JRCPPF congratulates the 13 undergraduate associates class of 2018 who received Bachelor of Arts degrees in Economics, Politics, Computer Science and Psychology. We wish them much success in their future careers.
A requirement for a Bachelor of Arts is The Senior Thesis which provides Princeton students the opportunity to develop their scholarly interest and to evolve as independent thinkers. The students work one-on-one with a faculty member who guides them through the process. Undergraduate Associates of the class of 2018 researched a wide variety of topics in their theses ranging from the effects of quantitative easing, the consequences of local immigration enforcement and police behavior, the impact of unionization, to the effects of creating memory jars. The topics reflect the varied interest of this exceptional group of young thinkers who are soon to embark in careers in finance, public policy, to launch their own startup or to continue their studies in law or PhDs in Economics.
Below we list our graduating seniors, the honors and awards that they receive and the their thesis abstracts.
Undergraduate Associates Class of 2018:
Idir Aitsahalia** (Economics)
Sara Diressova+ (Economics)
Christina Huang***+(Computer Sciences)
Bryce Keller (Economics)
Benjamin Lei (Economics)
Sam Maeglin** (Politics)
Vishan Nigam*** (Economics)
Shriya Sekhsaria***+ (Psychology)
Benjamin Sender***+ (Economics)
Brandon Tan*** (Economics)
Benjamin J. Tso *+ (Economics)
Diego Vives*+ (Economics)
Gavin Zhang**+ (Economics)
*** Highest Honors, ** High Honors, *Honors, +Certificate of Finance
Prizes and award winners:
Edward E. Jones Memorial Prize Awarded to the graduating student whose senior thesis is judged to be the most outstanding work in social psychology, broadly construed.
Winner: Shriya Sekhasaria (Advisor: Emily Pronin)
Halbert White ’72 Prize in Economics: Awarded annually to the most outstanding senior economics major, as evidenced by excellence in departmental coursework, and creativity in the junior papers and senior thesis.
Winner: Brandon Tan (Advisor: Leah Boustan)
Howard Crosby Warren Senior Prize in Psychology
Awarded annually to the senior concentrators in Psychology that are selected by the Department as the most worthy recipients on the basis of scholarly attainment and good character.
Winner: Shriya Sekhasaria (Advisor: Emily Pronin)
John Glover Wilson Memorial Award: The best thesis on international economics or politics.
Winner: Diego Vives (Advisor: Chris Sims)
Undergraduate Research Forum: Awarded annually to the five best senior thesis in economic policy.
Winner: Gavin Zhang (Advisor: Iqbal Zaidi)
Honor Society - Phi Beta Kappa:
Honor Society - Sigma Xi:
Advisor: Jakub Kastl
Low Fares Done Wright: Airline Responses to Low-Cost Entry Following Regulatory Changes
How do the established airlines in the United States respond to competition from low-cost carriers? I investigate the entry of low-cost titan Southwest Airlines into over a dozen nonstop routes from Dallas, Texas in 2014 following the lifting of the Wright Amendment, a legal restriction on flights from Dallas that had previously blocked Southwest from entering many markets dominated by American Airlines and other large legacy carriers. Using 2012-2017 panel data on route-level airfares from the United States Department of Transportation, I run a difference-in-differences analysis of routes affected by the Wright Amendment, with the law’s repeal as an instrument. I estimate that Southwest caused American and the other legacies to lower their fares by 22%, or $62, on average, on routes where Southwest added nonstop flights. This estimated effect was strongest on the most competitive routes and grew for the first two years but then weakened. The entry of Southwest still lowers airfares today, despite the airline’s growing nationwide dominance, and even in markets where the legacies have already responded to competition from ultra-low-cost carriers such as Spirit Airlines.
