Alice Henriques is an economist in the Microeconomic Surveys research group at the Federal Reserve Board of Governors. Alice’s research focuses on household financial decision making, with current research projects evaluating the reliability of owners’ house valuations during the housing boom and bust and understanding the rise in student loans among young families. Other areas of interest include the financial well-being of elderly households. Alice received her Ph.D. in economics from Columbia University and her B.A., also in economics, from the University of California at Berkeley.
Stephanie Moulton is an Associate Professor at the John Glenn School of Public Affairs, The Ohio State University. She is also a research affiliate with the University of Wisconsin’s Center for Financial Security. Moulton specializes in housing and consumer finance policies and programs implemented by federal, state, and nonprofit organizations, with a focus on vulnerable populations. Moulton is currently studying consumer decision making regarding mortgages and the role of public policy and program interventions to improve mortgage outcomes. She is currently the principal investigator on a multi-phase analysis of the financial decision making of seniors considering reverse mortgages, with funding from the MacArthur Foundation and the U.S. Department of Housing and Urban Development. She also studies homeownership programs administered by state housing finance agencies, including first-time homebuyer programs financed by mortgage revenue bonds (MRBs), and the Hardest Hit Fund (HHF) foreclosure prevention initiative, with funding from the MacArthur Foundation. Moulton’s research has been published in top journals, such as the Journal of Money, Credit & Banking, the Journal of Consumer Affairs, Housing Policy Debate, and the Journal of Public Administration Research and Theory. Prior to her academic career, Moulton worked in the nonprofit sector, designing and managing asset building, homeownership, and community development programs at the local and state levels. Moulton received her Ph.D. in Public Affairs from the School of Public and Environmental Affairs at Indiana University.
An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program
Stephanie Moulton, Don Haurin, and Wei Shi
While reverse mortgages are intended as a tool to enable financial security for older homeowners, the nearly 10 percent default rate on property taxes and homeowners insurance among borrowers in the Federally insured Home Equity Conversion Mortgage (HECM) program raises significant concerns. A variety of policy responses have been put into effect, including establishing financial assessment criteria (underwriting guidelines) for the first time in the program’s history. However, there is a lack of data and analysis to inform these criteria. Our analysis directly informs this policy need, with a unique data set of more than 30,000 seniors counseled for reverse mortgages between 2006 and 2011, 58 percent of whom took out HECM loans. Our data includes comprehensive financial and credit report attributes not typically available in analyses of reverse mortgage borrowers, in addition to loan data on originations, withdraws, and termination outcomes. Using a truncated bivariate probit model, we estimate the likelihood of tax and insurance default, conditioned on selection of an HECM loan. We identify the factors that contribute to default risk and then conduct a series of simulations to evaluate the recently enacted HECM program changes.
David P. Richardson is a Senior Economist at the TIAA-CREF Institute. Prior to joining the Institute, he served as Senior Economist for Public Finance at the White House Council of Economic Advisers and held the New York Life Chair in Risk Management and Insurance at Georgia State University. Previously, Richardson worked as a Financial Economist in the Office of Tax Policy at the U.S. Treasury and was an Assistant Professor in the Department of Economics at Davidson College. Richardson’s research interests focus on public pensions, employer retirement plans, and household financial security, including retirement preparedness, retiree healthcare, and the allocation of retiree risk burdens. He has served as a research fellow for the China Center for Insurance and Social Security Research at Peking University, a research fellow for the Center for Risk Management Research, and as a research associate at the Andrew Young School of Policy Studies at Georgia State University. Richardson is a member of the American Economic Association, the American Risk and Insurance Association, and the National Tax Association. He earned an M.A. and a Ph.D. in economics from Boston College, and a B.B.A. from the University of Georgia.
Financial Literacy Among Graduate Students: A Case Study from the Indiana University System
Coauthors: David Richardson, TIAA-CREF Institute, and Jason Seligman, Ohio State University
A standard intuition is that people who are highly educated and have relatively high expected lifetime earnings also tend to have relatively greater financial acumen and well-being. In this study, we analyze various dimensions of this intuition using a multi-stage research protocol on a sample of Indiana University system graduate students. We develop and administer a survey that provides insights into the correlates of this group’s self-accessed and survey-measured financial literacy. We find significant differences in these measures based on gender, home country, and academic discipline but not by having previously taken a financial planning course. We then offer a series of follow-up treatments designed to improve the financial literacy of the participants. Overall, we find generally low receptivity to these opportunities. For those who do accept, we find that receptivity to our offerings varies systematically across groups. In particular those who are in non-quantitative fields and score relatively high on the financial literacy quiz are more likely to signal interest in educational offerings and to attend seminars in person than other groups. Our results suggest that highly customized guidance and education programs may be needed to significantly increase participation in programs that improve overall financial acumen. In the absence of these customized services, financial product designs that rely heavily on adequate auto-features likely provide the best chance of helping workers achieve financial well-being.
