Essays on the Economics of Health and Risky Behavior

As Forrest Gump has ever eloquently pointed out: stupid is as stupid does. It turns out that most people engage in behavior that could reasonably be considered stupid, or at least risky. People overeat, chain-smoke cigarettes, drink excessively, consume harmful drugs, and drive too fast; if worst comes to worst they do some of these things simultaneously. This work evaluates three policy measures that are designed to promote health and less risky behavior: I evaluate the effects of penalties for speeding transgressions on future driving behavior, the effects of low emission zones on infant health and air pollution, and the effects of post-and-hold laws on alcohol consumption. Hence, this dissertation consists of three chapters:;Chapter 1: "Speeding, Punishment, and Recidivism---Evidence from a Regression Discontinuity Design" The first paper estimates the effects of temporary driver's license suspensions on driving behavior. A little known rule in the German traffic penalty catalogue maintains that drivers who commit a series of speeding transgressions within 365 days should have their license suspended for one month. My fuzzy regression discontinuity design exploits the quasi-random assignment of license suspensions caused by the 365-day cutoff and shows that 1-month license suspensions lower the probability of recidivating within a year by 20 percent. This effect is not driven by incapacitation and indicates that temporary license suspensions are an effective tool in preventing traffic transgressions.;Chapter 2: "More Than Hot Air? Low Emission Zones, Air Pollution, and Infant Health" The second paper investigates the effect of low emission zones on birth outcomes and air quality in Germany. The staggered introduction of the policy measure creates a credible natural experiment and a natural control group for births and air pollution measurements in cities that enact low emission zones. I show that the introduction of the most restrictive type of low emission zone decreases average levels of fine particulate matter by about 5 percent. However, these reductions are too small to translate into significant improvements in infant health. My results are not driven by changes in maternal or city specific characteristics, and are robust to variations in specification and to the choice of control group.;Chapter 3: "The Effect of Post-and-Hold Laws on Alcohol Consumption" (co-authored with Henry Saffer) The third paper estimates the effects of post-and-hold laws on alcohol consumption. Post-and-hold laws require alcohol wholesalers to provide a list of prices to the state, which can be reviewed by retailers, competitors and the public. These laws were generally enacted at the end of prohibition with the intention of limiting alcohol consumption by raising prices. The laws may also have the unintended consequence of protecting small retailers. Recently, several large retailers have argued in court that these laws are counter to the Sherman Act, which limits anti-competitive behavior. This paper follows the recent paper by Cooper and Wright (2012) and adds new data and new empirical specifications. The estimation results provide no persuasive evidence of an effect of post-and-hold laws on the consumption of either total ethanol, wine, or spirits. There is evidence of a small effect of beer post-and-hold laws on beer consumption. One possible explanation of this generally null effect is that the wholesale markets for alcohol are so highly regulated that post-and-hold laws have no marginal effect. The empirical results presented in this paper do support alcohol excise taxes as effective means of reducing alcohol consumption.