I am a lecturer (assistant professor) at the Adam Smith Business School at the University of Glasgow. My research is mainly focused on heterogeneous-agent macroeconomics, household finance and wealth inequality.

I also co-organize the Macroeconomics seminar series.

I received my PhD from the Institute for International Economic Studies (IIES) at Stockholm University.

CV: Link | Email: richard.foltyn@glasgow.ac.uk

Working papers

"Experience-based Learning, Stock Market Participation and Portfolio Choice" [June 2020]


Recent evidence suggests that lifetime experiences play an important role in determining households' investment choices. I incorporate these findings and the fact that household portfolios are underdiversified into an otherwise standard life-cycle model and examine to what extent 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 poor households. I find that in a reasonably calibrated quantitative model, this mechanism is able to close approximately half of the gap between participation rates observed in the data and the predictions from standard models. On the other hand, the average conditional risky share remains mostly unaffected.

"Subjective Life Expectancies, Time Preference Heterogeneity, and Wealth Inequality” (with Jonna Olsson) [October 2021]


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 are also more pessimistic about their remaining life time. To gauge the effect on savings behavior and wealth accumulation, we then 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 can explain one fifth of the differences in accumulated wealth and that pessimism among the unhealthy plays an important role.

"Health Dynamics and Heterogeneous Life Expectancies" (with Jonna Olsson) [September 2021]

[Companion website] [PDF] [Online appendix]

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, and health. The health gradient in life expectancy is steep and persists after controlling for socioeconomic status. Moreover, even conditional on health and socioeconomic status, the racial gap in life expectancy remains large. Simulations show that this gap affects savings rates but does not play a major role in explaining the racial wealth gap. However, differences in mortality imply that black individuals on average can expect to receive 15% less in Social Security benefits in present value terms.

Work in progress

"On the Redistributive Effects of Government Bailouts in the Mortgage Market" (with Dirk Krueger and Kurt Mitman)

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.

Photo credit: Sheep along the Stubaier Höhenweg in the Austrian Alps. Photo by Simona Foltyn.