Funded Faculty Research

Prakash Mishra, Applied Economics Doctoral Candidate, The Wharton School; Arthur van Benthem, Associate Professor of Business Economics and Public Policy, The Wharton School 

Since 1982, carbon emissions from deforestation are valued at $2 trillion of damages with a $51 social cost of carbon. Agriculture drives half of these emissions. I ask how much of agriculture-induced deforestation is efficient, and where efficient deforestation should occur. Using a globally estimated trade general equilibrium model over 1.6 million plots of land, I establish three descriptive empirical facts concerning globally efficient deforestation. First, at a 95% confidence interval, I reject 80% of deforestation since 1982 as inefficient. This deforestation has too low an economic return for a high environmental damage. In the numbers, efficient deforestation at a $51 social cost of carbon costs 12% of global agricultural production. Second, the deforestation tax is regressive across countries. The bottom quartile of countries by income bear nearly 100% of global abatement costs. I explore how to create a just and equitable forest pricing policy which alleviates these costs to world’s poorest. Third, should the EU propose bilateral trades, such as a payment for ecosystem services, with forested nations, it can support nearly efficient forest levels in most tropical nations. However, when the EU does not internalize full marginal benefits of carbon damages, they should preserve African or Russian forest over the Amazon to save forest at low cost. These experiments provide a blueprint for implementing value-add in global offset markets and REDD+ contracts like the Amazon Fund. In sum, this paper situates much of the prior literature’s focus on the Brazilian Amazon in a globally consistent framework for measuring marginal abatement costs for deforestation.

Ben Keys, Rowan Family Foundation Professor, Professor of Real Estate, Professor of Finance, The Wharton School; Philip Mulder, Assistant Professor of Risk and Insurance, University of Wisconsin-Madison School of Business

The goal of this research project is to understand how increasing homeowner’s insurance costs due to climate change are affecting housing markets. First, we will show geographically where homeowners premiums have been rising the most and how those changes are related to insurance market competition and regulation, the cost of building materials and labor, and physical risk. Second, we will show how higher premiums have affected home prices as well as the kinds of coverage homeowners buy and how they shop for homeowner’s insurance.

Arthur van Benthem, Associate Professor of Business Economics and Public Policy, The Wharton School; Joseph Shapiro, Associate Professor of Agriculture & Resource Economics, UC Berkeley

This research quantifies the social welfare consequences of a prominent environmental policy for transportation, and then assesses the distribution of economic costs and environmental benefits across racial and income groups. We study smog check vehicle inspections, which regulate emissions of older vehicles owned by households in the US, which are responsible for an enormous share of local air pollution. This policy has regressive costs but potentially progressive environmental benefits, making incidence complex but important to quantify. We will use an individual-vehicle data set on where cars are registered, where they are driven, how much pollution they emit before and after testing,
and how emissions reductions translate to environmental and health benefits at a very granular geographical level. The findings of this research project should fill an important gap in our understanding of the efficiency and fairness of mobile-source pollution policies.

Santiago Gallino, Charles W. Evans Distinguished Faculty Scholar, Associate Professor of Operations, Information and Decisions, The Wharton School; Alexander Hübner, Professor of Business Administration, Technical University of Munich; Konstantin Wink, Research Associate and Doctoral Student, Technical University of Munich

This research project, in collaboration with faculty from TUM and a leading German retail chain, aims to address a critical gap in retail operations research by empirically investigating the impact of grocery store characteristics on food waste. Leveraging a rich dataset provided by our industry partner, this study examines how factors such as sales area, market type, assortment depth, managerial decisions, and external elements like neighborhood purchasing power and market competition density influence food waste in the retail sector. This research not only contributes to academic knowledge by filling a research void but also provides actionable insights for the retail sector, enhancing both economic efficiency and environmental sustainability.

Jean-Marie Meier, Visiting Assistant Professor of Finance, The Wharton School; Steven Xiao, Associate Professor of Finance and Managerial Economics, Naveen Jindal School of Management, The University of Texas at Dallas

How do ESG practices, in particular environmental and social (E&S) practices, diffuse throughout the economy? Moreover, how does the diffusion of E&S practices differ at the firm-level compared to the economy-wide level? At the microeconomic level, a firm could improve the E&S performance of its existing products. Alternatively, the same firm could replace its “brown” products with “green” products. Or are companies offering both green and brown products and within-firm consumer demand for these different products changes over time, resulting in different market shares for these products? At the economy-wide level, an improvement in aggregate E&S policies could arise from existing companies offering more E&S-friendly products or from “brown” firms (potentially incumbents) exiting the marketplace while “green” firms (potentially start-ups) enter.

Sandra Schafhaütle, Assistant Professor of Accounting, The Wharton School; Gurpal Sran, Assistant Professor of Accounting, NYU Stern

We study the effects of local environmental regulations on the disclosure decisions and real behaviors of firms at various points in the supply chain. We exploit countries’ ratification of various local environmental regulations as a shock to firms’ disclosure and investment incentives. Because firms positioned in the upstream, midstream, or downstream of supply chains have different economic incentives, we expect differences in their disclosure behavior regarding commitments to address environmental outcomes (such as deforestation) and differences in real activities (such as supplier audits). With our research, we aim to shed light on how firms throughout the supply chain face not only heterogeneous disclosure incentives but also heterogeneous costs and benefits in taking real actions in line with their disclosed commitments.

R. Jisung Park, Assistant Professor of Business Economics and Public Policy, The Wharton School; Nora Pankratz, Economist, Federal Reserve; A. Patrick Behrer, Research Economist, Developmental Economics, World Bank

Adapting to climate change will require economic agents to make a wide range of investments. Central to the debate is the role of government intervention in facilitating such adaptation. One view is that firms and their employees will manage this process efficiently, voluntarily engaging in protective investments that increase resilience. An alternative possibility is that take up of protective technologies and behaviors is hindered by market frictions, necessitating government intervention. For instance, in the case of real estate, emerging evidence suggests that information asymmetries, local spillovers and other market imperfections may limit adaptation investment.