Daniel Gottlieb is an Assistant Professor of Business Economics and Public Policy at the Wharton School, University of Pennsylvania. He obtained his Ph.D. in Economics at the Massachusetts Institute of Technology. He also has a Masters in Economics from Getulio Vargas Foundation and a B.A. in Economics from IBMEC Business School, both in Rio de Janeiro, Brazil. Prior to joining the Wharton School, he was a Visiting Fellow at the Princeton Economic Theory Center at Princeton University. His research focuses on contracting and behavioral economics. One recent project studies the structure of life insurance policies and determinants of insurance lapses. Another project studies optimal contracts in the presence of adverse selection and moral hazard. His teaching focuses on risk management and behavioral economics.
Kent Smetters is the Boettner Chair Professor at the University of Pennsylvania’s Wharton School and a Faculty Research Fellow at the National Bureau of Economic Research. Previous positions include the Congressional Budget Office, the Kaiser Visiting Professor of Economics at Stanford Economics Department, and Deputy Assistant Secretary of the United States Treasury. His research focuses on applied theory, optimal fiscal policy, personal finance and asset pricing. He received his Ph.D. in Economics from Harvard University.
Kasey Wiedrich is a Senior Program Manager on CFED’s Applied Research team. Ms. Wiedrich manages research projects on asset building and financial security needs and strategies and leads the Research team’s efforts on the “Assets & Opportunity Scorecard” and “Local Assets & Opportunity Profiles.” She also managed CFED’s Assessing Financial Capabilities Outcome project with the U.S. Treasury Department, researching the impact of providing both financial education and financial products to youth in a classroom setting and adults in a transitional employment program. She has co-authored several CFED publications, including “Weathering the Storm: Have IDAs Helped Low-Income Homebuyers Avoid Foreclosure?” and “The Financial Security of Households with Children.”
Prior to joining CFED, Ms. Wiedrich worked for the City of New York as a policy analyst for the Department of Citywide Administrative Services and a research assistant at the Department of Housing Preservation and Development. While in graduate school, she conducted research on factors associated with uptake and knowledge of the EITC. She also worked with Public/Private Ventures conducting qualitative evaluations of workforce development programs in New York City. Before attending graduate school, Kasey managed the IDA program at the Opportunity Fund in San Jose, CA. Kasey holds a BA in Sociology/Anthropology from Carleton College and an MPA from New York University’s Wagner School of Public Service.
John Y. Campbell is the Morton L. and Carole S. Olshan Professor of Economics at Harvard University. He grew up in Oxford, England, and received a B.A. from Oxford in 1979. He came to the United States to attend graduate school, earning his Ph.D. from Yale in 1984. He spent the next ten years teaching at Princeton, moving to Harvard in 1994. In 2006 his undergraduate teaching was acknowledged with a Harvard College Professorship.
Campbell has published over 80 articles on various aspects of finance and macroeconomics, including fixed-income securities, equity valuation, and portfolio choice. His books include The Econometrics of Financial Markets (with Andrew Lo and Craig MacKinlay, Princeton University Press, 1997), Strategic Asset Allocation: Portfolio Choice for Long-Term Investors (with Luis Viceira, Oxford University Press, 2002), and The Squam Lake Report: Fixing the Financial System (with the Squam Lake Group of financial economists, Princeton University Press, 2010).
Campbell served as President of the American Finance Association in 2005 and as President of the International Atlantic Economic Society in 2009. He is a Research Associate and former Director of the Program in Asset Pricing at the National Bureau of Economic Research, a Fellow of the Econometric Society and the American Academy of Arts and Sciences, a Corresponding Fellow of the British Academy and Honorary Fellow of Corpus Christi College, Oxford, and holds honorary doctorates from the University of Maastricht and the University of Paris Dauphine. He is also a founding partner of Arrowstreet Capital, LP, a Boston-based quantitative asset management firm. At Harvard, Campbell helped to oversee the investment of the endowment as a board member of the Harvard Management Company from 2004–2011 and served as Chair of the Department of Economics from 2009–2012.
Inattention and Inertia in Household Finance: Evidence from the Danish Mortgage Market
Coauthors: Steffen Andersen, John Campbell, Kasper Meisner Nielsen, and Tarun Ramadorai
This paper studies the refinancing behavior of Danish households during a recent period of declining interest rates. The paper shows how demographic characteristics of households affect both the responsiveness of mortgage refinancing to financial incentives (attentiveness) and the unconditional probability of refinancing (inertia).
George Washington University School of Business
Duquès Hall, Room 652
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 651
The George Washington University
Marvin Center, Room 308