Published Papers

Publications

 Does Getting Forecasts Earlier Matter? Evidence from Advisory Lead Times and Vehicle Crashes 

American Economic Journal: Economic Policy (Forthcoming)

Paying for Expertise: The Effect of Experience on Reinsurance Demand with J. Tyler Leverty and Kenny Wunder,  Journal of Risk and Insurance,  Vol 88, Issue 3: 727-756, 2021. 

Optimizing Forecast-based Actions for Extreme Rainfall Events with Jonathan Lala (lead author), Juan Bazo, and Paul Block. Climate Risk Management, Vol 34 (2021) 100374


Working Papers

 Prediction Technologies and Optimal Adaptation 

Upcoming Presentations: AERE-MEA Annual Meeting, March 22, 2025, Kansas City

Abstract: Predictions guide important adaptation responses--from treating patients in hospitals to pretreating roads before snow storm. Advances in machine learning and artificial intelligence are accelerating improvements in prediction accuracy. However, it is unclear how prediction improvements should shape optimal adaptation. I develop a theoretical model for prediction-based prevention and provide three key insights. First, better predictions lead to more intense, yet less frequent, adaptation response. Second, risk preferences matter less as improved predictions resolve more uncertainty. Third, the average adaptation declines for highly risk-averse decision-makers but may rise for less risk-averse ones. These findings highlight the need to align adaptation planning with prediction skill, especially given varying levels of trust in prediction technologies.

Weather Stations and Agricultural Productivity: Evidence from Historical Data in the US (with Honglin Li) (Working paper available on request)

Abstract: In this paper, we examine the effect of access to forecasts on local economic productivity in the context of agriculture and weather risk. We exploit the staggered establishment of weather stations across the US during 1870–1990 as a source of variation in access to weather forecasts. Using a stacked difference-in-difference design, our preliminary results show that access to a weather station increases the agricultural productivity in a county. As the distance of a county to the nearest station increases, the agricultural productivity decreases.

When does Forecast-based Insurance benefit? A Study on Drought Risk Mitigation with Leah Poole, Alexa Gozdiff, Biniam Bekele, and Erin Coughlan de Perez 

Abstract: Improvements in forecasting technologies provide an opportunity to take anticipatory actions before disasters occur. However, traditional ex-post financing and lack of operational capacity often discourage countries from taking early actions. This paper examines anticipatory index insurance, focusing on a pilot by African Risk Capacity in Malawi and Zambia for drought risk. The product offers early-action capacity development and provides forecast-contingent financing for predetermined actions. However, its benefits are unclear due to the trade-off between acting early on uncertain forecasts and providing relief after certain losses. Since imperfect forecasts increase basis risk, anticipatory index-insurance can significantly exacerbate this trade-off. Using a stylized economic model and numerical analysis, we unpack the sources of value from anticipatory insurance and identify the range of economic conditions under which the product is beneficial. The primary benefit of anticipatory insurance comes from developing a country’s operational capacity to take forecast-based actions. However, the insurance mechanism's incremental benefit may not always outweigh premium costs due to basis risk when forecasts are imperfect. Our results can guide aid agencies and governments in designing the optimal financing plan for forecast-based anticipatory actions.

Select Research in Progress

Weather Forecast Skill in the US: Patterns, Disparities, and Determinants with Tim Philippi 

Implications of Forecast Improvements for Insurance Demand

Does Work-from-Home Improve Adaptation to Extreme Weather Risk?  with Mark Browne and Xiao (Joyce) Lin 

Assessing the vulnerability of U.S. Property Liability Insurers to Catastrophe Risk with Yuluen Ma and Yayuan Ren

Regulatory Reform and Resilience: The Effect of Certified Reinsurer Programs on U.S. Insurance Markets with Doug Bujakowski and Kyeonghee Kim

Accounting for Heterogeneous Beliefs on Forecast Skills in Forecast-Based Adaptation