A controversial approach to encouraging climate adaptation among firms is to mandate investments in resiliency. Mandatory standards may help overcome potential market imperfections and foster broader adoption of such investments. However, in a world with heterogeneous employers and workers, some may find themselves coerced into making costly investments they would have preferred to avoid, even if market participants are fully informed and costs are fully internalized. The regulator may also misjudge the magnitude of the risk relative to the costs of mitigation, in which case such policies may increase costs and cause firms to go out of business. Despite potentially wide-ranging implications, there is little empirical evidence regarding the efficacy of mandated adaptation investments and their effects on firms and their employees.

In this paper, we consider the case of workplace heat safety standards in the state of California. The number of days with potentially damaging heat is increasing rapidly and will continue to increase even with aggressive greenhouse gas mitigation. Currently, the heat wave season in the United States is nearly three times longer than in the 1960s, and in the summer of 2022 alone, a record-breaking 400 U.S. locations experienced unprecedented monthly temperatures (Lipton et al. 2018; Stevens and Samenow 2022). Climate models project increased frequency and intensity of extreme heat events due to ongoing climate change (IPCC 2021). Given its effects on energy costs (Auffhammer, 2018), labor productivity (Hsiang 2011; Somanthan et al, 2021), and worker health (Dillender, 2019), managing the risks posed by heat may pose significant costs on firms.

While there are currently no national workplace protections pertaining to heat exposure, in 2005 California became the first and at the time only state to adopt a mandatory workplace heat safety standard. The standard required firms with outdoor work sites to provide access to shade, water, and rest breaks for all employees, as well as training and safety protocols specific to heat-illness prevention. It was intensively enforced, with over 15,500 inspections, 19,700 citations, and $23.3 million in penalties being issued for the standard over the period 2005 to 2020, and its provisions became binding above an explicit daily temperature threshold, which enables a regression-discontinuity-in-differences (RDiD) research design.

We provide the first comprehensive evaluation of the effect of this mandate on both worker health and productivity and how sensitive they are to changes in temperature (“worker resilience”), as well as its effects on firm costs and profitability, including on such measures as costs of goods sold and how sensitive they are to changes in temperature (“firm resilience”). We then assess how these effects vary along dimensions commonly associated with a range of commonly studied market imperfections, including potential information, labor market, and credit market frictions.

Our analysis takes advantage of detailed administrative data from the nation’s largest worker’s compensation system, which comprises over 16 million injury records matched to injury dates and employer locations over the period 2000 to 2021. Importantly, our approach is robust to potential endogeneity of safety inspections, unlike many previous analyses that rely on publicly available data on workplace injuries and safety violations reported to OSHA (for instance, Zhao 2023). It is also robust to potential selection on firm characteristics, as we can observe the outcomes for a panel of treated and untreated firms over time. In addition to exploiting the plausible exogeneity of the policy itself, which was adopted as an “emergency order” following a high-profile workplace accident in agriculture, we also leverage the fact that its most stringent provisions are binding only on days above an explicit temperature threshold and to a subset of industries and firms with a large fraction of work tasks occurring outdoors.

We find that hotter temperatures increase workplace injuries significantly. A day with temperatures in the 80F to 90F range increases injuries relative to milder days in the 50s and 60s by 5 to 9 percent. The effect of heat on worker injuries is significantly mitigated after the implementation of the standard. The causal effect of daily temperature above 95 degrees F falls dramatically following the policy, decreasing by over 60 percent relative to the years immediately preceding its adoption.

In ongoing work, we explore whether the standard reduces injuries more acutely in firms with greater baseline exposure, using firm-level measures of outdoor work intensity derived from task-based measures of occupational exposure from O*NET, and detailed industry-level employment characteristics from the OEW. To better understand the broader implications for adaptation policy, we assess the effects of the policy on firms’ costs, leveraging firm-level financial information from COMPUSTAT, as well as on employment and wages of affected workers.

Sergey Sarkisyan, Doctoral Candidate in Finance, The Wharton School; Mirko Heinle, Associate Professor of Accounting, The Wharton School; Irina Luneva, Doctoral Candidate in Accounting, The Wharton School

We study cost and sources of debt for companies with poor ESG performance. We find that, while both loan and bond financing is costlier for borrowers with poor ESG performance, “brown” firms face a lower extra premium for borrowing from banks than “green” firms. In addition, companies with poorer ESG performance obtain larger bank loans and borrow smaller amounts from the public bond market, gradually shifting their debt structure towards more bank-loan-heavy. We test three explanations for our findings: banks’ closer relationship with borrowers allowing them to charge a lower premium for poor ESG performance, public debt holders’ inherent preference for high ESG performance firms, and public debt holders being subject to stricter ESG regulation than banks.

Susanna Berkouwer, Assistant Professor of Business Economics and Public Policy, The Wharton School; Joshua Dean, Assistant Professor of Behavior Science and Economics, Booth School of Business, University of Chicago

What investments should businesses, governments, and civil society target to maximally reduce greenhouse gas emissions? Economic efficiency would prioritize investment opportunities that generate the largest reduction in greenhouse gas emissions per dollar spent. Through two related research projects, this research will evaluate what types of opportunities will best enable maximal reduction in greenhouse gas emissions, and what barriers the global economy currently faces in achieving this allocation.

In the first research project, I plan to quantify a low-cost emissions reduction investment: the switch from biomass cooking (charcoal or wood) to electric induction stoves. This generates not only large environmental benefits (a charcoal stove generates roughly the same emissions per year as a gasoline vehicle) but also large private benefits for low-income families (through reductions in energy expenditures, since electricity is significantly more efficient in converting energy to heat). I study this in the context of an induction stove developed by a Kenyan company, with a factory in Nairobi.

