Professor Judith Chevalier

Judith Chevalier, the William S. Beinecke Professor of Finance and Economics, tracks down the sometimes-surprising outcomes that follow new technology adoption. Looking at a range of sectors, her work has unraveled implicit incentives driving risk taking by mutual fund managers, the ways online reviews shift business strategy and consumer decisions, and the consequences of nursing home workers’ movement between facilities in spreading COVID-19.

Q: What questions have guided your career?

My research has been pretty eclectic, but my overriding questions have been about innovation. People who study the innovative process might find it surprising that I say I’m interested in innovation because what I’m really studying is the ramifications of new technology adoption. How does an innovation impact markets, competition, personnel, and incentives?

Q: Would you give an example?

When the internet was new, there was a lot of attention on questions like: do I buy a book from Amazon or do I buy it at the local bookstore? But what’s bought and sold on the internet is a very small piece of how internet technology has changed commerce.

I think it’s fascinating that the way we make decisions about purchasing has changed so dramatically. Think about the process of finding and booking a hotel 20 years ago compared to today. The booking part is maybe the least interesting. At this point, anywhere I might want to go, I can find a pile of reviews that tell me the attributes of different hotels. I get a clear idea of everything that’s available at the hotel and all around it. It’s so different from how we made choices not that long ago.

Q: Where else do we see it?

While I was doing research on digital platforms and gig work, I used UberX in Chicago. I was picked up by a woman driving a much nicer car than was required. It turned out that she was running a funeral service that she had inherited. Coincidentally, I had written about funerals, so I knew many people have moved to the less expensive options for burial. It has become a challenging business. She was driving Uber for extra income.

She said, “If nobody dies, I drive. If somebody dies, I don’t.” That stuck with me. The side work in some ways enabled her to continue in the entrepreneurial work because it dovetails conveniently. Because her job was so unpredictable there’s no way she could commit to shifts at the Starbucks. But on the days when her assets—her time and her car—were underused, she had an alternative way to make money using those assets.

It was one person, but her story aligned with the data. Workers use digital platforms in different ways than we might have at first anticipated. Beforehand, I might have expected a new technology that improves the matching of cars and riders would lead full-time taxi drivers to adopt the innovation.

That would have been partially right, but the vast majority of Uber drivers only work 8, 12, or maybe 15 hours a week. These new gig economy platforms are used by workers as part-time second jobs typically organized around some other economic activity.

Q: Why is it valuable to know that?

People use innovations in ways that we might not completely anticipate. That ultimately transforms how people work and how they interact with work. Academic research helps shed light on what has changed in our environment. If policymakers are only thinking about gig work and digital platforms as full-time, it’s not the right framing.

Q: What led you to be an academic?

I’m from the New Haven area. A lot of kids at my public elementary school had parents who were academics. When I went to their houses, their parents never seemed like they were working that hard. Looking back, that’s probably because they weren’t working when I was there. But there was this mysterious allure to professors; it seemed like a cool job. It was not really a lot to go on. But I was always a nerdy kid, so it’s probably not surprising I chose a nerdy job.

Q: How did you decide on economics?

One class was enough for me to know. I attended Yale for college. The now-Nobel Prize winner Bill Nordhaus taught my freshman year intro economics class. It was super fascinating. I thought, “This makes sense. This is what I’m going to do.”

Q: Your intro econ professor became a Nobel Prize winner. As an undergraduate you also worked for David Swensen, Yale’s chief investment officer, who transformed how universities invest their endowments.

As part of my financial aid, I was a student worker. I started out in the Yale insurance office because it seemed sort of economic-y. The investment office was on the floor below. Knowing I needed a summer job, I chatted up Dave Swensen at the copy machine. Why he was doing his own copying I don’t know, but I remember helping him with a paper jam and getting a summer job. He remembered it differently, but however it happened, I got a job that was really helpful financially. It was also, obviously, a great opportunity. I got to work with an amazing team. It really helped me be more excited about economics. There was some serendipity to it.

Along those lines, I did my senior thesis on patents. Rick Levin, who went on to become the president of Yale, had done a lot of work on patents, so he agreed to be my adviser. He helped me out a lot with that and when I decided to go to grad school.

Q: How do the people you study with, work with, or write papers with shape a career?

The thing about networks is you meet people, you do some work with them, and they’re always part of your network. You’re always adding. You never really subtract from it.

There can be serendipity; there are also just weird coincidences. One of my earliest co-authors was Glenn Ellison, who is now at MIT. We knew each other from the math team at Hamden High School. Years later, when we had both become economists and were both junior faculty members at Harvard, we wrote a couple of papers together on mutual funds.

Fiona Scott Morton and I were in college together. Then we were in a study group in grad school. Now, she’s my next-door office neighbor. And as new faculty arrive at Yale SOM, I’ve loved getting to work with some of them on projects. You keep adding people to your network, which creates new opportunities.

Q: For those who have never written an academic paper, what is it like to work with co-authors?

Almost everything I’ve written since my dissertation has been co-authored, although I’ve been all over the map in who those co-authors are. It’s collaborative and social. People bring specific skills to the table. With the Uber paper, there was a technique that couldn’t have been in the paper without one of the co-authors. There are lots of reasons to work with other people but one is because it’s a lot more fun.

