Amelia Harlan

2017 Patricia and Harry L. Bruce Endowed Scholarship Recipient

Biography: Amelia Harlan is a third-year Business Economics major with a minor in accounting. She grew up on a family farm in Northern California, which shaped the enterprising and hard-working person she is today. At UCLA, Amelia has had the opportunity to take a broad spectrum of challenging courses that match her diverse interests in economics, finance, accounting, and environmental science. Amelia is very passionate about giving back to her community and has gotten involved on campus through the Pediatric AIDS Coalition and Volunteer Income Tax Assistance. In her free time, Amelia enjoys outdoor activities such as hiking, yoga, and also loves attending UCLA sporting events.

Future Plans: Amelia will intern this summer in San Francisco at Deloitte in their audit department. She is excited to get a taste for the professional life in such a thriving city. Amelia is preparing and planning to take the CPA exam upon graduation. She desires to always keep learning, whether that is in a graduate school program or gaining knowledge and experience in a career.

What does this scholarship mean to me?: I am extremely grateful and humbled to receive the Patricia and Harry L. Bruce Endowed Scholarship. I am honored for the recognition of my accomplishments and hard work. This scholarship will allow me to have less of a financial burden as I finish my undergraduate degree and pursue my career goals. I am very thankful for Mr. and Mrs. Bruce for their generosity in creating this endowed scholarship and I am motivated to continue to strive for success in the future.

Dalia Badih

2017 Robert D. and Margaret A. Wark Memorial Scholarship Recipient

Biography: Dalia is a 3rd year student at UCLA majoring in Economics with a  minor in Film, TV, and Digital Media. Born and raised in Kuwait, Dalia is enjoying exploring all that LA has to offer. Since coming to UCLA, Dalia has been involved in multiple film and photography clubs, the UCLA Rowing team, and the Epsilon Alpha Sigma sorority. Previously, Dalia interned for the Central Bank of Lebanon, and competed in a 6 month business plan competition hosted by PwC, both which fostered her passion for economics and business. She recently worked at the Beverly Hills Chamber of Commerce where she learned a lot about government affairs, marketing and branding. When she’s not busy with school or work, Dalia enjoys playing basketball, going to TV show tapings and movie premieres, and trying new foods.

Future Plans:  After finishing her degree this summer, Dalia is eager to find a career that brings together her passion for economics and analysis with her love for creative expression. She hopes to be able to work full-time in the consulting or entertainment industries, and eventually pursue an MBA or law degree.

What does the scholarship mean to me?: I am deeply honored to have been selected as a recipient of the Robert D. and Margaret A. Wark Memorial Scholarship and am extremely grateful for The Wark Family’s generosity and support. This scholarship really means a lot to me because it serves as a special recognition and reaffirmation of all my hard work and academic achievement. In addition, because of this scholarship, I can now focus more of my time to my academic, extracurricular, and professional pursuits. I am truly touched by the Wark Family’s giving values and hope that one day I will be able to pay it forward and help other students achieve their goals.

Emilie Birchler

2017 Professor Henry Simons Endowed Undergraduate Scholarship Recipient

Biography: Emilie Birchler is a currently a third year Business Economics major with an Accounting minor.  She is currently an undergraduate Teaching Assistant for Professor Gordon Klein, where she assists in both his personal and corporate taxation classes. Since coming to UCLA, Emilie has also been working at Resolution Economics, an economic litigation-consulting firm. This past summer, she spent six weeks in Europe where she enjoyed being immersed in local culture and this trip also sparked an interest in international taxation. In her spare time, she enjoys volunteering with campus ministry and trying new food at hipster restaurants.

Future Plans: In the future, Emilie plans to pursue her CPA and work in public accounting.  She is excited about her internship with Deloitte this summer where she will be working in Business Tax services. Upon graduation, Emilie plans to work in public accounting. She eventually plans to attend law school and hopes to work as a taxation lawyer.

What does this scholarship mean to me?: I am incredibly honored and grateful to have received this award and I am so thankful for all the donors who have supported me in my education. This scholarship has greatly helped me alleviate the financial burden and has allowed me to spend less time at work and more time on my studies and extra-curricular activities. I am inspired by donor’s generosity and will work hard to achieve my goals so that one day I can give back to my community as well.

 

Regulations and Competition in Subsidized Insurance Markets

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Richard Domurat

The U.S. government has been increasingly relying on markets to deliver public health insurance benefits. In this setting, policymakers not only need to consider the direct provisions to consumers (e.g. the level of the subsidy) but also how the subsidized markets function (e.g. the characteristics of the products offered). The exchanges established by the Affordable Care Act (ACA) are a recent example of this, where private insurers compete for subsidized consumers that don’t get coverage through an employer.

