Stephen Ryan

Professor Ryan earned undergraduate degrees in economics and chemistry at Virginia Tech before attending Duke University. After graduating with his PhD in economics in 2005, he worked for seven years in the Economics Department at MIT.

Professor Ryan’s research background is in industrial organization, with a focus on the application of structural methods at the intersection of public policy, economic theory, and econometrics. His work spans a range of topics, ranging from the estimation of the labor supply of teachers in rural India to modeling the health insurance plan choices and utilization of workers in the aluminum industry. Two recently published papers highlight the constructive role that theory can play in describing the world and providing policy guidance.

The first paper (Selection on Moral Hazard in Health Insurance, joint with Amy Finkelstein, Liran Einav, Paul Schrimpf, and Mark Cullen) examines the health insurance plan choices, and subsequent health care utilization, of workers at Alcoa. While adverse selection and moral hazard have long been recognized as potentially important determinants of how workers may sort into insurance plans and how much medical care they consume once insured, much of the previous literature tended to treat the two concepts in isolation. We relaxed this assumption, allowing workers in our model to select their plans based on private information about both their anticipated level of spending (adverse selection), and their expected response in medical usage to shocks in their health status (moral hazard). Our findings suggest that selection on moral hazard was as equally an important component of worker’s insurance decisions as expected spending. While our estimates are specific to a given firm, they nonetheless suggest the importance of accounting for the interaction of moral hazard and adverse selection when modeling insurance choices.

The second paper (Incentives Work: Getting Teachers to Come to School, with Esther Duflo and Rema Hanna) illustrates the usefulness of economic theory, especially when combined with the attractive identification properties of a randomized field experiment. In this paper, we examined the role that financial and monitoring incentives played in reducing teacher absenteeism in rural India. Among the one-room, one-teacher non-formal education centers of our sample, teacher absenteeism was nearly 50 percent per day in the baseline study. We ran a randomized field experiment where half of the teachers were given cameras to document their presence in the classroom twice a day. We combined this monitoring incentive with a financial one: for every day over 10 that a teacher worked in the month, they were given a 50 Rupee bonus. Teachers in the treatment group subsequently had absenteeism rates that were half of those in the control group. To explain whether this was due to monitoring or financial incentives, we estimated dynamic programming model of teacher labor supply. Our findings strongly suggest that monitoring only played a minor role in reducing absenteeism, and therefore the financial incentives were responsible for the increased attendance. This paper also illustrates the usefulness of theory in making policy, as our model allowed us to calculate the menu of cost-minimizing contracts that could be offered to teachers; these counterfactuals were subsequently adopted by the organization running the schools with great success.

In ongoing work, Professor Ryan is examining the impacts of cap-and-trade regulations on firms in California, and using personnel data from the US Army to estimate the value of statistical life.