Working Papers

Pay-As-You-Go Insurance: Experimental Evidence on Consumer Demand and Behavior, November 2022. AEA Pre-registration.

Abstract: Pay-as-you-go contracts reduce minimum purchase requirements which may increase market participation. We randomize the introduction and price(s) of a novel pay-as-you-go contract to the California auto insurance market where, despite a universal mandate, 17 percent of drivers are uninsured. The pay-as-you-go contract increases insurance take-up by 10.8 percentage points (89%) and days with insurance available by 4.6 days over the three-month experiment (27%). Demand is price-sensitive and coverage increases are smaller at higher prices. The pay-as-you-go contract increases insurance coverage in part by relaxing liquidity requirements: purchase behavior for more than half of drivers is consistent with a cost of credit in excess of payday lending rates and 19 percent of enrolled drivers have a purchase rejected for insufficient funds. Insurance coverage converges between the traditional and pay-as-you-go contract over time. I discuss potential explanations and their implications for similar financial technologies (e.g., buy-now-pay-later, earned wage access) and the uninsured driver problem.


The Impact of Financial Assistance Policies on Health Care Utilization: Evidence from Kaiser Permanente (with Alyce Adams, Neale Mahoney, Francis Wong, Jinglin Wang, and Wesley Yin) American Economic Review: Insights 4(3), September 2022: 389-407. Online Appendix. Replication Kit.

Abstract: Most hospitals have financial assistance programs for low-income patients. We use administrative data from Kaiser Permanente to study the effects of financial assistance on health care utilization. Using a regression discontinuity design based on an income threshold for program eligibility, we find that financial assistance increases the likelihood of inpatient, ambulatory, and emergency department encounters by 3.6pp (59 percent), 13.4pp (20 percent), and 6.7pp (53 percent), respectively, though effects dissipate three quarters after program receipt. Financial assistance also increases the detection and management of treatment-sensitive conditions (e.g., drugs treating diabetes), suggesting that financial assistance may increase receipt of high-value care.

Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment and Consumption (with Kyle Coombs, Arindrajit Dube, Calvin Jahnke, Suresh Naidu, and Michael Stepner) American Economic Association: Papers & Proceedings 112, May 2022: 85-90. Non-technical Summary.

Abstract: We examine the effects of the sudden withdrawal of expanded pandemic unemployment benefits in June 2021 using anonymized bank transaction data for 16,130 individuals receiving UI in April 2021. Comparing the difference in differences between states withdrawing and retaining expanded UI, we find that UI receipt falls by 36 p.p. while employment rises by only 7 p.p. by early September. Average cumulative UI benefits fall by$2,538 while average cumulative earnings increase by only $304. Heterogeneity by unemployment duration implies that these effects are primarily driven by extensive margin expiration of benefits, rather than intensive margin reductions in the benefit level.

Press: New York Times, The Economist, Washington Post, NPR, CNBC, Reuters, Business Insider, Yahoo

Trends in Medical Debt During the COVID-19 Pandemic (with Benedict Guttman-Kenney, Neale Mahoney, Francis Wong, Xuyang Xia, and Wesley Yin) JAMA Health Forum 3(5):e221031, May 2022.

Findings: Medical and nonmedical debt during the pandemic followed the prepandemic downward trends, with proportionally similar declines across zip code income quintiles. There was no statistically significant association between the percentage change in medical debt and the measures of pandemic severity.

Medical Debt in the US, 2009-2020 (with Neale Mahoney, Francis Wong, and Wesley Yin) JAMA 326(3), July 2021: 250-256. Online Appendix.

Findings: In this retrospective analysis of credit reports for a nationally representative 10% panel of individuals, an estimated 17.8% of individuals in the US had medical debt in collections in June 2020 (reflecting care provided prior to the COVID-19 pandemic). Medical debt was highest among individuals who lived in the South and in zip codes in the lowest income deciles and became more concentrated in lower-income communities in states that did not expand Medicaid.

Press: New York Times, Vox, Washington Post, Marketwatch, CBS Evening News, Marketplace, Bloomberg, Full List of Outlets

The Economic Consequences of Bankruptcy Reform (with Tal Gross, Feng Liu, Matthew Notowidigdo, and Jialan Wang) American Economic Review 111(7), July 2021: 2309-2341. Online Appendix. Replication Kit.

Abstract: A more generous consumer bankruptcy system provides greater insurance against financial risks but may also raise the cost of credit. We study this trade-off using the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which increased the costs of filing for bankruptcy. We identify the effects of BAPCPA on borrowing costs using variation in the effects of the reform across credit scores. We find that a one-percentage-point reduction in bankruptcy filing risk decreased credit card interest rates by 70–90 basis points. Conversely, BAPCPA reduced the insurance value of bankruptcy, with uninsured hospitalizations 70 percent less likely to obtain bankruptcy relief after the reform.

Press: New York Times (cited), NBER Digest

Myth and Measurement — The Case of Medical Bankruptcies (with Carlos Dobkin, Amy Finkelstein, and Matthew Notowidigdo) New England Journal of Medicine 378(12), March 2018: 1076-1078.

