USC Price Assistant Professor Emma Aguila’s research was featured on the front pages of numerous Mexican newspapers, including the flagship newspaper Reforma.
By Susan Wampler
Assistant Professor Emma Aguila, whose research spurred reforms to improve the financial security of millions of people in Mexico, has won the USC Price School of Public Policy’s inaugural High Impact Research Award. Dean Jack H. Knott presented the prize to Aguila at this year’s Price School Outstanding Performance Awards.
“Her work embodied what we were looking for with this prize — research that can improve the quality of life for people and their communities, here and abroad,” Knott said.
Aguila, whose research resulted in significant changes to Mexico’s social security system, was one of 11 faculty projects nominated for the High Impact Research Award, which comes with a $10,000 prize. The honor is designed to identify and reward faculty research that has addressed a critical issue facing society and, most importantly, had a demonstrable impact on improving policy, practices and discourse in the public or private sector.
Retirement account management fees and elderly income security in Mexico
Support of the elderly population is an urgent issue in Mexico, where almost 10 million people are 65 or older — a number that is expected to triple by 2050. Seeking a sustainable system to support that growth, Mexico in 1997 converted from a pay-as-you-go social security system to a fully funded system with personal retirement accounts (PRA) that charge a management fee.
Aguila’s research, published in 2014, showed that the new PRA system had the unintended consequence of reducing financial security for retirees by hitting them with high fees that eroded their retirement savings. Mexicans participating in the system were losing 18 to 23 percent of accumulated benefits.
Almost half of Mexicans over the age of 65 live in poverty. With their meager savings decimated by the high fees, many were forced to rely on a minimum pension guaranteed by the government. The increased reliance on the government subsidies also would have doubled the cost of supporting low-income earners.
Management fees for the PRA system were substantial — the highest among Latin America and Organisation for Economic Co-operation and Development (OECD) countries. Aguila’s research demonstrated that a more competitive fee system would increase pension wealth and reduce reliance on the minimum pension guarantee. Her work also highlighted the importance of financial literacy, including informing participants of the effect of fees on their wealth, as well as supporting other mechanisms to help individuals optimize their retirement savings.
Her research was featured on the front pages of numerous newspapers, including Reforma, the flagship newspaper of a Mexican chain reaching nearly a half-million readers daily and more than 18 other local newspapers across the country. The publicity surrounding Aguila’s findings resulted in legislation drastically cutting the fees fund managers can charge, giving Mexicans more incentive to contribute to retirement accounts and reducing the amount that government spends on pension guarantees.
In addition to Aguila’s research, 10 other faculty-driven projects made vital contributions to the broader public and were nominated for the prize.
Alice Chen: Battling U.S. infant mortality
The United States has higher infant-mortality rates than peer countries. In 2013, the U.S. infant-mortality rate ranked 51st internationally, comparable to Croatia, despite an almost three-fold difference in gross domestic product.
Alice Chen of the USC Leonard D. Schaeffer Center for Health Policy & Economics, along with her co-authors, Emily Oster and Heidi Williams, combined U.S. micro-data with similar data from four European countries to investigate causes for the U.S. disadvantage in infant mortality. Their widely published research recommended that policy attention should continue to focus on preventing preterm births but that reducing post-neonatal mortality also should become more of a priority.
Chen, an assistant professor at the USC Price School, and her co-authors pointed out the benefits of post-neonatal home nurse visits, which subsequently received support through the Medicare Access and CHIP Reauthorization Act of 2015. Based on their estimates, it would be worth spending up to $7,000 per infant to reduce post-neonatal mortality rates. Their research further found that, if more policies focused on individuals of lower socioeconomic status, even higher levels of spending per mother would yield positive results.
