Retail Investor Heterogeneity: Evidence from WallStreetBets (Job Market Paper)

I study the heterogeneity of retail investors based on the stocks they chose to discuss. I use Reddit WallStreetBets data totalling more than 1.5 million posts and 35 million comments from 2018 to the end of 2021. I find retail investors to be diverse, with distinct subgroups showing interest in stocks with attention-grabbing features, or fundamental based investing. I also find those attributes to be connected to echo chamber effects, likely causing confirmation bias, finding that subgroups do not mix. Finally, I find subgroups to be of differential importance in a predictability exercise. Effects commonly attributed to retail investors, such as increased volatility, might be coming from a sub-sample of them but also a sub-sample of stocks.

A Bad Bunch: Asset Value Under-Reporting in the Mumbai Real Estate Market (with Santosh Anagol, Vimal Balasubramaniam and Tarun Ramadorai)

Real estate values are often under-reported to avoid transaction and property taxes, and to hide wealth built from tax-evaded income. We develop a new method to extract estimates of under-reporting, and employ this measure in the Mumbai real estate market. This approach compares the bunching of reported property values around government-assessed guidance values with a third-party measure of true underlying transactions prices. We estimate that 13 percent of value in Mumbai real estate is under-reported between 2013 and 2018. Measured under-reporting spikes immediately before increases to government-assessed values, and properties with mortgages from public-sector banks and banks with high non-performing assets exhibit more visible evidence of under-reporting.

The Market for Data Privacy (with Tarun Ramadorai and Ansgar Walther)

We scrape a comprehensive set of US firms' privacy policies to facilitate research on the supply of data privacy. We analyze these data with the help of expert legal evaluations, and also acquire data on firms' web tracking activities. We find considerable and systematic variation in privacy policies along multiple dimensions including ease of access, length, readability, and quality, both within and between industries. Motivated by a simple theory of big data acquisition and usage, we analyze the relationship between firm size, knowledge capital intensity, and privacy supply. We find that large firms with intermediate data intensity have longer, legally watertight policies, but are more likely to share user data with third parties.

Race and Bankruptcy (with Edward R. Morrison and Belisa Pang)

The Journal of Law and Economics 63 (2), 269-295

Among consumers who file for bankruptcy, African Americans file Chapter 13 petitions at substantially higher rates than other racial groups. Some have hypothesized that the difference is attributable to discrimination by attorneys. We show that the difference may be attributable, in substantial part, to a selection effect: Among distressed consumers, African Americans have longer commutes to work, rely more heavily on cars for the commute, and therefore have greater demand for a bankruptcy process (Chapter 13) that allows them to retain their cars. We begin by showing that African Americans tend to have longer commuting times than other consumers and, when they do have longer commuting times, they also have relatively high Chapter 13 filing rates. We show this using data from Atlanta, Chicago, and Memphis, each of which has been identified as a location with over-representation of African Americans in Chapter 13. We then test our hypothesis that African Americans' reliance on automobiles is a cause of their substantially higher use of Chapter 13. We do this using data from Chicago, where the city recently implemented an aggressive program to collect parking debts by seizing the cars and suspending the licenses of consumers with large debts. We show that this city-wide program disproportionately affected African Americans and, as a result, their share of Chapter 13 filings increased substantially. Although we do not disprove the possibility of discrimination by attorneys, our data show that selection effects are potentially as important in explaining patterns in Chapter 13 cases.

Consumer Bankruptcy Pathologies (with Edward R. Morrison)

Journal of Institutional and Theoretical Economics, volume 173, issue 1, p. 174 - 196

This paper questions several longstanding descriptions of consumer bankruptcy in the United States. We focus on Chapter 13, which discharges debts after consumers pay disposable income to creditors for up to five years. Many studies document pathologies, including high failure rates, racial disparities, low creditor recoveries, and attorney biases. We observe the same patterns in new data drawn from Cook County, Illinois, but show that these pathologies are central tendencies that ignore substantial heterogeneity across consumers. Several are driven by subsets of consumers; some disappear once we account for account for consumer heterogeneity. We present new evidence that some pathologies reflect biases in non-bankruptcy law, not in the bankruptcy process itself.