In the second research project, I study why firms based in the U.S. might invest in high-cost types of abatement (such as Amazon’s recent electric vehicle announcement) instead of lower-cost abatement, such as the cookstoves. Specifically, I explore how customer perceptions of ethics and morals drive a preference for companies that undertake the former.

Serguei Netessine, Dhirubhai Ambani Professor of Innovation and Entrepeneurship, Professor of Operations, Information and Decisions, Senior Vice Dean for Innovation and Global Initiatives, The Wharton School; Vishrut Rana, PhD. Candidate in Operations, Information and Decisions, The Wharton School; Christian Kaps, Assistant Professor of Business Administration, Harvard Business School

Grid-scale electricity storage technologies enable better matching of electricity supply with demand by storing excess electricity during periods of low demand and releasing it during periods of high demand. As the share of variable renewable energy resources, like wind and solar, increases, the supply of electricity becomes more intermittent, and storage technologies serve as an important complement that help smooth out fluctuations in generation. Due to this, storage – like lithium ion batteries that account for 90% of US electricity storage capacity – is widely regarded as a crucial part of the clean energy transition. While batteries can earn revenues from multiple streams in wholesale electricity markets, a significant portion of the revenue comes from arbitrage – charging when prices are low, often in periods of high renewable electricity production, and discharging when prices are high, often when renewable generation falls and/or as total system demand increases.

Because of this arbitrage-driven revenue, battery operators choose to locate their resources in locations with high variability in nodal prices (i.e., locational marginal price). However, current practices for locating battery investments are unable to account for changes in price volatility at the location of interest under changing market conditions of the future, and may potentially overestimate future volatility leading to inefficient investments. To address this challenge of selecting locations for batteries, we develop a structural model for electricity price formulation using historical price, demand, renewable generation, and transmission data from various nodes in Texas. Using this model, we estimate revenues from arbitrage and predict future revenues under changing market conditions. Results from our model can help battery operators identify optimal locations for storage investments and help system operators study market performance under different demand and renewable generation growth scenarios in the presence of storage technologies.

In the first research project, I plan to quantify a low-cost emissions reduction investment: the switch from biomass cooking (charcoal or wood) to electric induction stoves. This generates not only large environmental benefits (a charcoal stove generates roughly the same emissions per year as a gasoline vehicle) but also large private benefits for low-income families (through reductions in energy expenditures, since electricity is significantly more efficient in converting energy to heat). I study this in the context of an induction stove developed by a Kenyan company, with a factory in Nairobi.

In the second research project, I study why firms based in the U.S. might invest in high-cost types of abatement (such as Amazon’s recent electric vehicle announcement) instead of lower-cost abatement, such as the cookstoves. Specifically, I explore how customer perceptions of ethics and morals drive a preference for companies that undertake the former.

Serguei Netessine, Dhirubhai Ambani Professor of Innovation and Entrepeneurship, Professor of Operations, Information and Decisions, Senior Vice Dean for Innovation and Global Initiatives, The Wharton School; Vishrut Rana, PhD. Candidate in Operations, Information and Decisions, The Wharton School 

This funding supports the development of a paper studying the impact of selecting locations for renewable energy generation (in particular, wind energy) based on metrics that account for the time and location of electricity generation from intermittent renewable resources. By developing computational models for site selection and simulation efforts for counterfactual assessment, the researchers will attempt to answer two main research questions: 1) How can granular wind-speed and transmission line data be used to identify locations for wind power plants? 2) What is the impact on the electricity markets by selecting locations using the proposed data-driven framework?

Leandro Pongeluppe, Assistant Professor of Management, The Wharton School

The primary objective of this research project is to develop a toolkit that can identify greenwashing practices in the sustainability reports of US Fortune 500 firms. The project will be achieved through three dimensions: textual analysis of environmental terms, collocation of these terms in sentences with emotional (sentiment) content, and visual analysis of the reports (count of green pixels). The secondary objective is to compare the firms’ disclosure with their ESG scores and penalties to identify the degree of greenwashing. The study’s outcomes will provide valuable insights into the identification of greenwashing practices in sustainability reports of US Fortune 500 firms. The toolkit developed from this research will enable investors, regulators, and other stakeholders to make informed decisions based on accurate information. The study will also contribute to the existing literature on corporate social responsibility and environmental disclosure, and the findings will have significant implications for policy-making and corporate governance.

Daniel Garrett, Assistant Professor of Finance, The Wharton School; Marius Guenzel, Assistant Professor of Finance, The Wharton School

This project continues the researchers’ ongoing work on bounded rationality in the market for public financing in the US in its relation to the market for securities issued for environmental, social, and governance (ESG) related spending priorities. Taking a new approach in modeling the decision to bring ESG-verified bonds to market over time and exploring how the presence of these bonds is driven by investor preferences, the project unearths two potential instruments for ESG-verification that have not been used before in the academic literature. Both of these instruments require modeling the selection of who wants to issue an ESG-verified bond.

Carol Seregni, Assistant Professor of Accounting, The Wharton School; Carolyn Deller, Assistant Professor of Accounting, The Wharton School

Evidence shows that individuals and firms forego energy efficiency investments: this is known as the Energy Efficiency Gap. One explanation for the existence of this gap is imperfect information (Alcott and Greenstone, 2012). These researchers study whether the introduction of mandatory energy audits for large firms reduces information frictions and leads to better environmental outcomes.

