Yanjun (Penny) Liao

Ph.D. Candidate – Department of Economics

Research Summary

How do weather and natural disasters interact with the economy, in both the short and long run? While exploring this core question, my research places particular emphasis on understanding the mediating forces of market responses, individual behaviors, and political economy. I derive novel empirical insights into these mechanisms using quasi-experimental methods and comprehensive datasets built from administrative records.

Research Statement  (PDF)

Job Market Paper

"How Hurricanes Sweep Up Housing Markets: Evidence from Florida"  (PDF) (with Yann Panassié)

This paper examines the impacts of hurricanes on the housing market and the associated implications for local population turnover. We directly characterize equilibrium dynamics in the housing market using micro-level estimates. For this purpose, we assemble a comprehensive dataset by combining housing transactions, parcel tax assessments, and hurricane history in Florida during 2000-2016. Our results show that hurricanes cause an increase in equilibrium prices and a concurrent decrease in the probability of transaction for homes in affected areas, both lasting up to three years. Together, these dynamics imply a negative transitory shock to the housing supply as a consequence of the hurricane. Furthermore, we match buyer characteristics from mortgage applications to provide the first buyer-level evidence on population turnover. We find that incoming homeowners in this period have higher incomes, leading to an overall shift in the local economic profile toward higher-income groups. Our findings suggest that market responses to destructive natural disasters can lead to uneven and lasting demographic changes in affected communities, even with a full recovery in physical capital.

Working Papers

"Weather and the Decision to Go Solar: Evidence on Costly Cancellations"  (PDF)

[Winner: Walter P. Heller Memorial Prize for Best Third Year Paper, revise and resubmit at Journal of the Association of Environmental and Resource Economists]

This paper studies the effect of short-run weather fluctuations on solar panel adoption in California. This decision appears to respond strongly to weather patterns associated with solar panel productivity: I find that customers whose sign-ups for solar panels are followed by unfavorable weather are more likely to cancel their contracts. In contrast, non-residential customers are not subject to the same effect. Together, these results suggest that short-run weather conditions affect customers’ valuation of solar panels. The most plausible mechanisms are psychological biases such as projection bias or a salience effect, leading the decision-maker to rely too heavily on transient conditions when predicting long-run utility. This paper is among the earliest to show evidence of behavioral anomalies in the solar market.


"Campaign Finance, Extreme Weather Events, and the Politics of Climate Change"  (PDF) (with Pablo Ruiz Junco)

In this paper we study how extreme weather and natural disasters affect political outcomes such as campaign contributions and elections. We suggest that weather events associated with climate change may influence these outcomes by (1) leading individuals to update their beliefs about climate change and act on these beliefs politically; and (2) increasing the salience of climate change for individuals who are already politically active. In a short-run analysis, we find that the number of contributions to the Democratic Party increases in response to weekly average temperature increases, and that the effect is stronger among constituents with a more anti-environment incumbent congressperson. In a medium-run analysis we find that after a natural disaster, total fundraising and the number of donors in an election cycle is higher if the incumbent has a more anti-environment stance, with the effect being stronger for donations to challengers than for incumbents. Further, we find that after a disaster, the more anti-environment the incumbent is the higher the chance of a challenger entering in the race, leading to a slightly lower re-election probability for the incumbent. Finally, we address alternative mechanisms and explanations for our results.



Research in Progress

"Mapping Empirical Estimates to Optimal Environmental Policy: Health and Productivity Effects"


"The Local Economic Consequences of Federal Disaster Mitigation Activities"


"Ingredients for Resilience: Heterogeneous Housing Market Responses to Natural Disasters"