Deniz Aydin is a PhD Candidate in the Economics Department at Stanford University. His research is in the field of empirical macroeconomics, household finance and behavioral economics, with particular interests in household consumption, social security and other social insurance arrangements (such as unemployment insurance and IRAs) and the behavior of individual investors. In his PhD thesis, Aydin aims to understand the distributional consequences of financial crises through a leveraged household sector. The excess buildup of consumer debt and the consequent tightening of borrowing constraints after the credit crunch of 2008 is seen as a primary reason for the currently ongoing worldwide recession. Aydin is quantifying the consumption and debt response consumers give to a change in borrowing capacity via a field experiment and asking if high levels of pre-crisis debt buildups are due to individuals being borrowing constrained or myopic. Aydin earned undergraduate degrees in Economics and Mathematics from Sabanci University and an MSc in Finance and Economics from the London School of Economics and Political Science. He was previously a Research Associate at Harvard Business School.
What is the consumption, debt and balance sheet response to increased savings? The budget constraint requires that every dollar saved should decrease consumption (or increase debt). Do individuals cut on groceries or human capital investments in response to increased savings? Do minimum savings requirements such as IRAs decrease liquidity and induce expensive borrowing through credit cards? This project revisits such foundational questions on the consumption/savings interplay in the retirement savings context. I propose a research design that would allow to answer these questions directly via a field experiment in Turkey. Through a large local financial institution, I randomly nudge a few thousand individuals via a phone solicitation to increase their savings through a retirement savings account, and track their consumption, debt and balance sheet responses.