Four essays on applied economics

This doctoral thesis is based on four essays on applied economics. Although the topics differ across the essays which constitute the chapters of the thesis, they all utilize market or survey data to understand the economic effects of the related agents by means of econometric analysis. In particular, the first chapter is about the public opinion views on immigrants’ contribution to the local economy, more specifically about the effect of TV exposure on these views. The second chapter finds that financial analysts’ optimistic bias tends to grow in proportion to the media coverage of corporate social irresponsibility conducts. In the third chapter, the effect of eudainomic wellbeing (sense of life) on life expectancy and mortality are examined. Finally, the last chapter quantifies the merit order effects of wind and river type hydro generations on average day-ahead electricity prices in Turkey. The first chapter Public opinion views on immigrants’ contribution to the local economy: the role of TV exposure, published in Italian Economic Journal and co-authored with Leonardo Becchetti, investigates the nexus between TV watching and the general public opinion about the impact of immigrants on the economies of destination countries using evidence from the European Social Survey. We find, as expected, that low skilled workers and less educated respondents have a more negative view, likely due to the stronger competition threat they suffer from immigrants. Second, and more surprising, time spent watching TV gives a strong and significant contribution to the negative opinions on the role of immigrants. Over-representation of negative events involving migrants and lack of migrants voice on TV are two likely rationales consistent with our findings. For a robustness check, we also use physical activity of the respondents as an instrument for TV watching and our findings do not change. The second chapter Media coverage, corporate social irresponsibility conduct, and financial analysts’ performance, accepted in Corporate Social Responsibility and Environmental Management journal and co-authored with Leonardo Becchetti and Stefano Manfredonia, examines how financial analysts respond to public information about corporate social irresponsibility conduct. Exploiting a novel dataset on environmental, social, and governance reputational risk rating based on media coverage and analyzing a sample of 667 public corporations over an 11-year period, we find that analysts’ optimistic bias tends to grow in proportion to media coverage of corporate social irresponsibility conduct. To deal with the endogeneity issue, we propose as instrumental variable, the Euclidean distance from the Canadian border. The results are robust to the use of different measures of the independent and dependent variables as well as an alternative instrumental variable approach. We also show that over-optimistic bias is larger when information asymmetries are stronger. Our findings are in line with the rational over-optimistic behaviour hypothesis and have important implications for market efficiency. The third chapter Eudaimonic wellbeing and life expectancy, co-authored with Leonardo Becchetti and Fabio Pisani, investigates the relationship between eudaimonic wellbeing and subjective survival probability (SSP), a proxy of self-assessed life expectancy. We find a robust and strong positive relationship after controlling for self-assessed health, coupled with a negative effect of sense of life on mortality. The magnitude of the first effect is relevant since the minimum difference between individuals declaring the highest versus the lowest sense of life is a 16-point higher self-assessed probability of being alive at the target age. The combination of our two main findings implies that when respondents declare a high sense of life they attribute to themselves lower mortality risk and their prediction is correct. In conclusion, active ageing policies with the reinforcement of life sense of the elders can have very useful effects on their survival. Finally, the fourth chapter The merit order effect of wind and river type hydroelectricity generation on Turkish electricity prices, published in Energy Policy and coauthored by Orhun Selcuk and Seyit Ali Dastan, explores the effects of wind and river type hydro generations on electricity prices. The environmental concerns and dependency on gas imports push Turkish policy makers to find ways of increasing the share of renewable sources in electricity generation. Providing incentives for renewable energy in the form of feed-in-tariffs is one of the measures to achieve this goal. Basing on the data of Turkish electricity market operator, we quantified the magnitude of the price effects of wind and river type hydro generations on hourly average of day-ahead prices. We find that wind and river type hydro plants reduced the spot electricity prices during the period of 2012-2017, and despite these resources get the same incentives, their impacts on the spot prices and price volatility are different: this can be useful for a more comprehensive cost benefit analysis aimed at differentiating incentive schemes. The chapter also discusses possible underlying reasons of these different impacts such as high seasonality of hydro generation and volatility of wind generation. Finally, we show that, assuming more than 75% of the price reductions were reflected into the consumer prices in Turkey, the net impact of wind and river type hydro generation on final consumer prices would be negative. This finding contributes to the discussions on renewable energy incentive mechanisms.

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