In an article for The New York Times, Prof. Simon Johnson questions the ability of U.S. banks to weather another recession. Johnson writes that he thinks the U.S. should require our largest banks “to have a great deal more equity so they could absorb more of their own losses, and not dump them…on the public.”
Financial Times reporter Tim Harford writes about the Billion Prices Project, which was started by Profs. Alberto Cavallo and Roberto Rigobon in an effort to better understand inflation by gathering price data from online retailers. Harford writes that the project’s “approach to inflation is also helping us to understand the fundamental question of why recessions happen.”
NPR reporter Michelle Andrews writes about a new paper, co-authored by Prof. Andrew Lo, that proposes developing health care installment loans to help patients access treatments that are prohibitively expensive. Lo explains that the loans are a "private sector stopgap way to deal with” the high prices of certain medications.
In an article for The New York Times, Nelson Schwartz highlights Prof. Duncan Simester’s study examining whether people spend more money when they are using a credit card. Simester notes that, “when you vary the payment method, people are willing to pay more. You’re not forking over a dollar bill, so there is less sensation of loss.”
In an article for BloombergView, Noah Smith highlights a paper by Prof. Deborah Lucas that found that “federal lending did as much as the American Recovery and Reinvestment Act of 2009 to stimulate demand and keep the economy from crashing.”
Prof. Andrew Lo speaks with Michael Regan of Bloomberg News about the recent volatility in the stock market. “We have a number of different forces that are all coming to a head,” explains Lo. Due to automated trading “we’re seeing much choppier markets than we otherwise would have five or 10 years ago.”
Money reporter Penelope Wang writes about a new study by Prof. James Poterba that examined why Americans often did not have enough money saved for retirement. The researchers found that, “how much subjects had the first year their assets were measured showed the strongest determinant of the amount of the wealth they had at the end of life.”
A new study co-authored by Prof. Andrew Lo shows that most hedge funds are not performing as well as people think they are, reports Michael P. Regan for Bloomberg News. The researchers found that “due to inherent biases in the way hedge-fund databases compile results, the industry's returns have been about half as strong as they appear.”
MIT lecturer Robert Pozen writes for the Financial Times about executive compensation. Pozen explains that he welcomes the “recent proposal from the SEC, the US financial regulator, that would mandate the reporting of pay actually received by corporate executives.”
John Diehl writes for The Huffington Post about a study led by Dr. Joseph Coughlin, director of the MIT AgeLab, that suggests that people value the empathy in their financial advisors more than effectiveness or expertise. “Among the seven most prominently valued advisor characteristics, more than half related to interpersonal skills.”
Prof. Xavier Giroud writes for Fortune that corporate debt played a large role in the Great Recession. “While it’s true that high levels of consumer debt helped lay the groundwork for the long economic slump that followed the financial crisis, other factors—including high levels of corporate debt—also played an important role,” Giroud explains.
Research by Professor Zeynep Ton might explain why it is in the interest of businesses such as Wal-Mart to boost employee wages, writes Chris Matthews for Fortune. Higher pay “encourages workers to give better customer service and makes them less likely to leave,” writes Matthews.
MIT Age Lab Director Joseph Coughlin writes for The Wall Street Journal about some of the potential pitfalls of early retirement. “[B]efore you retire, do some careful planning that goes well beyond financial security,” writes Coughlin. “What will you be pursuing to give you a daily sense of purpose?”
“In an ironic generational twist, the children of Baby Boomers are proving more inclined to turn to their grandparents for advice -- at least when it comes to learning about managing money and saving for the future,” writes Joseph Coughlin, director of the MIT AgeLab, in an op-ed for The Huffington Post.
Researchers from MIT and the Federal Reserve Bank of Boston “are engaged in a ‘multi-year effort to build and test a hypothetical digital currency oriented to central bank uses,’” reports Craig Torres for Bloomberg.