A co-author that I worked with on a COVID paper is over at the Yale School of Public Health. We’d never met before that project. Now, I send him messages on Twitter about things that we know are common interests. If we run into each other on the street, we’re glad to catch up. You make friends by writing papers with people.

Q: In addition to your academic research, you’ve taken on many organizational leadership roles—editorships, academic associations, nonprofit boards, and committees within the university. Why have you chosen to make that a significant part of what you do?

We’re all in this boat together, so we’ve all got to put our oar in the water. It’s not that I’m inherently interested in being on committees. I’m not. However, I am very interested in diversity issues in economics. So I was happy for the opportunity to really think about what we can do to improve the profession and make it more welcoming to different people as chair of the American Economic Association’s Committee on the Status of Women in the Economic Profession (CSWEP).

I recently finished my three-year term and rotated off. During the pandemic, many of the normal activities of the committee had to change so we used it as an opportunity to innovate with new technology and do different things that I’m proud of.

Q: During your time on CSWEP the American Economic Association produced a report that got significant attention. Where do things stand with respect to diversity within the field?

I don’t think that our profession has been completely welcoming to diverse people from different backgrounds. It has always been a majority man’s field, but it goes beyond women and men.

It’s been more welcoming to White people than to nonwhite people. It’s been more welcoming to straight people than to queer people. It has been more welcoming to people without disabilities. People look around the field and don’t always see themselves there. That’s especially difficult when informal networks help people advance in the field. There are so many ways in which economics would benefit from a variety of perspectives.

We’ve made progress, but we definitely need to do more. For instance, it’s unusual for high school students to learn what economics is. Increasing early exposure to the field could be a powerful way to get a much wider group of people excited about economics. We need students to look at economics and say, “Oh, actually this isn’t just about getting a job at an investment bank. This is a tool kit that’s helpful for making all kinds of change in the world.”

Q: You’ve done several papers touching on COVID. How did an economist decide to look at the pandemic?

Economists are good at looking at data and doing data analysis. In early March 2020, I got really curious about whether we should all be wearing masks. Jason Abaluck and I did some preliminary work. Based on that, we thought there was no reason not to require masks in settings like Yale New Haven Hospital and Yale Health. We wanted the university to be an early adopter.

We were asked to talk to an emergency COVID committee that was meeting every morning to plan the university’s pandemic strategy. There was some skepticism on the committee about requiring masks, but two public health doctors, Sten Vermund and Albert Ko, were super open-minded. We ended up collaborating with both of them and SOM colleagues Howie Forman and Ed Kaplan on a paper that laid out the case that there was already a lot of evidence that by everyone wearing a mask we could slow down transmission a little bit.

Obviously, that early paper has been superseded by other things, including Jason’s amazing randomized control trial that he and our colleague Mushfiq Mobarak did in Bangladesh to demonstrate the utility of masks. But Albert Ko [who advised Governor Ned Lamont during the pandemic] always graciously says that he did not think masks were a good idea until Jason and I convinced him. There was a real sense of urgency pushing us on that project and all the COVID work.

Q: Your next COVID paper was on nursing homes.

So many COVID deaths were in nursing home even though they were shut down to visitors, which was so difficult for the people who live there and for their families.

I worked with Keith Chen, who’s at UCLA, a friend, and someone I’ve collaborated with before, and Elisa Long (both former SOM colleagues) to use cellphone data to look at movements of workers across nursing homes. We were fairly convinced that, because of the nature of the livelihood, workers, particularly those who had jobs in multiple nursing homes, were moving COVID around.

It was a big project that we worked on in a time-sensitive way. We got some help from the Tobin Center. I still think nursing homes are not centered enough in the conversation about COVID, but we’re engaged in an ongoing broader conversation about how to shut down disease transmission in nursing homes.

When that paper was finished, I thought, “I’m done with COVID now; I’m getting back to my regular work.”

Q: But there was one more.

That happened because I was working with a bunch of co-authors including SOM colleague Kevin Williams on a project on the changing retail environment. We had been looking at dollar stores when the CDC and Dollar General announced that they were exploring a partnership for vaccine distribution.

We immediately knew we had all the data ready to go to assess whether that sort of partnership would be effective. We found using Dollar Generals would dramatically increase the fraction of low income households within a mile of a vaccine site.

Somehow the CDC didn’t end up partnering with Dollar General. That was disappointing, but again the research led to a lot of good, interesting conversations about ways other programs for public service could benefit from piggybacking off the distribution innovations that retailers have made.

Q: How do you assess when you’re successful? How do you know what your impact is?

I work hard. I do my best. But I try not to think about those things too much. If I was focused on coherently shaping my legacy, my work would probably be less disparate. I’m a full professor at Yale. We have academic freedom because our job is to not weigh the cost and benefits of working on a particular thing. We work on what we think is important.

Q: Are you getting to live the life that you found so alluring as a little kid in Hamden?

Yeah. I work super hard, but I work on things that I’m interested in. That’s awesome. It’s more work than I thought, but it turns out the work is better than I thought.