Lu Liu, Assistant Professor of Finance, The Wharton School; Parinitha Sastry, Assistant Professor of Finance, Columbia GSB

What is the role of government insurance in the mortgage market? Given the outsized role of public entities in the US mortgage market, this is a first-order question for policy and market design, given long-standing moral hazard issues and possibly distortionary effects such as crowding out of private provision. This research studies this question in the context of insurance against systematic risks, in particular, climate risks coming from flood risks.

Susanna Berkouwer, Assistant Professor of Business Economics and Public Policy, The Wharton School; Joshua Dean, Assistant Professor of Behavior Science and Economics, Booth School of Business, University of Chicago

Parametric insurance has the potential to be a key adaptation tool to make vulnerable communities more resilient to climate change. Under parametric insurance, premiums are determined by coverage level, which consists of two parameters: cyclone strength (ranging from Tropical Storm to Category 5) and location (whether the eye of the storm is within 25km, 50km, or 100km of a location). This funding supports early-stage exploratory surveys and piloting activities to study tropical cyclone insurance in the Philippines and answer the following questions: What is demand for parametric insurance (prior to the tropical cyclone season)? How do individuals trade off transparency and complexity (prior to the tropical cyclone season)? Does insurance improve recovery in the case of a tropical cyclone? Does insurance spur investment even absent a tropical cyclone? How do village cooperatives optimally award insurance policies and disburse funding to individuals or businesses? Can parametric insurance be used to leverage credit as a tool for economic growth?

Frank Zhou, Assistant Professor of Accounting, The Wharton School

Cross-border capital flows have the potential to enable host countries to leverage their comparative advantages, thereby improving resource allocation efficiency. However, foreign capital owners may not always share the same economic and social objectives as domestic shareholders. For instance, they may be primarily motivated by acquiring cutting-edge technologies to advance their own domestic markets or establishing a local presence to promote their existing products and services. This type of foreign capital utilization may lead to a loss of host country competitive advantages, with unintended consequences for the local economy and environment. As such, careful monitoring and regulation of foreign investment are necessary to ensure that investments align with host country goals and values. The primary objective of this project is to investigate the recent surge in cross-border mergers and acquisitions of farmlands and to analyze its impact on the efficient utilization of modern technology for improving land productivity, capital investments, and the local economy and environment.

Christina Parajon Skinner, Assistant Professor of Legal Studies and Business Ethics, The Wharton School; Jesus Fernandez-Villaverde, Professor of Economics, Penn School of Arts & Sciences

Increasingly, the question “what is a central bank” is harder to answer as these once narrow institutions have expanded and lines around once clearly delimited mandates blurred. This case book attempts to clarify the role of central banks—and to make the law governing them more concrete—by discussing the origins and evolution of the myriad functions of central banks we see today. It contextualizes this discussion with the economic policy rationale for these institutions myriad functions, doing so with comparative perspective that considers a range of central banks around the globe. Overall, the project is animated by the unprecedented pressure for central banks to evolve, which has been thrust upon these institutions by popular attention to ESG-related challenges and risks, as well as the rise of unconventional monetary policy—quantitative easing—and its impact on households.

Vinay Subramanian, Doctoral Student in Management, The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School 

We would like to empirically study the role played by impact investors in investments. We will build a panel dataset of impact and non-impact portfolio firms to investigate the selection and treatment effects of impact investors. These effects would potentially include the additionality and “extra-financial” value add of impact investors. We would like to augment data available from WRDS and other Wharton sources with paid data from Pitchbook as well as webscraped data and other textual sources. In addition, we would also like to explore collaboration with the impact investing research lab, especially with regards to potential usage of the leading impact finance database (IFD). We would like to pursue this line of enquiry further to study if impact funds engage in “greenwashing” and understand heterogeneity within impact investors.

Vinay Subramanian, Doctoral Student in Management, The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School 

We would like to empirically study the role played by impact investors in investments. We will build a panel dataset of impact and non-impact portfolio firms to investigate the selection and treatment effects of impact investors. These effects would potentially include the additionality and “extra-financial” value add of impact investors. We would like to augment data available from WRDS and other Wharton sources with paid data from Pitchbook as well as webscraped data and other textual sources. In addition, we would also like to explore collaboration with the impact investing research lab, especially with regards to potential usage of the leading impact finance database (IFD). We would like to pursue this line of enquiry further to study if impact funds engage in “greenwashing” and understand heterogeneity within impact investors.

Guilherme Siqueira, Doctoral Student of Legal Studies & Business Ethics, The Wharton School; Brian Feinstein, Assistant Professor of Legal Studies & Business Ethics, The Wharton School

Firms often break the law expecting to benefit from it, corruption practices being a typical example. Although there is a growing body of literature on explaining why firms adopt illegal strategies, almost no attention has been paid thus far to the strategic dimensions involved in pursuing unlawful strategies. While research has usually focused on explaining the selection of unlawful courses of action vis-a-vis law-abiding alternatives, the selection of a particular unlawful strategy among equally law-breaking alternatives remains largely unclear. That gap might be explained partly due to the challenge of gathering data on corporate illegality, which is usually surrounded by secrecy.

In 2014, Brazilian law enforcement authorities initiated what many consider to be the largest anticorruption investigation in history – Operation Car Wash, which sent ripples across Latin America. In Brazil, the investigation lasted seven years and resulted in over 300 convictions, including top executives from some of the largest companies in Latin America, such as Petrobras, Odebrecht and J&F. Through its investigations, Car Wash was able to gather an unprecedented volume of documents and information on wrongdoings committed by multiple Brazilian corporations, including long testimonies from hundreds of executives and records of illegal transactions spanning almost three decades. Given the well-known challenges of gathering data on corporate illegal behavior, Car Wash’s unique collection of data provides a rare opportunity to dive into the details of the illegal strategies pursued by the companies involved.

