Morningstar - Q3 2022 - 80

Ten Questions
Damon Jones of the University of Chicago
tackles financial inequality.
Laura Lallos, managing editor of Morningstar
magazine, interviewed Jones in June. The
transcript has been edited for length and clarity.
1. You describe your research as an intersection of
public finance, household finance, and labor/personnel
economics. Is there a common thread?
A unifying theme is inequality. I study tax policies
that redistribute income, especially the ones
that impact low-income families. These can help
to provide a safety net, but when they don't,
household financial decisions are important in
allowing people to weather volatility. Finally,
there are benefits and policies in the workplace
that are affected by public policies and have
implications for financial well-being.
Damon Jones is an associate professor
at the University of Chicago Harris School of
Public Policy. His current research topics
include income tax policy, Social Security,
retirement and retirement savings, and
the interaction between employer-provided
benefits and labor market outcomes. Jones
was a postdoctoral fellow at the Stanford
Institute for Economic Policy Research
from 2009 to 2010 and is a faculty research
fellow at the National Bureau of Economic
Research. He received his Ph.D. in economics
from the University of California, Berkeley,
and holds a B.A. in public policy with a
minor in African and African-American studies
from Stanford University.
Photography by Matthew Gilson.
2. What are your thoughts on " nudging " techniques,
such as requiring employees to opt out of 401(k) plans?
Some nudges, in particular default effects,
can have dramatic impacts on short-run outcomes,
like contributions to retirement accounts.
A question remains as to whether these impacts
are persistent. Nudges aren't enough to overcome
some sources of financial inequality, such
as structural racism, segregation, and the like.
3. What's your assessment of COVID-19 relief policies?
The monthly child tax credit had a tremendously
positive impact in cutting child poverty in
half, unemployment insurance expansions were
necessary to support workers while the economy
was on lockdown, and payment protection
loans could have been more equitably distributed
during its initial rounds.
4. Are you a proponent of a universal basic income?
I am in favor of a guaranteed income for everyone.
Some argue that this could reduce labor supply,
but our research found that this may be offset
if spending, and therefore the demand for workers,
increases. Also, this kind of safety net may
give workers more leverage in the workplace.
80
Morningstar Q3 2022
5. One of your studies challenges the conventional
view that temporary income shocks don't meaningfully
affect consumption. What were your key findings?
Fluctuations in income from month to month do
translate into fluctuations in spending on
nondurable goods such as food, groceries, and
services. This volatility in spending is higher
for households with low assets, which in our
sample, are disproportionately Hispanic and Black.
In particular, the racial wealth gap in liquid
assets leaves households of color more vulnerable
to income fluctuations or job loss.
6. Are there policy solutions?
Make sure that social safety net programs,
such as unemployment insurance, are well funded
and accessible across racial groups. Another
solution is to address factors leading to income
volatility, such as unpredictable working hours.
7. A number of states have instituted financial
education requirements for schools. What would you
like to see taught?
Tools that help students assess the risk, costs,
and benefits of student loans across different
schools might help students avoid some
of the more questionable financing options.
8. You recently finished a term at the White House
Council of Economic Advisers. What is the difference
between working in government and academia?
In academia, studies take years to get
finalized and published. In government, answers
to questions are needed immediately.
9. What are your favorite things to do in
Washington, D.C., and Chicago?
In D.C., going on walks and taking in the
architecture and people. In Chicago, watching
movies in the park during the summer.
10. What do you read for fun?
The Saga comic book series.

Morningstar - Q3 2022

Table of Contents for the Digital Edition of Morningstar - Q3 2022

Contents
Morningstar - Q3 2022 - Cover1
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Morningstar - Q3 2022 - 1
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