Lec12-Expected_Utility_Theory_Abortion

Lec12-Expected_Utility_Theory_Abortion - Lecture Note 12:...

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Lecture Note 12: An Application of Expected Utility Theory — The Demand for Abortion David Autor 14.03, Applied Microeconomic Theory and Public Policy, Fall 2005 1 TeenMotherhoodandAbort ionAccess :Context Question of the Kane and Staiger paper: What is the impact of limiting access to abortion on the frequency (rate) of teen motherhood? This question may seem too obvious to ask. There are only three possible answers (more births, fewer births, or no change) — and most people are quite sure they know which is correct. That’s partly what makes it a good paper. Why is this an interesting question: 1. Up until 1992, teen birthrates were rising, especially out of wedlock. (See K-S, Figure I) 2. Simultaneously, there had been substantial reductions in abortion access (decline in providers, increase in legal and social impediments) since passage of Roe v. Wade in 1973. (See K-S, Figure III) Hence, a great testable hypothesis: Reductions in abortion availability explain rise in teen birth rates. (Note: To many the question is already answered just by looking at the f gures. Students in 14.03 would not be so naive.) Howdoweeva luatethecausa lquest ion? 1. Cross-sectional: Correlate teen birth rates with abortion access by city/state/county. How do you interpret this? Places that don’t have access have low birth rates. This could just re F ect ‘strict attitudes’ that limit teen behavior and the availability of clinics. 1
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Places that don’t have access have high birth rates. Could be causal. But could re f ect the local social norms, e.g., Mormons choose to have high fertility and do not condone abortion. 2. Changes over time: Observe changes in teen births when abortion providers come and go. This implicitly removes the part of variation due to stable attitudes or norms that a f ect birth rates and are constant. Can think of this as a simple di f -in-di f model: comparing changes in birth rates in counties that had a reduction in abortion access to counties that did not. Of course, if norms and access move together, does not solve the causality problem. Hence, look for sharp changes in access and see if they result in changes in births. 1.1 Seems straightfoward — so why write a model? Why use a model? Clari F es thinking, removes cobwebs from brain. Makes clear the implicit assumptions that we bring to the analysis. Mostpeop lea lreadyhaveamode linp lace ,theyjustdon ’tknowit . What is the basic editorial page assumption about the impact of abortion availability on birth rates? Most likely: restrictions on abortion increase birth rates. What is the key assumption built into this model? Pregnancy is “exogenous,” i.e., predetermined or immutable. Or at a minimum, people don’t take into account availability of abortion when making decisions about sexual activity or contraception.
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Lec12-Expected_Utility_Theory_Abortion - Lecture Note 12:...

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