Although the majority of those records are no longer covered by judicial secrecy, that incredibly rich source of data remains largely unexplored by organizational scholars, and much of it risks being lost. The “Car Wash Archive” is an effort to collect and systematize archival data from Operation Car Wash, thus enabling a wide range of research projects to be derived from it.

The first stage of the project (for which funding is now requested) consists in gathering the documents and testimonies that resulted from plea-agreements with six large construction companies: Odebrecht, Andrade Gutierrez, Camargo Correa, OAS, UTC and Engevix. This incredibly valuable dataset would allow unprecedented insight into decision-making processes of law-breaking firms.

Sagar Saxena, Assistant Professor of Business Economics and Public Policy, The Wharton School; Shresth Greg, Doctoral Candidate in Economics, Harvard Business School

The Indian government spends almost 1% of India’s GDP on payments to fertilizer producers as part of a scheme to subsidize fertilizers for agricultural use. In particular, the government awards fertilizer producers a fixed price for their output, determined by production and investment costs, and then sells the fertilizers to farmers at a highly subsidized price. This scheme is an important part of the government’s strategy aimed at enhancing food security and increasing farmer incomes. However, for decades, this scheme has been subject to widespread criticism and remains a hotly debated issue among economists and policymakers. While there is evidence suggesting that the subsidies have spurred increased fertilizer use and agricultural productivity, critics argue they also distort market dynamics and diminish incentives for producers to enhance efficiency and reduce costs. Despite being in place for nearly six decades, the scheme has been subject to minimal reforms. In this paper, we study the equilibrium impact of fertilizer subsidy reform on the supply-side of this market. In particular, we examine how entry, exit, investment, and production decisions would change under alternative subsidy mechanisms. To do so, we develop a dynamic structural model of the fertilizer industry in India which we will estimate using firm-level data on production and investment decisions. Using this structural model, we plan to simulate several counterfactuals including (1) no subsidy, (2) entry/investment subsidy, (3) production subsidy, and (4) competitive procurement auctions wherein the government buys fertilizers from the lowest bidder. These counterfactuals will allow us to understand the equilibrium effects of alternative subsidy mechanisms and provide insights for policymakers.

Seyoun Kim, Doctoral Student in Healthcare Management and Economics, The Wharton School; Claudio Lucarelli, Associate Professor of Healthcare Management, The Wharton School

The global population is aging rapidly, and this progression will put increasing pressure on society to care for the growing population of elderly. This means a growing demand for caretaking support, both informal and formal. The United States has relied on congregate living settings such as nursing homes to provide formal caretaking support, however, the COVID-19 pandemic highlighted the advantages of aging at home and in the community. Concurrent to the aging population is the increasing secularization of society. Participation in religious communities has steadily declined over the past few decades. Historically, religious communities were a source of social support that the elderly could rely upon as they aged at home. The elderly that no longer go to church lose the community and support that helps them live independently and may be more at risk of needing formal caretaking in a setting such as a nursing home. The historical decline in religious participation may be a useful case study in understanding how the attrition of longstanding community institutions affect society as it increasingly moves into the virtual realm, especially with the rise of artificial intelligence.

Zorina Chen, Doctoral Student in Management, The Wharton School; Matthew Bidwell, Xingmei Zhang and Yongge Dai Professor, Professor of Management, The Wharton School

Despite research documenting the persistent labor market challenges experienced by immigrants, little is known about how immigrants navigate the recruitment process of elite industries in the United States. Drawing on the cultural matching theory, I will comparatively examine how first-generation immigrants from East Asian countries perceive and cope with the sociocultural inequalities facing them as they seek elite jobs in the US based on interviews with first-generation and second-generation East Asian immigrants and White Americans. Ethnographic observations of networking events, career fairs, and career panels will be conducted to generate additional insights. By exploring mechanisms embedded in social interactions that reproduce inequalities in elite labor markets–whose recruitment processes are known to be networking-intensive–I attempt to expand the current understanding of immigrants in labor markets and how certain hiring practices reinforce socioeconomic inequalities.

Aparajita Agarwal, Doctoral Candidate in Management, The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School

This study examines the trade-offs involved as organizations either scale “up” for widespread impact or scale “deep” for localized, enduring impact in resource-constrained emerging markets. Employing a randomized control trial in two settings – first, with 400 community female agents (intermediaries) of a digital platform and second, with 120 agents of an agri-tech firm in rural India, we investigate the implications of these scaling strategies on agent-level behavior and outcomes and on the social impact created. The study intends to examine the trade-offs among transaction activity, agent satisfaction, and agent engagement with low-income customer segments that accompany the scaling choice. The research seeks to extend the discussion on scaling to include agent-level outcomes, thereby offering nuanced insights into scaling trade-offs in complex environments in the management literature.

Saerom (Ronnie) Lee, Assistant Professor of Management, The Wharton School; Reuben Hurst, Assistant Professor of Management and Organization, Robert H. Smith School of Business, University of Maryland

This paper will investigate how employers’ use of pro-diversity claims in recruiting efforts shapes the distribution of political ideologies within the applicant pool. These researchers argue these claims are disproportionately attractive to left-leaning applicants, who compared to their right-leaning counterparts, view employers that make these claims as more aligned with their political ideology, more likely to employ others that share their political ideology, and less likely to discriminate against them based on their political ideology. In a field experiment with a partner firm, this research will measure how the use of pro-diversity claims affects the distribution of political ideologies within the applicant pool. One implication of the study is that recruiting strategies designed to diversify applicant pools in terms of gender or race may de-diversify applicant pools in terms of political ideology.

Christopher Bruno, Doctoral Student in Management, The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School

In recent years alone, COVID-19, Black Lives Matter, and disasters like the California wildfires asked firms to respond to fast-moving, highly visible, stressful, and frequently contentious or polarizing social issues. Prior theory does not adequately address how firms respond to the increased pressure from these types of issues. This research develops theory around a deeper understanding of the latent construct, expectations, to help fill this gap. This funding supports experiments to validate (1) that stakeholder expectations are a mechanism that varies by different traits of corporations (e.g., their size); (2) to understand which corporate factors are the most important differentiators of expectations; (3) to test the discriminant validity of different types of expectations (e.g., normative vs. predictive).

