MIT economist Amy Finkelstein, a leader in studying health insurance markets, was named winner today of the prestigious John Bates Clark Medal, an annual award given by the American Economic Association (AEA).
In its announcement of the 2012 medal, the AEA noted that Finkelstein’s work “is centered on some of the most important and policy-relevant issues facing developed economies today,” adding that her research stands “as a model of how theory and empirics can be combined in creative ways in order to yield credible, novel, and often unexpected insights into economic questions that will inform policy design.”
The Clark Medal is given to an economist under the age of 40 “who is judged to have made the most significant contribution to economic thought and knowledge,” according to the AEA.
“I’m honored and very humbled to have won it,” Finkelstein told MIT News this afternoon; she found out about the award by phone shortly before it was announced publicly.
From Medicare and Medicaid to market complexities
Finkelstein has gained acclaim, among other things, for large-scale studies of the effects of Medicare and Medicaid, two major American health insurance programs launched in the 1960s. One of her best-known papers, “The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare,” published in 2007, identified multiple consequences emerging from the program, which helps the elderly: It tended to help its recipients financially, but was also linked to increases in spending on health care, sometimes through the adoption of new technologies.
In a widely reported working paper released in 2011, Finkelstein and four co-authors found that enrolling in Medicaid, the federal program for low-income individuals and their families, helps the health and financial stability of participants, and makes them more likely to receive medical care than they otherwise would be.
In its statement, the AEA prominently cited Finkelstein’s research on the complexities of health insurance markets as a key reason for her honor. She has published multiple significant papers about the effects of asymmetric information in health insurance markets — elucidating, among other things, how frequently individuals with information on their high health risks purchase health insurance, and alternately, how frequently lower-risk people purchase insurance because they are risk-averse.
Finkelstein says she thinks her field has potential to grow further, via contributions from scholars with a variety of backgrounds. “One of the things I like about health economics is that it draws on so many other fields,” Finkelstein said today. In a 2009 interview with MIT News, she said her aim as an economist is to “try to uncover the facts. There are people with certain proclivities or ideologies who may look at [economists’] work a certain way, but we are trying to contribute to the state of knowledge.”
MIT colleagues expressed excitement at news of the award. “Amy’s research is a wonderful blend of economic theory and excellent empirics,” Whitney Newey, head of the Department of Economics and the Jane Berkowitz and Dennis William Carlton Professor of Economics, told MIT News. “She is also a terrific colleague, teacher and mentor. MIT Economics is thrilled at the recognition of her superb, innovative work and influence.”
Growing list of honors, and an ‘award for MIT’
Finkelstein earned her PhD from MIT's Department of Economics in 2001. Her thesis supervisor was James Poterba, the Mitsui Professor of Economics, with whom she has co-authored papers as well — including a 2004 paper on the annuities market, cited today by the AEA, that stems from Finkelstein’s thesis research. Finkelstein joined the faculty in 2005 and was promoted to professor in 2008.
“Amy's work has greatly advanced our understanding of how insurance markets function, and what that implies for consumer well-being,” Poterba told MIT News this afternoon, adding: “As recent policy debates make clear, insurance markets — for health care spending, long-term care, and many other risks — are a central feature of the economic landscape, so work like Amy's that offers new insights on these markets is of enormous importance.”
For her part, Finkelstein said today, “I think of this as an award for MIT,” adding that her “entire intellectual life” as a professional economist had been centered around the Institute.
While acknowledging she had received scores of congratulatory messages from colleagues, Finkelstein said she still expected to “get back to a few things I have to do for students” this afternoon as well.
The Clark Medal is the latest in a growing list of honors for Finkelstein. Earlier this month, she was elected into the American Academy of Arts and Sciences; in 2010, she was one of the recipients of the Presidential Early Career Awards for Scientists and Engineers; and in 2009, Finkelstein was elected to the Institute of Medicine, a part of the National Academies of Science.
MIT faculty, alumni and former faculty have won the last nine Clark Medals in a row, including current MIT faculty members Esther Duflo (2010) and Daron Acemoglu (2005). The award was given in odd-numbered years from its inception in 1947 (when MIT’s Paul Samuelson won) through 2009; starting in 2010, the AEA has granted the award annually.
The recent string of recipients consists of Finkelstein; Jonathan Levin PhD ’99 (in 2011); Duflo; Emmanuel Saez PhD ’99 (in 2009); former MIT professor Susan Athey (in 2007); Acemoglu; Steven Levitt PhD ’94 (in 2003); Matthew Rabin PhD ’89 (in 2001); and Andrei Shleifer PhD ’86 (in 1999).
Other past winners who were either MIT faculty or alumni include Lawrence Klein, Robert Solow, Franklin Fisher, Daniel McFadden, Joseph Stiglitz, Jerry Hausman, Paul Krugman and Lawrence Summers.