Advisor: Chris Sims
Vector Autoregressive Modeling of Interest Rate Shocks on Bank Balance Sheets: A Comparative Study
Di Tella and Kurlat (2017) and Drechser et al. (2017a) study the effects of a nominal interest rate shock on various bank balance sheet variables. I study the same relationships using a VAR model, to understand them over multiple periods of time, without assumptions of exogeneity, and with clear interactions between variables through impulse response functions (Hamilton 1994). I find that an increase in the nominal interest rate is associated with a much smaller increase in the rate banks pay on deposits and other expenses. Furthermore, an interest rate shock does not have much effect on bank net worth. This finding is important because previously banks were thought to be very sensitive to interest rate movements through their maturity transformation business model (Drechsler et al., 2017a).
Advisor: Giorgia Barboni
The Effect of An Aging Population on The Labor Force Participation of Women in the United States
The objective of this thesis was to discover how the aging population of women in the United States has affected the overall female labor force participation. Using the Ordinary Least Squares regression model, and controlling for other variables such as race, marital status, the number of children under 5 in the household, region, and education, it was found that the oldest age group measured, 65-79-years-old, had a significant negative impact on the labor force participation. As time went on, and the population share of this age group increased, the negative impact that being in the 65-79-year-old age group has on labor force participation has significantly increased.
Advisor: Kelly Noonan
Population Control in China: The Effect of Regional Variations in One-Child Policy Enforcement on Parental Investment in Children
This paper researches the relationship between child quantity and child quality in China. During the late 20th century, child quantity was significantly impacted by the Chinese one-child policy, which consisted of various regional differences in enforcement strictness. Using the China Health and Nutrition survey for the dataset, the regional variations in the one-child policy are studied. The effects of these variations are evaluated by various forms of parental investment – monetary, health, education, and time. This study contributes to existing literature as previous research has focused mainly on outcomes for child quality and not parental investment. In addition, factors such as regional variation and gender are taken into account for empirical analysis. It is hypothesized that the regional effects will be significant. In addition, increasing child quantity and thus disobeying the one-child policy should lead to decreased parental investment. The results show that this holds true for all four measures of parental investment. More specifically, violating the one-child policy has a greater effect relative to that of just having a larger family. The dependent variable most impacted by changes in child quantity is monetary investment.
Advisor: John Londregan
The Political Economy of Structural Change and Urbanization
How do different governments manage structural change? In this thesis, I build a two-class macroeconomic model in which the movement of labor from rural agriculture to urban manufacturing is driven by the capital accumulation of modernizing elites. Productivity growth results from the spillover effects of the free exchange of ideas in densely populated areas. I argue that elite authoritarian governments, due to their lack of accountability to the greater population, have more leeway to promote growth in channeling working class incomes towards investment above the market equilibrium, but are also more capable of squandering growth by extracting rents from production instead of accumulating further capital. Democratic governments, on the other hand, are more likely to pursue a moderate modernization project, because the worker majority prefers a growth path that preserves their wages. Finally, as workers moves to cities, modernizing elites may promote democratization to preserve an equilibrium growth path versus regime-threatening urban protests.
Advisor: Henrik Kleven
Local Immigration Enforcement and Police Behavior at Traffic Stops: Evidence from the Texas Highway Patrol
U.S. immigration enforcement increasingly relies on coordination with local and state law enforcement, which may induce shifts in day-to-day police behavior. Using data on 17 million traffic stops by the Texas Highway Patrol, I first document an increase in stops and citations of Hispanic drivers during a period of intensifying immigration enforcement, and provide suggestive evidence that increased stops may reflect efforts of pro-enforcement officers to participate indirectly in the deportation process. I then estimate the causal effect of increased enforcement by exploiting the staggered rollout of the Secure Communities program, which requires that county jails identify undocumented immigrants using a federal database. After accounting for smooth trends in Hispanic and white outcomes, triple-difference event study estimates suggest that Secure Communities does not significantly impact stops, searches, or citations of Hispanic drivers. Using a framework inspired by Knowles, Persico and Todd (2001), I show that immigration enforcement may affect stops through both police and driver behavior, but that any driver response should be small. I conclude that Secure Communities has little to no effect on the traffic stop behavior of the average state police officer.