Ashley Litwin, Doctoral Student in Applied Economics, The Wharton School; Judd Kessler, Howard Marks Professor of Business and Economic Public Policy, The Wharton School

Hospital emergency departments (ED) play a critical role in the U.S. healthcare system. In 2019, there were over 151 million ED visits across the country, or 46.6 visits per 100 people (Cairns, Ashman and Kang, 2022). Under federal law, emergency departments are required to provide care to all patients (Lulla and Svancarek, 2022). However, hospitals have substantial discretion as to the timeliness of care. The primary system that determines a patient’s wait time, and potentially their subsequent health outcomes, is triage, designed so that the sickest patients are seen by the doctor first. Despite the importance of this process, little is known about how triage decisions are made in practice.

Aparajita Agarwal, Doctoral Candidate in Management, The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School

This study examines the trade-offs involved as organizations either scale “up” for widespread impact or scale “deep” for localized, enduring impact in resource-constrained emerging markets. Employing a randomized control trial in two settings – first, with 400 community female agents (intermediaries) of a digital platform and second, with 120 agents of an agri-tech firm in rural India, we investigate the implications of these scaling strategies on agent-level behavior and outcomes and on the social impact created. The study intends to examine the trade-offs among transaction activity, agent satisfaction, and agent engagement with low-income customer segments that accompany the scaling choice. The research seeks to extend the discussion on scaling to include agent-level outcomes, thereby offering nuanced insights into scaling trade-offs in complex environments in the management literature.

Harriet Jeon, Doctoral Candidate in Healthcare Management, The Wharton School; Hummy Song, Assistant Professor of Operations, Information and Decisions, Associate Professor of Healthcare Management, The Wharton School; Song-Hee Kim, Associate Professor of Operations Management, Seoul National Unversity; Kyeongsu Kim, Samsung Medical Center; Sang Won Seo, Samsung Medical Center; Jeong Hee Hong, Samsung Medical Center

Shifts are the dominant way to work in many contexts requiring 24/7 coverage, including call centers, police departments, and hospitals. While the detriments of shift work are well-documented both at the individual and organizational levels, its deployment is often unavoidable given round-the-clock staffing needs. We explore a potential operational lever—incorporating heterogeneous preferences over shift design—to mitigate ramifications of shift work in the context of acute care bedside nurses. Using survey, administrative, and shift data, we examine whether and the extent to which individual choice over dimensions of their shifts mitigates the impact of shift work on work (dis)satisfaction and turnover of nurses.

Ruochen Sun, Doctoral Candidate in Healthcare Management, The Wharton School; Abby Albert, Assistant Professor of Healthcare Management, Dorinda and Mark Winkelman Distinguished Faculty Scholar, The Wharton School

Regulating the provision of product information is common in many industries. Increasing the provision of product information could improve consumer’s choices while the provision of product information imposes private and social costs. This project studies this trade-off in the context of the pharmaceutical industry’s provision of pediatric clinical trial data. Up to 60% of prescription medications given to children in the U.S. are for off-label, non-FDA approved uses lacking safety and efficacy data for pediatric populations. By linking drug patents, clinical trials, and health insurance claims data, we document the equilibrium level of pediatric trial provision and patterns of off-label prescription drug use among children. We then estimate a structural model to quantify the costs and benefits of additional pediatric trial requirements and simulate alternative policy options.

Julian Jonker, Assistant Professor of Legal Studies & Business Ethics, The Wharton School of Business

This funding supports this year’s Big Ten & Friends workshop on July 12-13, 2023. Big Ten & Friends is a small annual conference that brings together business law faculty to discuss works-in-progress. Faculty from Michigan, Indiana, Penn State, and Wharton are typically represented, along with occasional participation from Maryland, Rutgers, and UConn. The workshop much improves the papers’ quality. It also helps to build connections between research-active business law & ethics faculty, providing opportunities for faculty to discover potential collaborations and for graduate students to network with scholars at other schools prior to going on the job market.

Lynn Wu, Associate Professor of Operations, Information and Decisions, The Wharton School; Xiaoning Wang, Assistant Professor of Information Systems, Naveen Jindal School of Management, The University of Texas at Dallas

Social media can be used to reduce the information asymmetry between the organization and the external environment, but organizations can also use it send misinformation to manipulate the market. In this study, the researchers examine the two countervailing effects to understand whether and if so when organizations increase fraudulent behaviors after using social media.

Sasmira Matta, PhD Candidate in Health Care Management and Economics, The Wharton School; Ingrid Nembhard, Fishman Family President’s Distinguished Professor, Professor of Health Care Management, Professor of Management (Organizational Behavior), The Wharton School

Expertise on boards has been understudied and it remains unknown whether and how the professional expertise of board members enhances or inhibits board effectiveness and in turn organizational performance. Whereas the literature on teams has suggested that diversity perspectives on teams enhance idea generation, most of the work on diversity within boards has focused on diversity of race, ethnicity, and gender. While those dimensions are important in their own right, less work has focused on understanding the diversity of professional expertise on boards. Therefore, in this study, I will examine the role of expertise on boards using local boards of health (LBOH) as the study setting. Expertise on boards has been understudied and it remains unknown whether and how the professional expertise of board members enhances or inhibits board effectiveness and in turn organizational performance. Whereas the literature on teams has suggested that diversity perspectives on teams enhance idea generation, most of the work on diversity within boards has focused on diversity of race, ethnicity, and gender. While those dimensions are important in their own right, less work has focused on understanding the diversity of professional expertise on boards. This study examines the role of expertise on boards using local boards of health (LBOH) as the study setting.

