Codirectors
Ben Handel is an Associate Professor of Economics at the University of California – Berkeley. His research focuses on consumer choice and market structure regarding health insurance markets, and on regulation of insurance markets.
Motohiro Yogo is a professor of economics at Princeton University. He works primarily on the interactions between capital markets, insurance companies, and regulators, with particular focus on how public policy affects the menu of insurance products available to consumers.
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May 9, 2025 - ConferenceProgram
Greater reliance on nonbank financing makes firms fragile as it leads banks to limit their access to credit lines. Besides demonstrating this result in panel tests subject to range of controls and robustness checks, we employ the 201416 oil-price collapse as an exogenous rollover risk in nonbank...
Geoeconomics is the use of a countrys economic strength to exert influence on foreign entities to achieve geopolitical or economic goals. We discuss how concepts of power in the political science and economics literature can be used to guide research on geoeconomics. Economic threats as a form of...
Spending induced by health insurance is often called moral hazard and definitionally assumed to be inefficient. We adapt standard models and show that for those living "hand-to-mouth", the financing benefits of insurance cause a portion of moral hazard to be efficient. Although insurance's price...
Budget set kinks are much studied in economics, including in the context of bunching estimators that assume individuals react to the true marginal tax rate. We document that individuals disproportionately left-bunch below kinks in the context of the Social Security Earnings Test where incentives...
We develop a dynamic urban model combining features of quantitative spatial and macro-housing models. It includes multiple locations, forward-looking households, commuting, costly migration, uninsurable income risk, housing tenure choice, and housing frictions. The model operates in continuous time,...
We leverage decades of administrative data and quasi-experimental variation in the introduction of universal long-term care (LTC) insurance in Germany in 1995 to examine whether health insurance expansions can stimulate local economies. We find that the LTC insurance rollout led not only to sizeable...
How do environmental goods and policies shape spatial patterns of economic activity? How will climate change modify these impacts over the coming decades? How do agglomeration, commuting, and other spatial forces and policies affect environmental quality? We distill theoretical and empirical...
Time Consistent Infrastructure Investments: Optimal Flood Protection Policies in Spatial Equilibrium
Place-based investments can have unintended general equilibrium effects and face challenges of time inconsistency. This paper simulates the granular impact of alternative spatial and temporal designs of such investments, using Quantitative Spatial Models where the strategy of the policymaker is...
January 1, 2025 - Article
Foreign investors demand for US dollar (USD) denominated securities and their currency hedging activities are important for analyzing international capital flows, exchange rates, and the dollars global dominance. In Dollar Asset Holdings and Hedging Around the Globe (NBER Working Paper 32453),...
Hegemonic powers, like the United States and China, exert influence on other countries by threatening the suspension or alteration of financial and trade relationships. Mechanisms that generate gains from integration, such as external economies of scale and specialization, also increase the hegemons...
Setting payment rates for providers contracted over multiple periods is a persistent challenge in government procurement. We study the dynamics of fiscal costs following the outsourcing of Medicaid provision to private health insurers by states. We focus on beneficiaries with disabilities who...
We estimate the causal effect of attorney involvement on the indemnity benefits workers receive after their injuries. To address the fundamental challenge that claims and injuries may differ on unmeasured dimensions that affect both attorney involvement and benefits received, we propose and use two...
Author(s) - Gopi Shah Goda
The U.S. tax code partially subsidizes out-of-pocket medical spending as itemized medical deductions (IMDs). In this paper, using detailed information in the Health and Retirement Study, I find that while a substantial share of medical spending among older Americans is deducted through the tax code,...
Adverse selection is a classic market failure known to limit or unravel' trade in high-quality insurance and many other economic settings. While the standard theory emphasizes quality distortions, we argue that selection has another big-picture implication: it unravels competition among...
We investigate the effects of substantial Medicare price reductions in the medical device industry, which amounted to a 61% decrease over 10 years for certain device types. Analyzing over 20 years of administrative and proprietary data, we find these price cuts led to a 25% decline in new product...
This paper studies optimal information disclosure in dynamic insurance economies with income risk in which an incumbent firm acquires more information about a consumer's persistent type than the rest of the market does. We find that if the incumbent can commit to long-term contracts but the consumer...