Press: New York Times, Associated Press, Newsweek, Washington Post, Washington Post (FactCheck)

The Economic Consequences of Hospital Admissions (with Carlos Dobkin, Amy Finkelstein, and Matthew Notowidigdo) American Economic Review 108(2), February 2018: 308–352. Online Appendix. Replication Kit.

Abstract: We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health insurance, hospital admissions increase out-of-pocket medical spending, unpaid medical bills, and bankruptcy, and reduce earnings, income, access to credit, and consumer borrowing. The earnings decline is substantial compared to the out-of-pocket spending increase, and is minimally insured prior to age-eligibility for Social Security Retirement Income. Relative to the insured non-elderly, the uninsured non-elderly experience much larger increases in unpaid medical bills and bankruptcy rates following a hospital admission. Hospital admissions trigger fewer than 5 percent of all bankruptcies in our sample.

Press: Washington Post (Wonkblog), New York Times, Vox

Beyond Statistics: The Economic Content of Risk Scores (with Liran Einav, Amy Finkelstein, and Paul Schrimpf) American Economic Journal: Applied Economics 8(2), April 2016: 195-224. Replication Kit.

Abstract: "Big data" and statistical techniques to score potential transactions have transformed insurance and credit markets. In this paper, we observe that these widely-used statistical scores summarize a much richer heterogeneity, and may be endogenous to the context in which they get applied. We demonstrate this point empirically using data from Medicare Part D, showing that risk scores confound underlying health and endogenous spending response to insurance. We then illustrate theoretically that when individuals have heterogeneous behavioral responses to contracts, strategic incentives for cream-skimming can still exist, even in the presence of "perfect" risk scoring under a given contract.

Selected Research in Progress

The Burden of Medical Debt and the Impact of Debt Forgiveness (with Neale Mahoney, Francis Wong, and Wesley Yin) In the field. Summary on J-PAL Website. AEA Pre-registration 1 (Old Debt). AEA Pre-registration 2 (New Debt).

Abstract: Medical debt is potentially a large burden for many Americans. While these nominal amounts are staggering, it is unclear to what extent medical debt threatens well-being. Recovery rates for medical debt in collections are low, suggesting that the pure “balance sheet” cost of medical debt is modest for most individuals. Yet medical debt may harm individuals financially through lower credit scores, higher interest rates, and reduced access to credit. Medical debt may also have non-pecuniary costs through negative impacts on mental and physical health, or by deterring individuals from seeking valuable health care. We implement a large-scale randomized control trial of medical debt forgiveness. The experimental treatment group is comprised of around 60,000 individuals who have received approximately $122 million in medical debt forgiveness. We measure financial outcomes using credit bureau data and additional outcomes with a multi-modal survey.

Press Coverage of Intervention: New York Times, CNN, Indy Star, NPR, NBC News, PBS News Hour, Axios, Consumer Reports

Technology and Targeting: Accessing Bankruptcy Relief without Attorneys (with Sam Antill)

Abstract: Barriers to accessing government assistance affect who receives benefits. Filing for consumer bankruptcy is expensive, many potential filers are liquidity constrained (Gross, Notowidigdo, and Wang, 2014), and only a fraction of individuals who would benefit from filing for bankruptcy do so (White 1998). This paper explores the potential of a novel financial and legal technology to alter who accesses bankruptcy relief, surveys prospective filers on the causes of their financial distress, and considers the implications for the targeting and efficiency properties of the consumer bankruptcy system.

Press Coverage of the Prospective Filers Survey: NBC News

Resting Papers

Bankruptcy and the COVID-19 Crisis (with Jialan Wang, Jeyul Yang, and Ben Iverson). September 2020. See my coauthors' webpages for updated versions of this paper.

Abstract: We examine the impact of the COVID-19 economic crisis on business and consumer bankruptcies in the United States using real-time data on the universe of filings. Historically, bankruptcies have closely tracked the business cycle and contemporaneous unemployment rates. However, this relationship has reversed during the COVID-19 crisis thus far. While aggregate filing rates were very similar to 2019 levels prior to the severe onset of the pandemic, filings by consumers and small businesses dropped dramatically starting in mid-March, contrary to media reports and many experts' expectations. The total number of bankruptcy filings is down by 27 percent year-over-year between January and August.

Press: Wall Street Journal, The Economist (Daily Chart), Oxford Business Law Blog, Promarket at Chicago Booth

Information Frictions and Insurer Plan Design: Evidence from Medicare Advantage (with Evan Mast)

Abstract: Behavioral frictions in insurance exchanges affect not only the plan a consumer selects, but also the menu of plans insurers offer. We investigate an information friction in Medicare Advantage—beneficiaries pay two premiums, and one is much more salient. We find a larger demand elasticity for the salient versus non-salient premium. A model of insurer plan design produces simulated premiums matching the observed distribution using these “behavioral” elasticities, but not when assuming equal elasticities across the two premiums. Removing the friction increases enrollment in low-premium plans, increasing consumer surplus $5 per year with supply fixed and $73 per year when including a supply response.