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NBER: Deniz Aydin reference letter
Deniz Aydin reference letter
>Sender: beshears_at_gmail.com
>Date: Sun, 25 May 2014 17:22:58 -0400
>Subject: HF research grant - reference letter for Deniz Aydin
>From: John Beshears <beshears_at_nber.org>
>To: dhealy_at_nber.org
>
>Hi Denis,
>
>I am submitting the reference letter below in
>support of Deniz Aydin's application for an NBER
>Household Finance Working Group Small Grant. Â
>It would be great if you could confirm receipt of this message.
>
>All the best,
>John Beshears
>
>
>-----
>May 25, 2014
>
>
>To Whom It May Concern:
>
>I am writing this letter in support of Deniz
>Aydin, a student in the Stanford University
>Department of Economics Ph.D. program. Â DenizÂ
>is a promising applied theorist and empirical
>economist who works in the area of behavioral
>economics and financial decision making. I
>give him my strongest possible recommendation
>for an NBER Household Finance Working Group Small Grant.
>
>Deniz's dissertation project aims to improve our
>understanding of how consumer decisions are
>shaped by the availability of liquidity. Â In
>particular, following Gross and Souleles (2002,
>"Do liquidity constraints and interest rates
>matter for consumer behavior? Evidence from
>credit card data," Quarterly Journal of
>Economics 117, 1469-1513), Deniz is estimating
>the marginal propensity to consume out of a
>credit limit expansion using detailed credit
>card data from a bank in Turkey. Â The marginal
>propensity to consume out of liquidity is a key
>parameter for microeconomic modeling and
>macroeconomic policy. Â For microeconomic
>modeling, Deniz's results on the response of
>overall expenditure and the response of specific
>categories of expenditure will shed light on the
>drivers of consumer spending decisions
>(borrowing constraints, self-control problems,
>consumption commitments, and other factors). Â
>For macroeconomic policy, several economists
>have pointed to the importance of borrowing
>constraints in amplifying the economic downturn
>of 2008-2009 (Mian, Rao, and Sufi, 2013,
>"Household balance sheets, consumption, and the
>economic slump," Quarterly Journal of Economics
>128, 1687-1726), and Deniz's results on
>heterogeneity in expenditure responses to credit
>limit increases will serve as an important input
>into policy discussions around the role of
>household balance sheets in explaining macroeconomic fluctuations.
>
>Deniz has already obtained observational data
>from the bank, and his initial analyses are very
>promising. Â The observational data set is quite
>large, both in the cross-sectional dimension
>(hundreds of thousands of individuals) and in
>the time-series dimension (many accounts
>followed for more than five years), allowing him
>to precisely estimate how overall credit card
>expenditures and credit expenditures by category
>(e.g., restaurant spending) evolve over a long
>time horizon following an increase in the credit
>limit. Â The preliminary results indicate that
>consumers continue to accumulate unpaid credit
>card balances at a fairly steady rate for more
>than five years after the credit limit increase,
>a considerably longer time horizon than previously documented.
>
>Even more exciting, however, is the empirical
>analysis that Deniz will be able to conduct over
>the coming year. Â He convinced the bank in
>Turkey to conduct a randomized field experiment
>in which some individuals were randomly selected
>to receive a credit limit increase while others
>were not. Â It is very difficult to obtain
>unbiased estimates of the propensity to consume
>out of liquidity using observational data, since
>an increase in credit limits may be correlated
>with other factors, such as an increase in
>permanent income, that could be an alternative
>explanation for observed subsequent consumption
>growth. Â Deniz will be able to provide
>estimates of the propensity to consume out of
>liquidity that are based on experimental variation in credit limits.
>
>It is extremely rare for any economist
>(especially a Ph.D. student) to be able to
>provide such a cleanly identified answer to such
>an important question, and I anticipate that
>Deniz will produce a paper that will make him a
>star on the academic job market and that will
>become a landmark in the literature on household
>consumption and credit. Â An NBER Household
>Finance Working Group Small Grant would help him
>immensely at this juncture in his research. Â
>Setting up a field experiment of this size
>(without the help of a team of research
>assistants) and then assembling the data
>required to analyze the results represent an
>enormous task, and it will be important for
>Deniz to travel frequently to the bank in Turkey
>in order to ensure that his partners there are
>executing the experiment and the subsequent
>construction of the data set perfectly. Â Deniz
>is requesting support for five trips to Turkey -
>visiting his field partners approximately once
>every two months over the coming year seems like
>the correct frequency to make sure the project is on track.
>
>On a personal note, I have known Deniz for a
>little more than three years, and I have become
>one of his primary advisors, meeting with him
>frequently to discuss his own research progress
>and a joint research project. Â Deniz has great
>facility both in understanding the key moving
>pieces of theoretical economic models and in
>conducting careful empirical economic research.
>Â He will be an important contributor to the
>field of household finance in the years to come.
>
>To reiterate, I give the highest recommendation
>possible to Deniz's application. Please do not
>hesitate to contact me if I can provide any further information.
>
>Sincerely,
>
>John Beshears
>Assistant Professor of Business Administration, Harvard Business School
>Faculty Research Fellow, NBER Aging Program
Received on Tue May 27 2014 - 14:45:08 EDT
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