In his PhD dissertation, Richard Domurat studies what determines the outcomes we see in the ACA exchanges. In the ACA markets, there tends to be few insurers, many consumers with low levels of coverage (e.g. “Bronze” plans), and roughly half of the eligible population remaining uninsured instead of buying a plan. These patterns are generally contrary to the objectives of policymakers, which leads one to ask what is driving them. A common explanation that is consistent with these observations is that generous plans and the market as a whole are adversely selected—driven by enrollees with the highest risk. This explanation cites regulations in the law such as how premiums cannot vary by health or gender, which can increase premiums for low risk consumers. The study explores this explanation and explanations driven by other features in the market, namely characteristics of the consumers.

Domurat builds an empirical model of consumer choice (demand) and insurer profits (supply) to examine how regulations and market primitives drive market outcomes in equilibrium. To estimate the parameters of the model, he uses data on enrollment decisions and plan characteristics from California’s exchange. By combining these data with the economic model, he quantifies what plan characteristics are valuable to consumers, how profitable plans are, and simulates different regulatory environments.

The study indicates that consumer preferences, as opposed to the cited regulations, drive many of the aforementioned outcomes. Specifically, consumers are highly sensitive to premiums—for example, plan enrollment on average declines by about 4% for just a $1 increase in the premium. This high price elasticity has two implications. First, the common choice of low coverage plans is not driven by adverse selection but rather the preference for low premium plans. Second, it implies plan profitability is low, and prices become competitive after a small number of entrants. Therefore, it is unsurprising that so few plans compete in many ACA markets where fixed costs are high.

The broader implication of this work is that markets such as the ACA exchanges can deliver health care at premiums close to costs and provide low-price plans that people value.  This is especially true in California where regulators have taken additional steps to enhance competition.

James Min

James Min

James Min

James Min, a UCLA alumnus, is the founder of Telos Advisors – a boutique investment bank with offices in Santa Monica and San Francisco. During his undergraduate years at UCLA, James obtained his Bachelor of Arts degrees in both Business Economics and Political Science with the intention of someday going to law school, but instead went on to pursue careers in finance and technology.

As a current guest lecturer for an internet strategy upper division course (Economics 106T), James always finds it odd that he teaches in the very classrooms where he was once a student. As an undergraduate, he was strongly involved with the Undergraduate Business Society and wrote for the Asian American newsletter. Academics aside, he loved the social aspect of UCLA as it enabled him to forge lifelong friendships and memories. Years later, he still has many interesting stories to tell, like sneaking into Pauley Pavilion with his friends late at night to play basketball. He believes that what you get out of college is essentially what you put into it.

After working at different tech startups and investment banks for several years, he started Telos Advisors in 2013. Telos Advisors provides M&A advisory and capital raising services to companies in the Internet, Digital Media and Software industries. The initiative for Telos came from his explicit interest in technology and its ability to revolutionize the world. It was also an opportunity to implement his own work philosophies and to do things differently. This meant picking the right clients that are a good cultural and business fit, limiting administrative obligations and enhancing productivity, a unique advantage for a small firm. It also meant creating a fertile work environment that allows employees to advance the goals of both the company and themselves. As a CEO, he not only finds himself making changes to enhance the retention of employees, but is also emotionally invested in their development. He is especially proud when the junior analysts move onto other careers and beat out candidates that come from much larger, global investment banks. It proves that they learned valuable lessons during their time at Telos.

While James has been successful in his business venture, forming his own investment bank came with its own set of challenges. The biggest challenge is that James is ultimately accountable for all the decisions the firm makes, from selecting which clients to take on, to hiring and firing. Another challenge is trying to anticipate and understand the impact of changing markets on boutique banks like his.  But despite the risks and challenges, James has thoroughly enjoyed his entrepreneurial journey.

For students at UCLA aspiring to be investment bankers one day, James has some advice. First and foremost, he insists that students must know their finance and be skilled in communicating this understanding. He also encourages students to do more internships as it shows interest and allows them to develop skills that will be required in a full-time position. He believes that being successful once you get the job is as important as getting the job itself. To James, there are two qualities that distinguish an investment banking analyst from the others: 1) a genuine interest and curiosity in the job and companies you work with; and 2) taking pride in one’s work and work product.

By Aditi Ganesh and Radhika Ahuja

Hugo Hopenhayn awarded NSF Grant

We’d like to congratulate Professor Hugo Hopenhayn for winning an NSF grant on “Innovations, Innovators and Knowledge Transfer”.

The proposed research project studies the incentives and rewards to innovation, and their impacts on economic development, growth and welfare. In particular, it examines three related questions as follows: Is innovation going to the right areas? Are the incentives for innovation and diffusion of new ideas appropriate? And, what constitutes the innovation capital of the economy?

Raj Dalal

2008 John J. Peterson Scholarship Recipient Biography: Raj Dalal is a third year Business Economics major and Accounting minor student pursuing College Honors. He was born in Southern California and graduated from El Toro High School. In high school, he was very active in track and field and Associated Student Body. At UCLA, he works as a personal tutor for 4 high school students and is a member of the Undergraduate Business Society. He just completed a summer internship at Alacer Corp., which gave him valuable experience in managerial and operational accounting. In his spare time, he enjoys surfing, snorkeling and hiking.

