Greg Passani

/in /by

Greg Passani

UCLA alumnus Greg Passani’s foray into the investment banking industry was anything but typical. Currently an Associate at Intrepid Investment Bankers, Passani received his B.A. in Economics at UCLA in 2011, after which he went on to work as a private equity intern at OpenGate Capital, which focuses on acquiring corporate carve-outs, divestitures and special situations throughout North America, Western Europe and Latin America. Shortly after, he pursued a year-long Master’s program in Finance at Claremont McKenna College. Following this, Passani joined Intrepid Investment Bankers, a specialty investment bank based in Los Angeles that provides M&A, capital raising and strategic advisory services to middle-market companies. He initially joined the firm as an Analyst before being promoted to Associate, where he currently focuses on the Technology and Digital Media sectors.

Having grown up in California to parents who were both UCLA graduates themselves, Passani shared a personal connection with UCLA. That said, studying economics was far from mind when he entered UCLA in 2008, intending to become an environmental science major. However, while witnessing the 2008 financial meltdown, Passani desired to understand the global macro-economic impact and switched his major to economics.

Passani made the most of his opportunities at UCLA through the honors program, which enabled him to connect with many of our economic faculty, including Professor Simon Board and Professor Connan Snider. Initially, Passani aspired to continue his path in academia and pursue a PhD in economics. While exploring post-graduate opportunities with a TA, he instead decided to pursue a career in finance, where he could apply economic principals to real-world problems in a fast-paced environment.

Adeptly juggling his responsibilities as a student, fraternity brother at Sigma Phi Epsilon, and member of the UCLA Snowboarding team, Passani went on to graduate UCLA in three years. His experience here forged some wonderful memories: travelling over 24 hours to ski at Jackson Hole, taking a genetic engineering class, and avidly watching UCLA Basketball, to name a few. Looking back, he concedes that the most free time he had was definitely in college!

Although Passani graduated in three years, he believes the competitiveness and demanding nature of coursework at UCLA thoroughly prepared him for the real world. Despite the notorious lifestyle and hours prevalent in investment banking, Passani welcomes the challenge. While he acknowledges the difficulties of his job, including long hours and late nights, he also cherishes the rewards of investment banking as a challenging industry with a steep learning curve and substantial camaraderie amongst co-workers, many of whom have become his close friends.

Most importantly, he loves the intricacies present in his work engagements. To illustrate this point, Passani discussed one of the most interesting projects he worked on last year which was a debt recapitalization case to support a management buyout of a company that serviced large equipment at the ports of Los Angeles and Long Beach. What made the case particularly interesting was the various moving parts involved in the project. Passani had to maneuver between the labor union litigation, while simultaneously handling the debt raising aspect of the project. The logistics of the project and the necessity to sync various moving parts created a challenge that he enjoyed and continues to enjoy.

On a concluding note, Passani offers UCLA undergraduates some advice. He encourages students to reach out to professionals in any industries in which they are interested in order to get an insider’s perspective. Learning about the kind of work individuals actually do on a day-to-day basis, as well as challenges they face, can help students determine career fit. To accomplish this, he stresses the importance of networking and reaching out to other UCLA alumni as a means of opening new doors for yourself. Most importantly, he wants students to make the most out of their time at UCLA and enjoy the freedom and flexibility that the undergraduate lifestyle affords.

By Eric Liu and Adithya Kumar

Lee Ohanian article in the Wall Street Journal

/in /by

Lee Ohanian recently co-published an article with Ted Temzelides in the Wall Street Journal titled “My Kingdom for a Renewable Energy Source.”  Here is the text of the article in its entirety:

 

‘In 50 years, every street in London will be buried under 9 feet of manure.” With this 1894 prediction, the London Times warned that the era’s primary source of transportation energy — the horse — would soon create an environmental crisis.

In New York City, about 100,000 working horses produced roughly 2.5 million pounds of manure a day. Residents were exposed not only to the stench but to biohazards like anthrax. One commentator estimated in 1908 that roughly 20,000 New Yorkers died each year from diseases related to horse waste.

But the deluge of dung predicted by the Times never arrived. Instead the free market solved the problem in roughly 25 years, while creating new goods and industries that transformed society.

The enormous demand for a cleaner and more efficient source of energy led to remarkable innovations in the internal combustion engine. By 1920 horses in cities had been almost entirely replaced by affordable autos and trucks.

The revolution was not driven by government. In fact, the transition away from horses would have taken longer if states had followed today’s policy of subsidizing specific energy sources.

Since the 1970s, politicians have artificially pushed resources into renewable energy. Today the solar industry employs nearly 400,000 workers. That sounds impressive, but it accounts for only 1% of America’s electricity production.

Suppose governments in the 1890s, desperate to replace the horse, had jumped on the first available alternative, the steam engine. Heavy subsidies would have produced more steam engines and more research on steam technology. This would only have waylaid the development of the far superior internal combustion engine.