Janet and Robert Denhardt: “The New Public Service”
Janet Denhardt, the Chester A. Newland Professor of Public Administration and director of the USC Price School in Sacramento, and Professor Robert Denhardt conducted 15 years of research into the role of public administrators in restoring citizen trust in government — an essential element to effective governance but one that has suffered greatly in recent decades. Their findings led to a new approach they describe as “The New Public Service (NPS),” which prioritizes rebuilding trust through citizen engagement in all phases of policymaking and implementation.
Their NPS model has influenced other research in public administration, with more than 2,500 citations in academic literature. Their book New Public Service is now in its fourth printing and is the eighth bestselling book on Amazon in the category of public affairs. Widely adopted as a textbook in public administration, the work has influenced curriculum development nationally. At least two schools have built their entire curricula around NPS, which has become a primary concern for public agencies at all levels, but especially at the local level.
Eric Heikkila: Urban planning inequality in Latin America
Professor Eric Heikkila, director of the Price School’s International Initiatives, developed a model that calculates the efficiency and equity impacts of land-use restrictions on both low- and high-income households. He observed that in Brazil, the Philippines and elsewhere, restrictive regulations in the formal housing sector had particularly negative repercussions on the informal sector — slums and other low-quality dwellings that represent a large portion of housing markets in developing countries.
The Inter-American Development Bank has adopted a framework created by Heikkila to inform its own work on improving land-use regulatory practices in Latin America. The organization also asked him to conduct further research with the goal of improving land-use regulatory practices in Buenos Aires and Sao Paulo. They are collaborating on how to improve urban development practices in the region — work that has the potential to upgrade housing and urban land planning and management in cities throughout Latin America.
Annette Kim: Understanding the sidewalk economy
Associate Professor Annette Kim’s research project on sidewalk vending in Vietnam brought empirical analysis to what has become a volatile public issue globally: how to manage street vending in cities in which swelling migrant populations eke out a living by selling goods in public spaces. Director of the school’s Spatial Analysis Lab (SLAB), Kim has long sought to bring recognition to the reality of this phenomenon, which represents between 30 to 70 percent of the urban population in many developing countries.
Kim’s suggestion that street vending has valuable economic and cultural aspects was startling in Vietnam, which has recently seen bloody clashes between vendors and police. In a broader context, her research taps into a global populist desire for public spaces to become more creative, humane and inclusive.
The project – which received national media attention in Vietnam, including two documentaries and coverage on the front page of the country’s largest newspaper – blended empirical social science with the arts and humanities. Kim also proposed a pilot tourism pedestrian path project that advocated a new model of public space incorporating street vendors and international tourists, which was unanimously approved by Ho Chi Minh City government.
Gary Painter: Household formation in a recession
While the housing sector’s interaction with the macroeconomy has long been considered crucial, the ability of the housing sector to cause a financial crisis had not been realized until the Great Recession. Professor Gary Painter, director of social policy at the USC Sol Price Center for Social Innovation, conducted landmark research on a neglected, related topic: how the economic cycle influences household formation. He found that, among young adults, recessions reduce the number of new households being formed by as much as nine percentage points. Considering the large number of millennials, their decisions are an important element of housing demand and influence the housing market’s ability to recover.
Painter’s study attracted considerable media attention. The Board of Governors of the Federal Reserve asked economist Andrew Paciorek to investigate whether the results of the study were consequential. His paper, “The long and the short of household formation,” confirmed Painter’s findings.
Painter conducted a follow-up study that predicted that household formation will recover in two to three years even without improvements in the macroeconomy.
Rodney Ramcharan: Impact of the American financial crisis
Studies co-authored by Associate Professor Rodney Ramcharan, director of Research for the USC Lusk Center for Real Estate, and colleagues have bolstered support for many of the post-2008 bailouts and interventions by the Federal Reserve and U.S. Treasury. They suggest that, without many of these programs during the crisis, the economic collapse in the U.S. could have been dramatically worse.