October 1, 2024 - Article
Average property insurance premiums have risen by more than 30 percent since 2020, and there is wide variation by location. Premiums have risen the most for homeowners in areas with the highest risk of natural disasters such as hurricanes or wildfires. While premiums have always been higher in...
We systematically review studies of how unemployment benefits affect unemployment duration. Statistically significant findings are eight times more likely to be published. Correcting for publication bias cuts the average elasticity by a third. Meta-analysis is a data-driven way to aggregate...
We measure the impacts of vertical integration between insurers and hospitals. In the Chilean market, where half of private hospital capacity is vertically integrated, integration increases inpatient care spending by 6 percent and decreases consumer surplus and total welfare. Integrated insurers...
We investigate how formularies used by pharmacy benefit managers (PBMs) can affect manufacturer rebates for branded drugs. We first present a theoretical model of multidimensional contracting in which a PBM negotiates with drug manufacturers over menus of formulary-contingent rebate payments and...
Author(s) - Frances C. Moore
Key methodologies used for managing weather risks have relied on the assumption that climate is not changing and that the historic weather record is therefore representative of current risks. Anthropogenic climate change upends this assumption, effectively reducing the information available to...
Property insurance is critical for reducing household exposure to severe weather risks and aiding in recovery when disaster strikes. As climate risks escalate, insurers are investing in more sophisticated methods to classify and price complex disaster risks. We use proprietary data on parcel-level...
The failure of the Freedman's Savings Bank (FSB), one of the only Black-serving banks in the early post-bellum South, was an economic catastrophe and one of the great episodes of racial exploitation in post-Emancipation history. It was also most Black Americans' first experience of banking. Can...
We develop a new dataset to study homeowners insurance. Our data on over 47 million observations of households property insurance expenditures from 2014-2023 are inferred from mortgage escrow payments. First, we find a sharp 33% increase in average premiums from 2020 to 2023 (13% in real terms) that...
A rent guarantee insurance (RGI) policy makes a limited number of rent payments to the landlord on behalf of an insured tenant unable to pay rent due to a negative income or health expenditure shock. We introduce RGI in a rich quantitative equilibrium model of housing insecurity and show it...
Health insurance is increasingly provided through managed competition, in which subsidies for consumers and risk adjustment for insurers are key market design instruments. We illustrate theoretically that, in markets with adverse selection, subsidies provide greater flexibility in tailoring premiums...
May 17, 2024 - ConferenceProgram
We collect and analyze a large set of industry- and company-level filings from global institutional investors to provide the first comprehensive estimates of foreign investors U.S. dollar (USD) security holdings and currency hedging practices. We document that foreign investors USD holdings expanded...
We analyze the value of insurance when individuals have access to credit markets. Loans allow consumers to smooth financial shocks over time, decreasing the value of consumption smoothing from insurance. We derive formulas for the value of insurance that can be taken to data, and show how that value...
Author(s) - Alexander Karaivanov, Benoit Mojon, Luiz Pereira da Silva, Albert Pierres Tejada & Robert Townsend
We model a reinsurance mechanism for the national unemployment insurance programs of euro area member states. The risk-sharing scheme we analyze is designed to smooth country-level unemployment risk and expenditures around each countrys median level, so that participation and contributions remain...
A marked feature of health insurance plan choice is inconsistent choices through the overweighting of premiums relative to out-of-pocket spending. We show that this source of inconsistency disappears when both types of spending come from the same source of designated funds. We focus on the MediSave...
Fiscal policy in the U.S. and other countries renders intertemporal budgets non-differentiable, non- convex, and discontinuous. Consequently, assessing work and saving responses to policy requires global optimization. This paper develops the Global Life-Cycle Optimizer (GLO), a stochastic pattern...
In recent years, assets of non-bank financial intermediaries (NBFIs) have grown significantly relative to those of banks. These two sectors are commonly viewed either as operating in parallel, performing different activities, or as substitutes, performing substantially similar activities, with banks...
