Faculty Spotlight: Emma Aguila
Emma Aguila is an Assistant Professor at the Price School and an expert in the economics of aging, health economics, and applied econometrics. Receiving her Ph.D. in Economics from University College London, Professor Aguila’s research has been widely recognized for its impact on social program design in Latin America. Her work on pension reform in Mexico has received several awards and she has been invited to advise to the World Bank, Mexican Ministry of Finance, and Inter-American Development Bank among other esteemed institutions.
In this Faculty Spotlight, Professor Aguila discusses about how she selected her field, recent research, and motivations for the projects she selects.
Q: How did you develop your passion for research in health economics and social welfare programs?
A: When I was 14, my school organized field trips to rural and very poor areas in Mexico where we would teach children mathematics and Spanish, and we would organize plays and other fun events. My closest friends and I were on a team in charge of inviting the children that lived in the most isolated areas. We would walk for hours to find a small hut and then return to the community before dusk. One afternoon, we found a small hut with three children: a baby, a 2-year-old, and a 5-year-old. They were on their own and covered in dirt. Their mother, like many other women in that area, had to work in a distant community; she had to leave her children on their own all day. My friends and I were speechless and immediately started cleaning the hut, washing them and their clothes, and cooking them a meal. We did not realize it was getting dark and at some point we had to go back. When we left, we felt powerless. We had tried to help them as much as possible but we really couldn’t: the next day, their clothes and hut would likely be dirty again, and no one would be there to cook them a meal. Since then, I have felt a strong commitment to help people in need and to make a difference through my research.
Q: Tell us about your educational experience. What was the most important skill you developed to support your current research?
A: One of the most important skills I learned in my undergraduate studies was econometrics. Econometrics has allowed me to observe different social phenomena and events as if I were using a microscope and to disentangle every part. Using econometrics I have been able to test theory, find associations and patterns that emerge, and to connect cause and effect.
Q: In 2007, your research into social security systems and retirement behavior in Mexico received the Inter-American Award for Research in Social Security. Can you tell us a little about that research?
A: I analyzed the effects on consumption and saving of a major pension reform in Mexico that shifted from a traditional pay-as-you-go system to a fully funded retirement accounts system. I found that, contrary to public perception, lower-income individuals benefited the most from the pension reform. The new pension system provided a minimum pension guarantee or minimum floor for lower-income individuals that was higher than the minimum pension under the old system. In fact, fully funded systems with individual retirement accounts could be more redistributive towards the poor than traditional pay-as-you-go systems. Traditional pay-as-you systems may favor the wealthy because of pension formulas that depend on salary during working years and because wealthier individuals may live longer. In contrast, fully funded systems with individual retirement accounts shift subsidies to retirement benefits for lower-income individuals.
Q: You have advised and conducted research for the World Bank, the Mexican Ministry of Social Development, and the Inter-American Development Bank among other internationally recognized institutions. Can you provide an example of how your research has impacted policy decisions?
A: One example is a research paper analyzing the fees of pension fund managers participating in the fully funded system with individual retirement accounts in Mexico. I found that management fees drained a significant proportion of individuals’ wealth and thereby increased the number of persons claiming a government-subsidized minimum pension, particularly in the early years of the new system. The resulting increased reliance on the government pension would have doubled government subsidies of pensions for low-income earners. This research was featured on the front page of Reforma, the flagship newspaper of a Mexican chain reaching nearly a half-million readers, and in many other newspapers. Most importantly, the research and resulting discussion led to a change in the Mexican social-security system that sharply decreased the fees that pension-fund managers could charge. This improved \prospects for the government in financing pension guarantees and furthered incentives for individuals to save in retirement accounts.
Q: What is your favorite course to teach and why?
A: Econometrics and program evaluation because they are very creative subjects. There is not a fixed way to specify an econometric model or to design an evaluation. Students learn that they need not only a deep understanding of econometrics but also of the policy problem itself in order to come up with ideas to analyze and solve the problem.
Q: Looking forward, what topic most interests you for future research?
A: I am very interested in socioeconomic status and health, saving for retirement, access to social security benefits, and health care for older minorities.
To learn more about Professor Aguila and her research, visit her faculty page: