Traumatic Financial Experiences and Persistent Changes in Financial Behavior: Evidence from the Freedman's Savings Bank - Joint with Vellore Arthi and Gary Richardson. NBER Working Paper (June, 2024)
Abstract: The failure of the Freedman’s Savings Bank, (FSB) one of the only Black-serving banking institutions in the early post-bellum South, was an economic catastrophe and one of the great episodes of racial exploitation in post-Emancipation history. Can events like these permanently alter financial preferences and behavior? To test this, we examine the impact of FSB collapse on insurance-holding, an alternative savings vehicle that was both accessible and extremely popular over the late 19th and early 20th centuries. We document a sharp and persistent increase in insurance demand in affected counties following the shock, driven disproportionately by Black customers. We also use FSB migrant flows to disentangle place-based and cohort-based effects. In so doing, we provide evidence identifying psychological and cultural scarring as a distinct mechanism underlying the shift in financial behavior induced by the bank’s collapse. Horizontal and intergenerational transmission of preferences further help explain the shock’s persistent effects on financial behavior.
Economic Consequences of Corporate Campaign Contributions: Evidence from the Electric Utility Industry - Working Paper (August, 2024)
Abstract: This paper examines the regulatory, investment, and performance effects of legalizing electric utility campaign contributions. Using a difference-in-differences identification strategy, I leverage existing state campaign finance legislation and the 2005 repeal of the Public Utility Holding Company Act, which lifted a federal prohibition on utility campaign contributions from the corporate treasury. Utility contributions influence regulatory policy and yield significant returns for investors. This regulatory dynamic distorts utility investment strategies and deteriorates service reliability. Customers consequently pay more for less reliable service. These results challenge the perspective that corporations do not benefit from campaign contributions.
A previous draft of this paper is published as a working paper at the Center for Growth and Opportunity (October, 2023) under the title Power Play: Political Contributions and Regulatory Capture in the Electric Utility Industry
Ordinary Lives: Insurance and Savings in America, 1861 to 1941 - Joint with Vellore Arthi and Gary Richardson. Working Paper (September, 2024)
Abstract: Life insurance was the principal method of old-age savings for American households from the mid-nineteenth to the mid-twentieth centuries, a period prior to the advent of OASDI and the popularization of employer-sponsored retirement or pension programs. Despite its historical importance both as a precursor to Social Security and as households’ primary mechanism for savings and investment throughout much of American history, life insurance has been overlooked in the literature. This paper sheds light on the function of life insurance in American households, and provides valuable context for understanding the evolution of American old-age savings from private insurance toward nationalized retirement savings programs such as Social Security. To do so, this paper focuses on ordinary life insurance, the most popular of these life insurance products. It first describes the properties of standard policies, which, though complex, offered customers a range of lucrative and useful options that could be tailored to their particular needs. It then establishes why life insurance was such an attractive option to nineteenth- and early twentieth century Americans, relative to other savings vehicles, in the low-peacetime-inflation environment of the pre-WWII period and in the absence of formal retirement plans of the kind most Americans rely on today.
Ongoing Research:
From Steel to Rust: The Silver Lining of Deindustrialization
Early-Career Trajectories during the Great Depression: Evidence from Large-Scale Longitudinal Microdata - Joint with Vellore Arthi and Gary Richardson
The Peabody Education Fund and Origins of Public Education in the South
Mayors of America: Immigrant Assimilation into Local Politics during the Age of Mass Migration