TWO ESSAYS ON HOUSEHOLD FINANCE

Abstract

This thesis consists of two essays on household finance. The first essay investigates the effect of stock market fluctuations on workplace inattention, using administrative data from a large Chinese hospital. Following a one-standard-deviation increase in market volatility in the morning, patients in the same-day afternoon are 2.8% more likely to pay a second visit and switch to an alternative doctor. Doctors also provide shorter consultations and are more likely to prescribe medication without performing diagnostics tests after experiencing a volatile market. The second essay investigates how mortgagors respond to an unexpected interest rate cut (by 230 bps) that reduces mortgage payments and thereby generates positive disposable-income shocks. Based on a representative sample of credit card holders from a leading Chinese commercial bank, the difference-in-differences analysis shows that mortgagors increased their monthly credit card spending by 8.6% after the policy announcement, implying a marginal propensity to consume of 0.41-0.54.