Unfunded state pension liabilities, running into the $trillions in magnitude, constitute an enormous off-balance sheet liability for state governments in the U.S. I investigate how political incentives can distort how state governments fund state pension plans. State politicians, motivated by re-election concerns, face the temptations of "dipping" into pension funds in order to fund activities more visible to voters, such as tax cuts or public spending. I build a theoretical model to show how such political distortions arise, and empirically document an electoral cycle pattern in which government funding to state pension plans decreases during election year.
What do you hope to accomplish with your research?
Given the purported crisis over underfunded state pension plans in the U.S., I believe it is extremely important to understand the economic and political factors that determine pension funding policy. With my research, I hope to provide convincing empirical evidence that distortionary political forces play a significant role in shaping public pension policies.
What has winning a major award meant to you?
The award is an encouraging sign that my research is meaningful to society, and of course provides added financial security that allows me to better focus on research.
What was the best surprise about UBC or life in Vancouver?
The best surprise for me has been living at St. John's College, a graduate residence on campus with an international focus. It provided me the chance to get to meet and learn from fellow graduate students from an incredibly diverse range of disciplinary and geographic backgrounds.
Why did you decide to study at UBC?
I chose UBC because of its sterling reputation for research in finance and its location in the beautiful city of Vancouver. The faculty here is supportive and open to collaboration, a fact that I discovered during my one year in the Finance M.Sc. program. UBC is also unique in playing host to annual finance conferences attended by some of the top academics from across North America.
What advice do you have for new graduate students?
It can be difficult at times, but try to maintain some semblance of balance, both physically and intellectually. Take advantage of Vancouver's scenic outdoors, and allow your fellow students from different fields to provide you with alternate perspectives on both your own research and the world at large.