More generally, these papers have advanced the economists’ understanding of financial crises and disintermediation. From a policy perspective, the research shows that, without robust policy interventions, financial crises can metastasize into massive economic slumps and contagion. Ramcharan’s ideas are now embedded in various banking regulations — for example, having banks write “living wills” to avoid the disorderly liquidation of assets during financial distress. In sum, this agenda has had an enormous impact on how policymakers and economists have thought about the financial crisis and its impact on the U.S. economy.
William Resh: Reforming the Federal Employment Viewpoint Survey
Assistant Professor William Resh and colleagues researched the relative strengths and weaknesses of the U.S. Office of Personnel Management’s (OPM) Federal Employee Viewpoint Survey — a widely distributed annual survey of more than two million federal employees that is used as a critical component in assessing human capital needs and government performance. The strength of this research, combined with robust public efforts in engagement, resulted in a comprehensive reevaluation by OPM aimed at reforming the survey’s design and delivery.
OPM’s proposals to improve the survey credit the USC Price research as a major impetus. For example, OPM psychologists intend to follow the advice of Resh and his team about the need for “stronger, relevant and unambiguous questions as well as questions that capture a single concept” to better assess human capital issues in the federal government.
Resh’s work also earned the 2016 American Society for Public Administration’s William E. Mosher and Frederick C. Mosher Award for best article by an academic in Public Administration Review.
John Romley, Dana Goldman and Neeraj Sood: Relating costs to hospital productivity
Productivity in the U.S. health system, and specifically how to improve it through effective policy, remains a crucial topic in health care reform. Researchers from the USC Schaeffer Center – Associate Professor John Romley, USC Distinguished Professor Dana Goldman and Price Vice Dean Neeraj Sood – focusing on U.S. hospitals between 2002 and 2011, applied new models to assess productivity growth in U.S. health care. Goldman is also the Leonard D. Schaeffer Chair and director of the Schaeffer Center.
They found that when hospital output was defined by “high-quality” stays – with patients surviving at least 30 days and avoiding an unplanned readmission – productivity growth in U.S. hospitals proved to be positive and substantial. Their findings have been featured in major media outlets and are informing critical debates on the subject, particularly in relation to how the Medicare program reimburses health care providers. Long-term projections of health care spending are contingent on productivity growth, which the U.S. Department of Health and Human Services had previously forecast as negligible.
Neeraj Sood: Expanding health insurance coverage for India’s poor
USC Price Vice Dean of Research Neeraj Sood published a study in The BMJ, a leading global health journal, which provided critical evidence to support the expansion of universal health insurance in Karnataka, a populous state of 65 million in southern India.
Sood and his team evaluated the implementation of a government program in Karnataka that expanded access to catastrophic health insurance for households below the poverty line. Their evaluation uncovered dramatic health and financial benefits, including reduced mortality rates for conditions covered by the insurance. After publishing their findings, Sood was invited to brief key policymakers throughout India and the international development community to inform the policy response.
Karnataka expanded the insurance program to cover all households, making it the first Indian state to offer universal coverage, and directly attributed the move in part to Sood’s research. Now, India’s national government and other states are considering similar expansions. In ongoing research, Sood continues to explore the optimal design of insurance coverage, highlighting mechanisms through which insurance might improve health.
Erin Trish: Health care market concentration and its effect on premiums
Understanding the impact of consolidation in health care markets, including whether the currently pending mergers of Aetna-Humana and Anthem-Cigna should be approved, is a critical issue facing society today. Price Assistant Research Professor and Schaeffer Center researcher Erin Trish provides a tool to predict the impact of such deals, taking into account variations across geographic regions and important nuances and institutional details about how health care markets function.
Her study evaluates the effects of three types of market concentration on health insurance premiums: insurer market power in selling policies to employers, insurer bargaining power with providers, and provider bargaining power with insurers.
Trish’s research has been cited in testimony before numerous federal and state entities over the past year, including the House and Senate Judiciary committees, the Federal Trade Commission, and the Department of Justice. It also has been cited in policy proposals and analyses from the Congressional Budget Office and the Medicare Payment Advisory Commission.