review 76 (2).
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The authors use de-identified data from California personal income tax returns to measure the frequency and nature of independent contracting and self-employment in California. They identify this work by the presence of a Schedule C on the tax return and/or the receipt of a Form 1099 information return. The authors estimate that 14.4% of California workers aged 18 to 64 in tax year 2016 had some independent contracting or self-employment income and approximately half of this subgroup also had earnings from traditional W-2 jobs during the year. Only a small share (1.4%) of workers had earnings from online labor platforms (often called gig work). Workers with low earnings were significantly more likely to earn independent contracting or self-employment income and to rely primarily or exclusively on that income. The article explores the characteristics of workers engaging in independent contracting and self-employment and their distribution across family type, geography, and industry.
American Economic Journal: Economic Policy 14(4).
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The Earned Income Tax Credit distributes more than $60 billion to over 20 million low-income families annually. Nevertheless, an estimated one-fifth of eligible households do not claim it. We ran six preregistered, large-scale field experiments with 1 million observations to test whether “nudges” could increase EITC take-up. Despite varying the content, design, messenger, and mode of our messages, we find no evidence that they affected households’ likelihood of filing a tax return or claiming the credit. We conclude that even the most behaviorally informed low-touch outreach efforts cannot overcome the barriers faced by low-income households who do not file returns.
Economics of Education Review 89.
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A subset of undergraduate applicants to the University of California, Berkeley were invited to submit letters of recommendation as part of their applications. I use scraped text of the submitted letters, natural language processing tools, and a within-subject experimental design wherein applications were read in parallel with and without their letters to understand the role that this qualitative information plays in admissions. I show that letters written on behalf of underrepresented applicants were modestly distinctive. I also construct an index of letter strength, measuring the predicted impact of the letter on the student’s application score. I show that underrepresented applicants tend to get weaker letters, but that readers pay less attention to letter strength for underrepresented students. Overall, the inclusion of letters modestly improved application outcomes for the average underrepresented student.
© Jesse Rothstein 2024
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Website design & development by MIGHTYminnow.