No abstract

, and participants at numerous conferences and seminars for helpful comments. Masao Fukui, Rafael C. Araujo, and Cecilie Øiulfstad provided outstanding research assistance. Simsek acknowledges support from the National Science Foundation (NSF) under Grant Number SES-1455319. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the NSF or the National Bureau of Economic Research. Iachan acknowledges that this study was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior-Brasil (CAPES)-Finance Code 001. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

No abstract

We employ a density discontinuity design to evaluate the deterrence effect of more severe punishments around the legal age of criminal responsibility in Brazil. Motivated by the criminology literature, we propose a novel proxy based on the inherent risk underlying criminal activities. Using violent death rates as a proxy for an individual's involvement in violent crime, we find no discernible deterrence effects. We additionally study arrest data from the country's third most populous state, Rio de Janeiro, and discuss the advantages of our proxy in light of potential underreporting biases from using criminal records.

Financial innovation in recent decades has expanded portfolio choice. We investigate how greater choice affects investors’ savings and asset returns. We establish a choice channel by which greater portfolio choice increases investors’ savings—by enabling them to earn the aggregate risk premium or take speculative positions. In equilibrium, portfolio customization (access to risky assets beyond the market portfolio) reduces the risk-free rate. Participation (access to the market portfolio) reduces the risk premium but typically increases the risk-free rate. Empirically, stock market participants in the United States save more than nonparticipants and have increasingly dispersed portfolio returns, consistent with the choice channel. (JEL E21, G11, G12, G51)