Does emergency credit prevent long-term financial distress? We study the causal effects of government-provided recovery loans to small businesses following natural disasters. The rapid financial injection might enable viable firms to survive and grow or might hobble precarious firms with more risk...
Two in five Americans have medical debt, nearly half of whom owe at least $2,500. Concerned by this burden, governments and private donors have undertaken large, high-profile efforts to relieve medical debt. We partnered with RIP Medical Debt (now Undue Medical Debt) to conduct two randomized...
Author(s) - Roland Beck, Antonio Coppola, Angus J. Lewis, Matteo Maggiori, Martin Schmitz & Jesse Schreger
We assess Euro Area financial integration correcting for the role of onshore offshore financial centers (OOFCs) within the Euro Area. The OOFCs of Luxembourg, Ireland, and the Netherlands serve dual roles as both hubs of investment fund intermediation and centers of securities issuance by foreign...
Author(s) - Anup Malani, Cynthia Kinnan, Gabriella Conti, Kosuke Imai, Morgen Miller, Shailender Swaminathan, Alessandra Voena & Bartosz Woda
Universal health coverage is a widely shared goal across lower-income countries. We conducted a large-scale, 4-year trial that randomized premiums and subsidies for Indias first national, public hospital insurance program, called RSBY. We find substantial demand ( 60% uptake) even when consumers...
Despite growing concerns about the impact of pollution on workers, little is known about how pollution impacts worker health and workplace safety. This paper leverages high-frequency, plausibly exogenous variation in wildfire smoke to estimate the impact of pollution on workplace injuries. Our...
We study life insurance market responses to Covid-19 using unique national administrative data from Israel on purchases and cancellations of life insurance policies, and an internet survey of Americans life insurance choices, risk attitudes, Covid-19 perceptions, and vaccination behavior. We see no...
How quickly does marginal utility fall with increasing consumption? It depends on the dimension along which we consider concavity of the utility function. This paper estimates the distribution of heterogeneous curvature parameters in individuals utility functions from hypothetical choice data, while...
We study the provision of financial services to small firms, consumers, and workers in developing countries as part of value chain relationships: value chain microfinance (VCMF). We first explore how VCMF can both overcome barriers to financial access including asymmetric information, enforcement,...
This paper studies the labor market impacts of firm accommodation decisions and assesses implications for the design of social insurance for workplace disability. We leverage a unique workers compensation (WC) program in Oregon that provides wage subsidies to firms for accommodating workers with...
The paper reviews the evidence on the macroeconomic announcement premium and its implications on equilibrium asset pricing models. Empirically, a large fraction of the equity market risk premium is realized on a small number of trading days with significant macroeconomic announcements. We review the...
We document that the convenience yield of U.S. Treasuries exhibits properties that are consistent with a hedging perspective of safe assets. The convenience yield tends to be low when the covariance of Treasury returns with the aggregate stock market returns is high. A decomposition of the aggregate...
We examine cost-plus lagged-price reimbursement contracts, focusing on Medicare Part B's payment for physician-administered drugs. Our theoretical model shows that lagged-price reimbursement can raise launch prices but lower prices in later periods. While previous research showed Part B increased...
Author(s) - Abdoulaye Ndiaye, Kyle F. Herkenhoff, Abdoulaye Cisse, Alessandro Dell'Acqua & Ahmadou Aly Mbaye
This paper studies the welfare effects from the provision of unemployment insurance (UI) benefits in a context where formal workers represent only a small proportion of the labor market and informal workers can submit fraudulent claims for UI benefits. We model these features and allow for varying...
Is government guiding the invisible hand at the top of the labor market? We use new administrative data to measure physicians' earnings and estimate the influence of healthcare policies on these earnings, physicians' labor supply, and allocation of talent. Combining the administrative registry of U...
Existing research on selection in insurance markets focuses on how adverse selection distorts prices and misallocates products across people. This ignores the distributional consequences of who pays the higher prices. In this paper, we show that the distributional incidence depends on the...
Within the field of economics, despite being widespread, African traditional religions tend to be perceived as unimportant and ignored when studying economic decision-making. This study tests whether this presumption is correct. Using daily data on business decisions and performance of beer sellers...
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