Advisor: Emily Pronin
Let’s Start with Forever: Counterintuitive effects of writing and reading own and others’ memories
This thesis aims to investigate the effects of creating and reading memory jars – virtual or physical jars filled with memories, moments, and experiences in a person’s life – on affect, loneliness, and psychological well being. While previous research ties reminiscence to a variety of benefits such as increased happiness and social connection, research about narrative reminiscence and reminiscence using non-autobiographical memories, particularly those belonging to unknown others, remains limited. Study 1 shows that creating jars for oneself and then reading either one’s own or an unknown classmate’s memory jar a month later makes Princeton University seniors feel happier. Study 2 replicates Study 1 with senior citizens in assisted living and shows that creating jars for the self and then reading either one’s own or an unknown resident’s memory jar a week later makes residents feel happier, less lonely, more in control of their environment, and as though their lives are more meaningful with more positive relations. Implications for using unknown others’ memories and stories as a tool for reminiscence, including strategies for a business focused on memory jars, are discussed.
Advisor: Harold T. Shapiro
Predicting the Accuracy of Earnings Forecasts Using Machine Learning
Previous studies present models that predict the accuracy of earnings forecasts and provide evidence consistent with investors using these models when evaluating forecasts. In this study I mirror the framework of past studies but take a machine learning approach to predicting forecast accuracy. I evaluate the out-of-sample performance of random forest, neural network and k-nearest neighbors compared to linear regression. I find random forest and neural network have modestly stronger out-of-sample predictive performance than linear regression for annual and quarterly earnings periods. Then, I test whether the accuracy predictions from these models help explain investor reactions to forecasts. I find the predictions from each model help explain investor reactions to forecasts – consistent with the intuition that investors use these models when predicting forecast accuracy.
Brandon Joel Tan
Advisor: Professor Leah Boustan
The Impact of Unionization on Industry Adoption of Labor Saving Technologies: A Machine Learning Approach
Innovation and the adoption of new technologies create value, bring about greater efficiency, and are key drivers of growth and productivity for the industries of the American economy. This paper seeks to examine the impact industry unionization has on the adoption of new labor saving technologies, specifically the transfer machine technology which was a key labor saving innovation in the first wave of automation since the mid 19th century. I develop a novel machine learning approach to classify United States patents which cite the original transfer machine patents by their respective industries of application. I then construct measures of both the extent and the speed of diffusion of these patents into a given industry. Following, I utilize both duration and time series analysis to conclude that greater industry unionization is significantly negatively associated with the adoption of the labor saving transfer machine technology.
Benjamin J. Tso
Advisor: Nobuhiro Kiyotaki
Investigating Abe’s Third Arrow: The Effect of Japanese Corporate Governance on Firm-Level TFP and Company Performance
In response to a two-decade period of deflationary pressures and economic stagnation, Japanese Prime Minister Shinzo Abe has pushed for significant economic changes. Among his three arrows of fiscal stimulus, expansionary monetary policy, and structural reform, the third arrow of structural reform, which focuses on corporate governance, appears to be the most compelling. Japan has a long history of cross-shareholdings in which conglomerate networks of companies hinder the efficient allocation of resources. Additionally, compared to all other G7 countries, Japanese companies hoard cash and cash equivalents at the highest rate. With this in mind, the main purpose of this paper is to quantify the relationship between corporate governance (specifically cash-hoarding) and firm-level TFP. As a supplementary topic, this paper explores if corporate governance has an impact on company performance. To accomplish this task, this paper first constructs firm-level TFP presuming a Cobb-Douglas production function with time and firm-fixed effects. Then, this paper employs a series of panel regressions, using data between 1987 and 2016, in which the manufacturing and non-manufacturing sectors are analyzed separately. Results indicate that cash-hoarding, measured by cash to interest expense and cash to asset ratios, had a negative impact on TFP in both manufacturing and non-manufacturing firms. Additionally, relationships with main banks had a negative relationship, though small in magnitude, with TFP in both sectors. This is the first paper to conclude that indicators of corporate governance influence firm-level productivity in Japan. Supplementary results suggest that cash-hoarding had a positive relationship with ROA in manufacturing firms but a negative relationship with gross margin in non-manufacturing firms.