Saerom (Ronnie) Lee, Assistant Professor of Management, The Wharton School; Reuben Hurst, Assistant Professor of Management and Organization, Robert H. Smith School of Business, University of Maryland

This paper will investigate how employers’ use of pro-diversity claims in recruiting efforts shapes the distribution of political ideologies within the applicant pool. These researchers argue these claims are disproportionately attractive to left-leaning applicants, who compared to their right-leaning counterparts, view employers that make these claims as more aligned with their political ideology, more likely to employ others that share their political ideology, and less likely to discriminate against them based on their political ideology. In a field experiment with a partner firm, this research will measure how the use of pro-diversity claims affects the distribution of political ideologies within the applicant pool. One implication of the study is that recruiting strategies designed to diversify applicant pools in terms of gender or race may de-diversify applicant pools in terms of political ideology.

Aparajita Agarwal, PhD. Candidate in Management; The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School

How does an impact-oriented firm’s focus on breadth vs. depth of reach affect its financial and social performance? The research will examine this question through a randomized control trial conducted in partnership with Grameen Impact Ventures (GIV). GIV is a wholly owned subsidiary of the Grameen Foundation USA, a global non-profit organization that replicates the Grameen Bank’s microfinance model around the world.

Sophia Pink, PhD. Candidate in Operations, Information and Decisions, The Wharton School; Maurice Schweitzer, Cecilia Yen Koo Professor, Professor of Operations, Information and Decisions, Professor of Management, The Wharton School

Though nearly everyone recognizes the importance of addressing issues like climate change, gender bias, and police brutality, we face bitter and debilitating conflict with respect to the causes of these challenges. As a result of this conflict, as a society we have taken only limited and halting action to address many of our most pressing challenges. In this work, researchers investigate structural attributions, which they define as the belief that an issue was caused by policies, infrastructure, or institutions. They also investigate individual attributions, which is the belief that an issue was caused by individuals making decisions. In doing so, they aim to introduce a novel framework for understanding the faultlines of high stakes conflicts, and advance our ability to resolve conflict and address some of our most pressing challenges.

Valentina Assenova, Edward B. and Shirley R. Shils Endowed Term Assistant Professor of Management, The Wharton School

This funding supports an emerging-markets themed conference at the Wharton School, tentatively titled the “Wharton Management in Emerging Markets Conference.” The primary aim of the proposed conference is to foster an environment for presenting and discussing early-stage research focused on studies at the intersection of environmental, social and governance (ESG) issues and innovation. The conference is designed to bring together leading management scholars with research interests in these areas to share research in progress. The goal is to create a forum for the sharing of research and the development of new ideas that will help to inform policy and practice.

Ben Keys, Rowan Family Foundation Professor, Professor of Real Estate, Professor of Finance, The Wharton School; Philip Mulder, Assistant Professor of Risk and Insurance, University of Wisconsin-Madison School of Business

The goal of this research project is to understand how increasing homeowner’s insurance costs due to climate change are affecting housing markets. First, we will show geographically where homeowners premiums have been rising the most and how those changes are related to insurance market competition and regulation, the cost of building materials and labor, and physical risk. Second, we will show how higher premiums have affected home prices as well as the kinds of coverage homeowners buy and how they shop for homeowner’s insurance.

Jean-Marie Meier, Visiting Assistant Professor of Finance, The Wharton School; Steven Xiao, Associate Professor of Finance and Managerial Economics, Naveen Jindal School of Management, The University of Texas at Dallas

How do ESG practices, in particular environmental and social (E&S) practices, diffuse throughout the economy? Moreover, how does the diffusion of E&S practices differ at the firm-level compared to the economy-wide level? At the microeconomic level, a firm could improve the E&S performance of its existing products. Alternatively, the same firm could replace its “brown” products with “green” products. Or are companies offering both green and brown products and within-firm consumer demand for these different products changes over time, resulting in different market shares for these products? At the economy-wide level, an improvement in aggregate E&S policies could arise from existing companies offering more E&S-friendly products or from “brown” firms (potentially incumbents) exiting the marketplace while “green” firms (potentially start-ups) enter.

J. Daniel Kim, Assistant Professor of Management, The Wharton School of Business; Matthew Lee, Associate Professor of Public Policy and Management, Harvard Kennedy School of Government

Are prospective employees more likely to express interest in – as well as select a job offer from – startup companies with a social responsibility orientation? Do employees at socially responsible startup company exhibit higher retention than their peers at non-socially responsible startup? What is the long-term impact of employment with a social responsibility-oriented company on individuals’ career trajectories? This research aims to study the effect of social responsibility orientation across the employee lifecycle, extending beyond the attraction stage to selection (i.e., a candidate’s choice among job offers) and attrition (i.e., an employee’s decision to leave a company voluntarily) – as well as the long-term impact on individuals’ career trajectories.

Serguei Netessine, Dhirubhai Ambani Professor of Innovation and Entrepeneurship, Professor of Operations, Information and Decisions, Senior Vice Dean for Innovation and Global Initiatives, The Wharton School; Vishrut Rana, PhD. Candidate in Operations, Information and Decisions, The Wharton School 

This funding supports the development of a paper studying the impact of selecting locations for renewable energy generation (in particular, wind energy) based on metrics that account for the time and location of electricity generation from intermittent renewable resources. By developing computational models for site selection and simulation efforts for counterfactual assessment, the researchers will attempt to answer two main research questions: 1) How can granular wind-speed and transmission line data be used to identify locations for wind power plants? 2) What is the impact on the electricity markets by selecting locations using the proposed data-driven framework?

