Research

Published/Forthcoming Papers:  

The Welfare and Distributional Effects of Fiscal Volatility: a Quantitative Evaluation [Publisher] (with Ruediger Bachmann, Jinhui Bai, and Fudong Zhang), Review of Economic Dynamics, forthcoming. 

Forced Retirement Risk and Portfolio Choice [Publisher] (with Guodong Chen and Tong-yob Nam), Journal of Empirical Finance, 58, September 2020.

Heterogeneity in Expectations, Risk Tolerance, and Household Stock Shares [Publisher] (with John Ameriks, Gabor Kezdi, and Matthew D. Shapiro), Journal of Business & Economic Statistics, 38 (3), June 2020.   

Older Americans Would Work Longer If Jobs Were Flexible [Publisher] (with John Ameriks, Joseph Briggs, Andrew Caplin, Matthew D. Shapiro, and Christopher Tonetti), American Economic Journal: Macroeconomics, 12 (1), January 2020. 

Working Papers:  

Portfolio Allocation over Life-Cycle with Multiple Late-in-Life Saving Motives [PDF], under revision for the Journal of Banking and Finance 

Abstract: 
Older households face health-related risks, including risk of being in need of long-term care and mortality risk.  How these risks affect financial portfolio choice of households depends on household preferences for long-term care and bequest. Using linked survey-administrative data on clients of a mutual fund company, this paper finds that the desire to have enough resources for long-term care and bequests are overall strong but also heterogeneous across households.  The estimated relationship between actual stock share of households and the strength of these preferences is qualitatively similar but quantitatively much weaker compared to the predictions from the life-cycle model with the estimated preference heterogeneity.  Based on the predictions from the model, this paper discusses what financial instruments would better meet the needs of households. 

The Wealth of Wealthholders [PDF] (with John Ameriks, Andrew Caplin, Matthew D. Shapiro, and Christopher Tonetti), Vanguard Research Initiative Working Paper and NBER Working Paper 20972.

Abstract: 
This paper introduces the Vanguard Research Initiative (VRI), a new panel survey of wealthholders designed to yield high-quality measurements of a large sample of older Americans who arrive at retirement with significant financial assets. The VRI links survey data with a variety of administrative data from Vanguard. The survey features an account-by-account approach to asset measurement and a real-time feedback and correction mechanism that are shown to be highly successful in eliciting accurate measures of wealth. Specifically, the VRI data reflect unbiased and precise estimates of wealth when compared to administrative account data. The VRI sample has characteristics similar to populations meeting analogous wealth and Internet access eligibility conditions in the Health and Retirement Study (HRS) and Survey of Consumer Finances (SCF). To illustrate the value of the VRI, the paper shows that the relationship between wealth and expected retirement date is very different in the VRI than in the HRS and SCF—mainly because those surveys have so few observations where wealth levels are high enough to finance substantial consumption during retirement.


Research in Progress: 

Nursing Homes in Equilibrium: Implications for Long-term Care Policies (with Tatyana Koreshkova)

Abstract: 
Nearly a third of elderly Americans will have a long-term stay in a nursing home over their lives; half will enter as private payers.  The objective of this paper is to understand the effects of public policies on the nursing home entrance decision, associated long-term care costs, and individual welfare in general equilibrium.  The novelty of our approach is to analyze the demand for nursing homes in an environment with endogenous supply of nursing home services. On the supply side, nursing homes decide the quality of service, out-of-pocket price, supply and allocation of beds between privately-paid and Medicaid residents, subject to the industry regulations. On the demand side, individuals, heterogeneous in health, wealth and access to alternative care, make a nursing-home entry decision.  Selection into the nursing home, quality and quantity of beds and their private and social costs are jointly determined in equilibrium. The model generates nursing home use patterns across demographic groups that are consistent with the data. In the dynamic version of the model, we examine strategic behaviors arising on both sides of the market: while Medicaid induces individuals to time their consumption and nursing home entry, nursing homes influence the pool of residents via pricing and quality decisions. We show that interactions of the demand and supply sides of the nursing home market have important implications for the effects of long-term care policies.