Working Papers

Money to Burn: Crowdfunding Wildfire Recovery with Tony Cookson & Philip Mulder (R&R at Journal of Finance)

Person-to-person charity has grown substantially in recent years, yet little is known about who benefits from it. This paper uses micro data on crowdfunding campaigns after a major wildfire to ask whether donors give according to the comparative needs of beneficiaries. Linking to personal financial data and holding losses fixed, we find that beneficiaries in the top-tercile of the income distribution receive 25% more support and are more likely to have a campaign than beneficiaries with incomes in the bottom-tercile. As we document, high-income beneficiaries possess several network advantages when soliciting crowdfunding. Conditional on income and losses, more crowdfunding is associated with faster recovery. Nationally, crowdfunding campaigns raise more contributions in higher-income and more economically connected zipcodes. These findings imply that crowdfunded private charity likely exacerbates income inequalities in the recovery process.

Coverage Neglect in Homeowners Insurance with Tony Cookson & Philip Mulder  (formally "Shopping for Underinsurance") 

Most homeowners do not have enough insurance coverage to rebuild their house after a total loss. Using contract-level data from 24 homeowners insurance companies in Colorado, we show wide differences in average underinsurance across insurers that persist conditional on policyholder characteristics. Underinsurance matters for disaster recovery. Across households that lost homes to a major wildfire, each 10 p.p. increase in underinsurance reduces the likelihood of filing a rebuilding permit within a year by 4 p.p.. To understand why consumers purchase underinsured policies, we build a discrete choice insurance demand model. The results suggest that policyholders treat insurers that write less coverage as if they set lower premiums, forgoing options to get more coverage at the same premium from other insurers -- a pattern we call coverage neglect. Our findings suggest that coverage limits are either not salient to consumers or difficult to estimate without the input of insurance agents. Under a counterfactual without coverage neglect, consumer surplus increases by $290 per year, or 10% of annual premiums, on average.

Works in Progress

For a list of works in progress, see: Curriculum vitae (CV)