Participants and lecturers of the 2014 CEAR/Huebner Summer Risk Institute

Participants and lecturers of the 2014 CEAR/Huebner Summer Risk Institute

The CEAR/Huebner Summer Risk Institute exposes Ph.D. students and interested faculty in risk and uncertainty to relevant cutting-edge models, tools, and theory. Our audience is primarily comprised of faculty and Ph.D. students interested in the economics of risk who are located at colleges and universities that do not have access to specialized seminars and courses in these areas. Lectures are conducted by leading scholars in the fields of risk and uncertainty located at Georgia State University and elsewhere.


July 28-31, 2014


Georgia State University
CEAR Seminar Room
35 Broad St, 11th floor
Atlanta, GA 30303

Monday, July 28th
9:30-10:00 coffee/breakfast
10:00-noon Lecture 1: Affordable Care Act and Labor Market by Hanming Fang
Noon-1:00 lunch
1:00-2:30 Seminar: The Affliction of Choice in Health Insurance: Evidence from Employee Open Enrollmentby Justin Sydnor

Tuesday, July 29th
9:30-10:00 coffee/breakfast
10:00-noon Lecture 2: Affordable Care Act and Labor Market by Hanming Fang
6:00 Conference Dinner (Ellis Hotel)

Wednesday, July 30th
9:30-10:00 coffee/breakfast
10:00-noon Lecture 1 by Christian Gollier
Noon-1:00 lunch
1:00-2:30 Seminar: Behavioral Tools for Evaluating Insurance Products by Glenn Harrison

Thursday, July 31st
9:30-10:00 coffee/breakfast
10:00-noon Lecture 2 by Christian Gollier
Noon Institute adjourns


Hanming Fang
Professor of Economics, University of Pennsylvania
Topic: Health insurance reform and the labor market
July 28-29, 10:00 a.m. – 12:00 p.m.

Hanming Fang’s Presentation

Affordable Care Act (ACA) represents the most significant change (since the Medicare introduction) to the US health insurance market , where most of the working age population rely on their employers to obtain health insurance , and employer-provided health insurance premium accounts for more than 10 percent of workers’ compensation. Previous research has documented many connections between the labor market and health insurance market, for example, larger firms offer higher wages and are also more likely to offer health insurance; workers in firms that offer health insurance have lower turnover rates and have better self-reported health. How would ACA, a large-scale reform on the health insurance market, affect the labor market equilibrium? We present and empirically implement an equilibrium labor market search model , extended from Burdett and Mortensen (1998), where risk averse workers facing medical expenditure shocks are matched with rms making health insurance coverage decisions. Our model delivers a rich set of predictions that can account for a wide variety of aforementioned phenomenon observed in the data including the correlations among fi rm sizes, wages, health insurance o ff er ing rates, turnover rates and workers’ health compositions. We estimate our model by Generalized Method of Moments using a combination of micro data sources including Survey of Income and Program Participation (SIPP), Medical Expenditure Panel Survey (MEPS) and Robert Wood Johnson Foundation Employer Health Insurance Survey. We use our estimated model to evaluate the equilibrium impact of the AC A, including its impact on uninsured rate, firm size distribution, labor productivity, health and health expenditures . We also examine a variety of alternative policies to understand the roles of different components of the ACA in contributing to these equilibrium changes. We also discuss some ongoing work on the effect of ACA on firms’ decisions regarding their technological choice s and whether to to include spousal benefits in their employee insurance plans.

Christian Gollier
Professor, University of Toulouse
Topic: Valuing climate policies in an uncertain world
July 30-31, 10:00 a.m. – 12:00 p.m.

Christian Gollier’s Presentation

Although it never makes the front pages, it a nevertheless a major concern, both in government and in business: what price do we assign to the future? Or, more precisely, how do we discount, that is, how do we determine what value to attribute now to the socio-economic impacts that an investment made today will bring in the long term? In this talk, I will focus on the application of climate change, and I will raise a fundamental question: are we too selfish, selecting large discount rates and therefore investing insufficiently for the well-being of future generations, or are we, on the contrary, too virtuous? Using a time-consistent expected utility framework, I will show how the uncertainty affecting economic growth should affect the socioeconomic value of long-term investment and green policies. I will show that the same arguments proposed in the literature to justify a decreasing term structure for the safe discount rate also apply to justify an increasing term structure for the systematic risk premium. I will apply these general results to the case of macroeconomic catastrophes à la Barro (2006), and to the case of an uncertain trend or volatility of growth à la Weitzman (2007). Finally, I will discuss the evaluation of climate change policy in the light of the deep uncertainties affecting both its impacts on climate damages and the economic environment in which these damages will materialize.

Glenn Harrison
Professor, J. Mack Robinson College of Business, Georgia State University
Topic: Behavioral Tools for Evaluating Insurance Products
July 30, 1:00 – 2:30 p.m.

Glenn Harrison’s Presentation

Justin Sydnor
Assistant Professor, Wisconsin School of Business
Topic: The Affliction of Choice in Health Insurance: Evidence from Employee Open Enrollment
July 28, 1:00 – 2:30 p.m.

Justin Sydnor’s Presentation

There is a growing movement to offer individuals more choice in their health-insurance coverage. We see choices proliferating both in the public exchanges through the ACA and also in many employer-sponsored plans. At the same time there is growing concern, driven in large part by evidence from Medicare enrollment decisions of the elderly, that peoples’ understanding of and engagement with health-insurance options may lead to poor choices. In this study we examine data from an employer who enacted a new health-insurance enrollment platform that allowed employees to select different cost sharing provisions across deductibles, out-of-pocket maximums, co-pays and co-insurance, resulting in a matrix of over 40 plan options. In a data set with over 50,000 employees, we find that the vast majority select into coverage combinations that are financially dominated by other plans, which is especially startling given that these plans had the same provider network and differed only on cost-sharing dimensions. Most employees could save between $500 and $1,000 per year by selecting into the optimal plan. We find that selection into dominated plans is more likely for women and older employees, though roughly similar across income levels within the company.