Natalie Carlson, Assistant Professor of Management, The Wharton School

In explaining variation in productivity in microenterprise, research has focused primarily on the adoption of effective business practices and access to capital, with little focus on strategic positioning. In archival evidence, we find that offering a differentiated product or service is strongly correlated with firm performance. Given these findings, this project seeks to test this relationship causally. With the partnership of a training organization in Zimbabwe, RBCT, researchers plan to implement a version of the ILO’s “Generate Your Business Idea” (GYBI) / “Start Your Business” (SYB) program for aspiring entrepreneurs that focuses specifically on differentiation and nudges business owners to stake out a differentiated market position.

Daniel Garrett, Assistant Professor of Finance, The Wharton School; Marius Guenzel, Assistant Professor of Finance, The Wharton School

This project continues the researchers’ ongoing work on bounded rationality in the market for public financing in the US in its relation to the market for securities issued for environmental, social, and governance (ESG) related spending priorities. Taking a new approach in modeling the decision to bring ESG-verified bonds to market over time and exploring how the presence of these bonds is driven by investor preferences, the project unearths two potential instruments for ESG-verification that have not been used before in the academic literature. Both of these instruments require modeling the selection of who wants to issue an ESG-verified bond.

Susanna Berkouwer, Assistant Professor of Business Economics and Public Policy, The Wharton School; Joshua Dean, Assistant Professor of Behavior Science and Economics, Booth School of Business, University of Chicago

Parametric insurance has the potential to be a key adaptation tool to make vulnerable communities more resilient to climate change. Under parametric insurance, premiums are determined by coverage level, which consists of two parameters: cyclone strength (ranging from Tropical Storm to Category 5) and location (whether the eye of the storm is within 25km, 50km, or 100km of a location). This funding supports early-stage exploratory surveys and piloting activities to study tropical cyclone insurance in the Philippines and answer the following questions: What is demand for parametric insurance (prior to the tropical cyclone season)? How do individuals trade off transparency and complexity (prior to the tropical cyclone season)? Does insurance improve recovery in the case of a tropical cyclone? Does insurance spur investment even absent a tropical cyclone? How do village cooperatives optimally award insurance policies and disburse funding to individuals or businesses? Can parametric insurance be used to leverage credit as a tool for economic growth?

Aparajita Agarwal, PhD. Candidate in Management; The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School

How does an impact-oriented firm’s focus on breadth vs. depth of reach affect its financial and social performance? The research will examine this question through a randomized control trial conducted in partnership with Grameen Impact Ventures (GIV). GIV is a wholly owned subsidiary of the Grameen Foundation USA, a global non-profit organization that replicates the Grameen Bank’s microfinance model around the world.

Christina Parajon Skinner, Assistant Professor of Legal Studies and Business Ethics, The Wharton School; Jesus Fernandez-Villaverde, Professor of Economics, Penn School of Arts & Sciences

Increasingly, the question “what is a central bank” is harder to answer as these once narrow institutions have expanded and lines around once clearly delimited mandates blurred. This case book attempts to clarify the role of central banks—and to make the law governing them more concrete—by discussing the origins and evolution of the myriad functions of central banks we see today. It contextualizes this discussion with the economic policy rationale for these institutions myriad functions, doing so with comparative perspective that considers a range of central banks around the globe. Overall, the project is animated by the unprecedented pressure for central banks to evolve, which has been thrust upon these institutions by popular attention to ESG-related challenges and risks, as well as the rise of unconventional monetary policy—quantitative easing—and its impact on households.

Christopher Bruno, Doctoral Student in Management, The Wharton School; Tyler Wry, Associate Professor of Management, The Wharton School

In recent years alone, COVID-19, Black Lives Matter, and disasters like the California wildfires asked firms to respond to fast-moving, highly visible, stressful, and frequently contentious or polarizing social issues. Prior theory does not adequately address how firms respond to the increased pressure from these types of issues. This research develops theory around a deeper understanding of the latent construct, expectations, to help fill this gap. This funding supports experiments to validate (1) that stakeholder expectations are a mechanism that varies by different traits of corporations (e.g., their size); (2) to understand which corporate factors are the most important differentiators of expectations; (3) to test the discriminant validity of different types of expectations (e.g., normative vs. predictive).

Rachele Ciulli, PhD. Student in Marketing The Wharton School; Cait Lamberton, Alberto I. Duran President’s Distinguished Professor, Professor of Marketing, The Wharton School

Binge-watching, defined as “the consumption of multiple episodes of a television series in a short period of time” (Schweidel and Moe, 2016) requires considerations of time and energy tradeoffs. This research hypothesizes that focusing on the opportunity cost of accumulating in terms of energy will increase the likelihood of leisure accumulation and decrease the likelihood of work accumulation. When its opportunity cost is considered in terms of time, likelihood of accumulation will decrease for leisure and increase for work. However, both post-leisure consumption and post-work, if the focus is on the opportunity cost of energy spent, the likelihood of regretting accumulation will be lower. If the focus is on the opportunity cost of the time spent, the likelihood of regretting accumulation will be higher. Whichever resource is perceived as scarcer at the time will determine which opportunity cost consideration individuals will focus more on. The researchers plan to observe real behavior changes over different contexts when manipulating the resource individuals focus on when evaluating the opportunity cost of taking action in 6 studies.

Valentina Assenova, Edward B. and Shirley R. Shils Endowed Term Assistant Professor of Management, The Wharton School

This funding supports an emerging-markets themed conference at the Wharton School, tentatively titled the “Wharton Management in Emerging Markets Conference.” The primary aim of the proposed conference is to foster an environment for presenting and discussing early-stage research focused on studies at the intersection of environmental, social and governance (ESG) issues and innovation. The conference is designed to bring together leading management scholars with research interests in these areas to share research in progress. The goal is to create a forum for the sharing of research and the development of new ideas that will help to inform policy and practice.