The lesson is that governments are in no position to predict technological breakthroughs, and their attempts to do so can delay innovations by entrenching inferior technologies.

Diesel cars are another example. European states have been subsidizing them for decades, but diesel engines create considerably more noxious gases and particulates. Now Britain and Germany are reversing their policies and trying to phase out diesel.

Or take the attempts to push renewable energy into poor countries. About 1.3 billion people, many in sub-Saharan Africa, lack electricity, making it incredibly difficult to purify water or preserve food and medications. World-wide subsidies for renewables total more than $100 billion a year, according to the International Energy Agency. But scientists still haven’t solved their core problem: Peak electricity demand comes early in the morning and at night, when the sun isn’t shining and the wind may not be blowing.

Nearly a half-century of subsidies has not delivered the next energy revolution. The great manure crisis of 1894 suggests a far better way to advance clean, affordable and safe energy: open competition on a level playing field.

Adriana Lleras-Muney Mentioned in NYT Article

/in /by

In a New York Times article titled “How A Healthy Economy Can Shorten Lifespans“, the author mentions Adriana Lleras-Muney’s research on the effects of industrial pollution on one’s quality of life and lifespan.  The article outlines how many economic factors, like the boom and bust cycle, can adversely affect a person’s health.  The article specifically cites Lleras-Muney’s co-published article that shows how 2/3 of all adverse health effects on a population can be attributed to air pollution alone.  Conversely, when agricultural economies are on the rise mortality rates tend to sink.  It has been only in the post-war period, when America’s industrial activity started to become the dominant feature in the economy, that a rising economy has correlated with a rising mortality rate.

Deborah Feinerman

/in /by

UCLA alumnus Deborah Feinerman, current Executive Vice President of Business Affairs and Legal at Paramount Worldwide Distribution, exemplifies the powerful woman—but she didn’t follow a sure-footed path to her success. After Deborah received a B.A. in Economics from UCLA decades ago, she veered away from a business-centric path and instead proceeded to Loyola Law School to pursue a J.D. She eventually went on to work at the law firm Gibson, Dunn, & Crutcher in Los Angeles for just shy of 20 years. Following her extensive experience at the law firm, Deborah was connected to Paramount by a colleague, where she has moved up in the ranks ever since.

For Deborah, the choice to pursue Economics at UCLA was spearheaded by an interest in business more than anything else, although her interests spanned across a variety of social science courses. Law school was never a clear destination for her. Rather, it was her father who planted the idea of applying in her head, citing Deborah’s aptitude for talking and debating. Once she was accepted to Loyola, she knew she was going—though she wasn’t quite sure what her particular focus would be.

After graduating from Loyola, Deborah spent most of her time working in her law firm’s litigation department. However, she found herself gravitating toward business matters. She liked working on deals, though her path meandered through corporate work, banking work, and the like. Toward the end of her time at the firm, she had been working on entertainment related matters when one of her colleagues brought up the prospect of working in-house for Paramount—an opportunity Deborah grasped.

Now in a more business-centric environment as a lawyer at Paramount, Deborah believes that her foundation in law eased the transition from a law firm into a corporate office. Her current position at Paramount includes management duties alongside her legal responsibilities—she now leads a team and reflects on how stronger leadership roles adhere to more administrative and personnel responsibilities.

Although her time at UCLA was long ago, she believes her education provided her with a solid foundation to successfully pursue a J.D. Deborah is also thoroughly impressed by UCLA’s Economics program, which she claims has only been on an upward trend over the years and allows one to pursue a broad range of interests.

To all economics majors, Deborah would advise on staying focused on your goals, working hard and keeping your mind open to trying new things because you never know what may spark an interest. “The class that you didn’t want to take could turn out to be something you really enjoy or the professor that you thought was going to be awful that everybody didn’t like, might be the one you click with.”

by Aditi Ganesh and Myla Andrews

Medicaid and Financial Health under the ACA

/in , /by
Martin Hackmann

Martin Hackmann

Over half of the uninsured struggle to pay their medical bills. This suggest that expanding health care coverage may significantly mitigate financial distress faced by consumers, particularly those with lower incomes who have limited ability to bear the financial burdens that accompany adverse health shocks.

In ongoing research, joint with Daniel Grodzicki (Penn State) and Kenneth Brevoort (CFPB), Professor Martin Hackmann quantifies the effect of the recent Medicaid health insurance expansion under the Affordable Care Act (ACA) on financial health. The existing literature highlights that consumer welfare gains from health insurance arise from reductions in the mean and variance of out-of-pocket medical expenses. We argue that, although low-income uninsured individuals pay only about 20% of the cost of their care out-of-pocket, the overall benefit of insurance to them may be large. Specifically, we show that about 50% of unpaid medical bills are sent to collection agencies and reported to credit bureaus. In turn, this has a negative impact on credit scores and access to credit markets more generally. We calculate that the financial benefits of Medicaid double when considering these indirect benefits in addition to the direct reduction in out-of-pocket expenditures.

