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Title: Three essays on the economic theory of self-control
Author: Doubrovina, Alla
Awarding Body: University of Edinburgh
Current Institution: University of Edinburgh
Date of Award: 2011
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The prevalence of obesity in the developed world has more than doubled over the last 30 years with disproportionate burden of weight falling on the lower income groups. In our first chapter, we argue that advances in food technology, which have made food abundant, available and cheap, have also made obesity a problem of self-control. We then develop a model of self-control which can explain the inverse socioeconomic gradient of obesity. We argue that whereas the payoffs to simple temptations of palatable foods are independent of income, people's underlying wellbeing, such as the utility of their everyday 'sensible' life, is increasing in income. This implies that the relative payoffs to the temptations of energy-rich, palatable food, compared to the underlying wellbeing, may be higher for lower income groups, which reduces their incentive to exercise self-control, and leads to higher rates of obesity. Our model is based on the premise that people can make systematic mistakes, which we represent through introduction of a second myopic self. Further, the propensity for systematic mistakes is endogenously determined. Based on evidence from psychology, we argue that exercise of self-control is costly in the short run, but increases the stock of willpower and so reduces the propensity for systematic mistakes in the long run. Incorporating the short-term vs. long term dynamics of willpower and allowing individuals to endogenously affect their self-control ability is the secondary objective of the chapter. In the second chapter, we develop a model of job autonomy, human capital and self-control which aims to explain the effect of different types of occupations on selfcontrol outcomes, which is distinct from the pure income effect of wages. Jobs differ in the degree of autonomy placed on the worker. We argue that successful performance in autonomous jobs requires the kind of human capital, acquiring which demands exercise of self-control in the first place. Accumulating such human capital then has spill-over effects on individual's level of willpower in other areas of his life. We show that an increase in the degree of job autonomy in fact increases the steady state levels of willpower, self-control and human capital. Increasing the return to human capital has a similar effect. We also find an upper bound for marginal cost of self-control for which a small increase in autonomy increases agents' experienced welfare in steady state. In the third chapter, we re-visit the hyperbolic discounting view of self-control by extending the Benabou and Tirole's "Willpower and Personal Rules", (2004), model to explore intergenerational links in self-control outcomes. Benabou and Tirole build a selfsignaling model of personal rules based on self-reputation, in which people are uncertain about their underlying willpower type but can infer it from their own past actions. However, in equilibrium of their model, full spectrum of self-control outcomes can be achieved depending on agents' initial beliefs, which remain exogenous. In this chapter, we put their self-signaling model in the dynamic overlapping generations context, which provides a mechanism for the formation of initial beliefs and generates heterogeneous behaviour among agents of the same type driven by different parental choices. We show that, conditional on type, children of parents who exercised more self-control during their lifetime, have higher self-confidence, exercise more self-control themselves and are at least ex ante better off. We find that this heterogeneity persists from two to infinite generations set-up with the long run fraction of population exercising self-control being lower with the influence of parental behaviour than without. Introduction of parental altruism retains the heterogeneity of children's behaviour but also induces parents to exercise more self-control, especially when observed by children in later stages of their life.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available