Faculty & Research

Eric Zwick

Eric Zwick

Associate Professor of Finance and Fama Faculty Fellow

Eric Zwick studies the interaction between public policy and corporate behavior, with a focus on fiscal stimulus, taxation and housing policy. His research draws insights from finance and behavioral economics while using a variety of methods: new data, natural experiments, theory and anecdotal exploration.

Zwick is particularly interested in the problems that small and medium-sized private firms and new ventures face, from the perspective of owners, investors, managers and workers. A secondary area of interest concerns the role of bounded rationality and imperfect information in the design of policies that promote behavior change. This work focuses on determinants of habit formation in health and workforce productivity settings.

Zwick earned a Ph.D. and M.A. in business economics from Harvard University and a B.A. in economics and mathematics with high honors from Swarthmore College. Prior to grad school, he worked as a research assistant at the National Bureau of Economic Research and as a web and software developer for several start-ups and non-profits.


2020 - 2021 Course Schedule

Number Title Quarter
34101 Entrepreneurial Finance and Private Equity 2021  (Spring)
35916 New Developments in Public Finance 2021  (Spring)
35930 Research Seminar 2020  (Autumn)
35931 Research Seminar 2021  (Winter)
35932 Research Seminar 2021  (Spring)

REVISION: Did the Paycheck Protection Program Hit the Target?
Date Posted: Nov  17, 2020
This paper provides a comprehensive assessment of financial intermediation and the economic effects of the Paycheck Protection Program (PPP), a large and novel small business support program that was part of the initial policy response to the COVID-19 pandemic in the US. We use loan-level microdata for all PPP loans and high-frequency administrative employment data to present three main findings. First, banks played an important role in mediating program targeting, which helps explain why some funds initially ?owed to regions that were less adversely affected by the pandemic. Second, we exploit regional heterogeneity in lending relationships and individual firm-loan matched data to show that the short- and medium-term employment effects of the program were small compared to the program’s size. Third, many firms used the loans to make non-payroll fixed payments and build up savings buffers, which can account for small employment effects and likely reflects precautionary motives in the ...

New: Business Incomes at the Top
Date Posted: Sep  04, 2020
Business income constitutes a large and increasing share of income and wealth at the top of the distribution. We discuss how tax policy treats and shapes how businesses are organized and how they distribute economic gains to owners, with the focus on closely-held and pass-through firms. These considerations influence whether and how labor and capital income is observed in economic data and feed into research controversies regarding the measurement of inequality and the progressivity of the tax code. We discuss the importance of these issues in the US, and highlight that limited evidence from other countries suggests that they are likely to be important elsewhere.

New: Is Attention Produced Rationally?
Date Posted: Jul  07, 2020
A large and growing literature shows that attention-increasing interventions, such as reminders and planning prompts, can promote important behaviors. This paper develops a method to investigate whether people value attention-increasing tools rationally. We characterize how the demand for attention improvements must vary with the pecuniary incentive to be attentive and develop quantitative tests of rational inattention that we deploy in two experiments. The first is an experiment with an online education platform run in the field (n=1,373), in which we randomize incentives to complete course modules and incentives to make plans to complete the modules. The second is an online survey-completion experiment (n=944), in which we randomize incentives to complete a survey three weeks later and the price of reminders to complete the survey. In both experiments, as incentives to complete a task increase, demand for attention-improving technologies also increases. However, our tests suggest ...

REVISION: Did the Paycheck Protection Program Hit the Target?
Date Posted: Jul  07, 2020
This paper takes an early look at the Paycheck Protection Program (PPP), a large and novel small business support program that was part of the initial policy response to the COVID-19 pandemic. We use new data on the distribution of the first round of PPP loans and high-frequency micro-level employment data to consider two dimensions of program targeting. First, we do not find evidence that funds flowed to areas more adversely affected by the economic effects of the pandemic, as measured by declines in hours worked or business shutdowns. If anything, funds flowed to areas less hard hit. Second, we find significant heterogeneity across banks in terms of disbursing PPP funds, which does not only reflect differences in underlying loan demand. The top-4 banks alone account for 36% of total pre-policy small business loans, but disbursed less than 3% of all PPP loans in the first round. Areas that were significantly more exposed to low-PPP banks received much lower loan allocations. We do ...

New: Capitalists in the Twenty-first Century
Date Posted: Feb  23, 2019
Have the idle rich replaced the working rich at the top of the U.S. income distribution? Using tax data linking 11 million firms to their owners, this paper finds that entrepreneurs who actively manage their firms are key for top income inequality. Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries. Private business profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of private business profit as human capital income, we find that most top earners are working rich: they derive most of their income from human capital, not physical or financial capital. The human capital income of private business owners exceeds top wage income and top public equity income. Growth in private business profit is explained by both rising productivity and a rising share of value added accruing to owners.

REVISION: Kinky Tax Policy and Abnormal Investment Behavior
Date Posted: May  10, 2018
This paper documents tax-minimizing investment, in which firms accelerate capital purchases near fiscal year-end to reduce taxes. Between 1984 and 2013, average investment in fiscal Q4 exceeds the average of fiscal Q1 through Q3 by 37%. Q4 spikes occur in the U.S. and internationally. Research designs using variation in firm tax positions and the 1986 Tax Reform Act show that tax minimization causes spikes. Spikes increase when firms face financial constraints or higher option values of waiting. We develop an investment model with tax asymmetries to rationalize these patterns. Models without purchase-year, tax-minimization motives are unlikely to fit the data.

REVISION: Stimulating Housing Markets
Date Posted: Sep  13, 2016
This paper studies temporary policy incentives designed to address capital overhang by inducing asset demand from buyers in the private market. Using variation across local geographies in ex ante program exposure and a difference-in-differences design, we find that the First-Time Homebuyer Credit induced a cumulative increase in home sales of at least 382 thousand, or 7.4 percent, nationally. We find little evidence of a sharp reversal of the policy response; instead, demand appears to come from several years in the future. The program likely sped the process of reallocating homes from distressed sellers to high value buyers and stabilized house prices. The response is concentrated in the existing home sales market, implying the stimulative effects of the program were less important than its role in accelerating reallocation.