I am an Associate Professor (tenure track) at the Norwegian School of Economics (NHH) in Bergen. My research is mainly focused on heterogeneous-agent macroeconomics, household finance, and inequality.
I received my PhD from the Institute for International Economic Studies (IIES) at Stockholm University.
CV: Link | Email: richard@foltyn.net
Quantitative Economics 15 (3), 2024, [PDF] [SSRN] [Published version]
This paper examines how objective and subjective heterogeneity in life expectancy affects savings behavior of healthy and unhealthy people. Using data from the Health and Retirement Study, we first document systematic biases in survival beliefs across self-reported health: those in poor health not only have a shorter actual lifespan but also underestimate their remaining life time. To gauge the effect on savings behavior and wealth accumulation, we use an overlapping-generations model where survival probabilities and beliefs evolve according to a health and survival process estimated from data. We conclude that differences in life expectancy are important to understand savings behavior, and that the belief biases, especially among the unhealthy, can explain up to a fifth of the observed health-wealth gap.
Presented at: 2023: Statistics Norway*; RES/SES Annual Conference; T2M, Paris* — 2022: Austrian Economic Society Winter Workshop; LMU*; Manchester*; 4th Behavioral Macroeconomics Workshop, Bamberg — 2021: Nordic Junior Macro Seminar*; SED*; DIAL Final Conference* — 2019: Norface TRISP, London* — (*) Presentation by co-author
Revise & Resubmit at the Economic Journal [PDF] [SSRN] [Companion website]
Using biennial data from the Health and Retirement Study, we estimate age-dependent health dynamics and survival probabilities at annual frequency conditional on race, sex, self-reported health and other covariates. The estimates can be used to calculate heterogeneous life expectancies in the population. We show that the racial life expectancy gap remains large, even conditional on health, socioeconomic and marital status. Due to racial differences in health dynamics and mortality, married black men on average can expect to receive $6,900 (or 9.5%) less in Social Security benefits in present value terms. Using a rich life cycle model, we estimate that this corresponds to a welfare loss of about 4%. Black married women's welfare loss is primarily driven not by their own shorter life expectancy but the shorter life expectancy of their husbands.
Presented at: 2024: Austrian Economic Society Winter Workshop, Vienna; EALE Conference, Bergen; RES Annual Conference, Belfast; 2023: Wittgenstein Centre Conference on "Exploring Population Heterogeneities", Vienna; Workshop on Fertility, Health, and Human Capital, Belfast* — 2022: The Private and Social Insurance Implications of Demographic Change, Frankfurt*; PERspectives on KURTosis in Macroeconomics, Stockholm; University of Dundee*; Scottish Economic Society Annual Meeting; CBS Inequality Platform 3rd Workshop on Health and Inequality*; Norwegian School of Economics (NHH); Austrian Economic Society Annual Meeting — 2020: Longevity Heterogeneity and Pension Design, Louvain-la-Neuve*— (*) Presentation by co-author
A growing body of evidence suggests that lifetime experiences play an important role in determining households' investment choices. I estimate how such experiences shape individuals' beliefs about stock returns using a long-running panel data set of elicited beliefs. I then incorporate these findings into a life cycle model and examine the extent to which they can help resolve long-standing puzzles in the literature regarding stock market participation and the fraction of financial wealth invested in risky assets. I show that experience-based learning about returns creates a positive correlation between a household's position in the wealth distribution and its optimism about future returns. The wealthy consequently increase their investment in risky assets, while participation is limited among poorer households. I find that in a reasonably calibrated quantitative model, this mechanism is able to generate limited participation and an average risky share that is close to the data.
Presented at: 2025: CEPR European Conference on Household Finance, Stockholm; SED Annual Meeting, Copenhagen; 3rd Paris Conference on the Macroeconomics of Expectations, PSE; 2024: Bergen Macro Workshop; 2nd Arne Ryde Workshop on "Micro data meet Macro models", Lund;16th Nordic Summer Symposium in Macroeconomics (Normac), Denmark; Scottish Economic Society Annual Conference, Glasgow; 45th Annual Meeting of the Norwegian Association of Economists, Oslo; — 2023: 5th Austrian Economic Society (NOeG) Winter Workshop; TU Vienna; Austrian Economic Society (NOeG) Annual Meeting — 2020: University of Glasgow; Nova SBE; Norwegian School of Economics (NHH); Riksbank — 2019: IIES; Stockholm University Economics Department
In this paper we investigate positive and normative implications of bailout guarantees for mortgage lenders. The implicit guarantee for debt issued by Fannie Mae and Freddie Mac in the US prior to 2008 led to lower borrowing costs for financial intermediaries in the mortgage market, which were passed on to households taking out mortgages. This in turn might have affected the distribution of real estate ownership and leverage among US households. On the other hand, the bailouts in 2008 required injections of $187bn of taxpayer money into these companies. The paper attempts to quantify this trade-off of lower borrowing rates and higher taxes to fund bailouts in a model featuring heterogeneous households and aggregate uncertainty in the form of (severe) recessions, identifying beneficiaries and losers of such a policy as well as overall welfare effects.