Future Plans: In the next two years, Raj plans to complete his B.A. and finish his College Honors program as well as complete a senior thesis for the Economics Department Honors program. He plans to intern for an investment banking firm in this upcoming year or over summer. After graduation, he plans to gain additional work experience in finance or accounting before returning to graduate school to pursue his MBA. He also plans to attain his real estate license so he can buy and sell houses as investments.

What does the scholarship mean to me?: It is a great honor to be the recipient of the John J. Peterson Scholarship. I greatly appreciate the financial assistance and moral support Mr. Peterson has provided me. I will be using this scholarship to cover my educational expenses for this upcoming year. This will greatly ease my financial burdens considering that I must work to pay for tuition and books. Now I will be able to greatly help my parents out by covering most of my living expenses. This scholarship will help put me on the path to financial independence but also provides me with renewed determination to further expand my academic endeavors.

Martin Feldstein gives MAE Distinguished Speaker Talk

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Martin Feldstein

Professor Martin Feldstein gave the MAE Distinguished speaker talk on “The Future of Taxes, Money, and the Stock Market”.

Professor Feldstein is the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research.   From 1982-1984, he was Chairman of the Council of Economic Advisors and President Ronald Reagan’s chief economic advisor.  He was a member of the President’s Foreign Intelligence Advisory Board under President George W. Bush and of the President’s Economic Recovery Advisory Board under President Barack Obama.

Adriana Lleras-Muney wins Scoville Teaching Award

In fall 2017, the economics department awarded Professor Lleras-Muney the Warren C. Scoville Distinguished Teaching Award for her class Economics 130: Public Finance. Professor Lleras-Muney’s popular lab-based public finance course introduces students to the latest issues on a range of public policy topics, ranging from health care to education. The class instructs students in data analysis, improves their analytical skills, hones their writing skills by teaching them how to write policy memos, and engages them in policy debates. Congratulations Adriana!

Debt Strategy

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Saki Bigio

A classic question in economics is: How to design an optimal debt strategy? This is a problem confronted by the treasury of any government or any big corporation. A debt strategy must determine an amount of debt issuances and its maturity structure. Economics offers a number of theories that guide that design. Although each theory brings different insights, each theory is cast through a common exercise: the theory sets up a fictitious economic environment and presents an optimal debt-maturity profile for that environment. That solution is translated into policy principles that can be applied by practitioners. Current work by Professors Saki Bigio (UCLA), Juan Passadore (Einaudi Institute) and Galo Nuño (Bank of Spain) is a new take on that classic problem.

In their recent paper entitled “Optimal Maturity-Debt Management”, the researchers make two innovations to study that classic question. Their first innovation is conceptual. Their theory highlights the importance of liquidity frictions, the notion that abrupt adjustments in the debt of a given maturity can saturate the market for that debt. The consequent price impact is a common consideration by practitioners, but has been neglected by normative studies on debt management. The second innovation is technical. In the past, theories could only deal with problems where the strategy considers a choice among only a few number of bonds of one specific structure. Those specific bonds, known as consols, assume that bonds mature by retiring a constant fraction of the outstanding principle every period. Consols are rarely issued in practice. Instead, their study adapts techniques from other sciences to allow the study of the debt management problem where it is allowed to have bonds of any arbitrary number of maturities and any arbitrary cash-flow structure.

A principle that emerges from this theoretical study is that the problem can be studied as if the Government delegates the issuance problem to a continuum of subordinate traders. Each trader is in charge of the issuance of bonds of a single maturity. In this fictitious delegation, each trader then follows a simple rule. Each trader computes the internal valuation of bonds of the maturity that he manages. For that valuation, traders use discount provided by the Government. To determine his optimal issuance, each trader compares his valuation to the market price of that bond. Typically, prices and valuations will differ. The authors derive a simple guiding principle for the optimal issuance of bonds of a given maturity:

%  issuance/GDP  = liquidity coefficient  ⋅ %   value gap.

The principle states that in a given period, the issuances of a bond of a given maturity (relative to GDP) should equal the product of a value gap and a liquidity coefficient. The value gap is the difference between the market price and the internal valuation of a bond, as a percentage of the price. Think now of a trader. A trader would want to issue as much debt as possible whenever the price he receives is higher than his valuation (when there is a positive value gap). The formula says that there is a force that contains that desire: the liquidity cost that is produced by the price impact. Mathematically, this liquidity force appears as a coefficient that can be estimated with measures of bond-market liquidity and intermediation spreads. The higher the liquidity coefficient, the greater the issuances.

One piece is missing. For this delegation principal to deliver the optimal debt issuance, the authors show that the Government must assign his fictitious traders an appropriate discount factor. The authors develop a numerical algorithm to solve for that discount factor given information on expected tax revenues, and the paths of expected interest rates. At the moment, the authors are developing applications of their methodology, and anticipate that these will be relevant for government and corporate treasuries optimal policy discussions.