We evaluate the financial benefits to consumers in the context of one of the most controversial elements of the ACA: the Medicaid expansion. This reform sought to expand Medicaid eligibility to all individuals earning less than 138% of the federal poverty level. While this expansion was intended to apply nationwide, the Supreme Court ruled that the states had to be allowed to decide for themselves whether they would adopt the expanded Medicaid eligibility rules. As a result, only about half the states had signed on when the expansion went into effect in 2014, providing us with quasi-experimental variation in the Medicaid expansion.

Combining state-level variation from the Medicaid expansion with a nationally representative panel of over 5 million de-identified credit records, we find that the reform reduced the incidence of newly-accrued medical debt in collection by 30%. On average, the reform led to a large annual decline in accrued medical debt of $900 per treated person or 40% of health care utilization. This translates into an overall reduction of $3.4 billion in the two years following the reform.

Turning to the result on financial health, we find that the Medicaid expansion reduced the likelihood of becoming newly delinquent, improved credit scores, and reduced personal bankruptcies in particular among subprime borrowers. To measure the effects of improved financial health on the availability and pricing of credit, we add novel data on direct-mail credit offers from Mintel in conjunction with aggregated lender FICO rate sheets. Our estimates suggest large annual interest rate savings, predominantly on credit card debt and personal loans, of about $280 per treated person. This translates into $520 million in annual savings.

Finally, we turn to the effects on consumer welfare. To this end, we model uninsured individuals who derive utility from consumption and face a disutility from leaving medical bills unpaid. Disutility from unpaid medical bills captures costs like worsening credit options, the hassle of dealing with debt collectors, and the risk of legal action taken by creditors. The novelty of this framework is that Individuals choose optimally what portion of their medical expenses to leave unpaid. Combining the model with our empirical estimates, we find that the financial benefits of a mean and variance reduction in medical bills double when considering the indirect financial benefits.

Amazon Chief Economist gives MAE Distinguished Lecture

/in /by

 

As part of the MAE Distinguished Speaker series, Pat Bajari, the Chief Economist of Amazon, gave a talk on using big data in practice. His talk focused on the methodology of how to continuous refine algorithms to make steady improvements, by developing new models, training them on data and then testing them against competitors. He also emphasized the importance of interdisciplinary interaction: for example, computer scientists can turn photos of clothes into data points that economists can use to predict demand.

Till von Wachter new Associate Dean for Research

/in /by

We are delighted to announce the appointment of Professor Till von Wachter to the position of Associate Dean for Research for the Division of Social Sciences.  Professor von Wachter will work with the Dean and the Director for Research and Civic Engagement to find synergies and opportunities for enhancing the Division’s research infrastructure and strengthening its community partnerships.  He will lead the newly created Dean’s Forum, a faculty advisory board representing the Division’s academic units and research centers.

Econ Concentations – Finance – Risk and Portfolio/Wealth Management

/in /by

Investors in a market economy strive to maximize returns while sharing risks efficiently. This concentration is intended to prepare students for a wide range of careers in which they will be faced with the challenge of advising or managing investment portfolios. Such careers include positions in the rapidly growing asset management industry and/or careers as wealth management advisors. A student graduating from this concentration should be able to understand the basics of portfolio management and the full set of macroeconomic forces that drive the risks investors face.

Prerequisites: In addition to the full set of Lower Division requirements for the Economics or Business Economics Major, a student in this concentration must also take Economics 101, 102, and 103/103L.

Upper Division Electives: A student completing this concentration must complete four courses from the following list:

Econ 106M (Financial Markets and Institutions) Various

Econ 106V (Investments: Portfolio Theory) Pierre Olivier Weill

Econ 141 (Mathematical Finance) Patrick Convery

Econ 144 (Economic Forecasting) Randall Rojas

Econ 160 (Money and Banking) various

Econ 161 (Monetary Theory) various

Econ 122 (International Finance) Ariel Burstein

Math 174A (Financial Economics for Actuarial Students) various

Econ 187 (History of Financial Crises) Andy Atkeson and William Simon

Associated Bruin Development Academies to be shared by the two concentrations in finance:

– Financial modeling with Excel

– Valuation

Associated Internship Programs to be shared by the two concentrations in finance:

– Sharpe Fellows

– Simon Fellows

Associated Support for Faculty and Graduate Student Research:

The application of academic theory has transformed the asset management industry over the past several decades. At the same time, turbulence in financial markets has exposed the difficulties of applying this theory in a constantly evolving world. Both UCLA Economics and UCLA Anderson have been building strong groups of young scholars in macroeconomics and finance. One particularly exciting initiative is to strengthen the collaboration between the Ph.D. programs in Economics and in Finance at Anderson as is done in joint programs between the University of Chicago Economics Department and Chicago Booth. Support for faculty and graduate student research will help make UCLA a top center of new research in financial markets, asset pricing, and their interaction with the broader macroeconomy.