Yanjun (Penny) Liao

Postdoctoral Research Fellow

The Wharton School


I am an applied microeconomist at the Wharton Risk Management and Decision Processes Center. I am primarily interested in behavioral and market responses to extreme weather events and environmental risks, and how policies can be designed to facilitate efficient adaptation. In a related research agenda, I study consumer behavior regarding energy-efficient technologies and renewables.

In Fall 2021, I will join Resources for the Future as a fellow.

Click here for my full CV.


  • Climate adaptation
  • Natural disaster policy
  • Climate financial risk
  • Energy and transportation


  • Ph.D. in Economics, 2019

    University of California, San Diego

  • B.A. in Economics, 2013

    University of Hong Kong



“Weather and the Decision to Go Solar: Evidence on Costly Cancellations” Journal of the Association of Environmental and Resource Economists, no.1 (January 2020): 1-33.
Manuscript, Online Appendix

Working Papers

“What’s at Stake? Understanding the Role of Home Equity in Flood Insurance Demand” (with Philip Mulder)
Current version: May 2021.
– Also on SSRN

Millions of properties in the U.S. are exposed to increasing threats from natural disasters. Yet, a large majority of at-risk homes are uninsured against the costliest disaster: flooding. Floods cause elevated rates of mortgage delinquency and default that can impact the broader housing finance system. In this paper, we explore the connection between homeowners’ stake in their homes and their demand for flood insurance. To isolate the causal effect of home equity on food insurance demand, we study the response of flood insurance take-up to sudden house price changes over the housing boom and bust in the 2000s. We find that flood insurance take-up follows the dynamics of house prices in each market over the boom-bust cycle, with a home price elasticity around 0.33. A series of heterogeneity and robustness checks suggest that the role of mortgage default as implicit insurance is the most plausible mechanism for the positive relationship. We conclude by discussing the implications of our results for the effects of climate change on real estate and financial markets as well as for optimal disaster insurance policy.

“The Fiscal Impacts of Wildfires on California Municipalities” (with Carolyn Kousky)
Current version: May 2021. Revise and resubmit at Journal of the Association of Environmental and Resource Economists.
– Also on SSRN

This paper provides some of the first empirical estimates of the impact of natural disasters on the subcomponents of municipal budgets. We combine detailed municipal financial data from 1990-2015 with data on historical wildfire perimeters in California. We find that wildfires increase both revenues and expenditures. Sales taxes temporarily increase. Property taxes increase to a permanently higher level; this appears due to California law that limits reassessments of property until time of sale. Wildfires also cause a long-term increase in local spending on community development and public safety. The overall impact of wildfires on municipal budgets is negative and substantial. That said, in comparison to the spending by state and federal governments on wildfire suppression and response, municipalities are surprisingly insulated from the costs of wildfires.

“Extreme Weather and the Politics of Climate Change: a Study of Campaign Contributions and Elections” (with Pablo Ruiz Junco)
Current version: February 2021. Revise and resubmit at Journal of Environmental Economics and Management.

In this paper, we study how extreme weather and natural disasters affect political outcomes such as campaign contributions and elections. Weather events associated with climate change may influence these outcomes by leading voters to re-evaluate the incumbent politician’s environmental position. In a short-run analysis, we find that the number of online contributions to the Democratic Party increases in response to higher weekly temperature, and that the effect is stronger in counties with more anti-environment incumbent politicians. In a medium-run analysis we find evidence that, when a natural disaster strikes, the election becomes more competitive if the incumbent has a more anti-environment stance: total campaign contributions increase for both candidates but skewed towards the challenger, the race is more likely to be contested, and the incumbent is less likely to be re-elected. These results suggest that extreme weather events carry a moderate electoral penalty for anti-environment incumbents during 1990-2012, which has eroded but not fundamentally changed the large electoral advantage they enjoy. This mechanism will play a more important role as the public awareness of climate change continues to increase.

“How Hurricanes Sweep Up Housing Markets: Evidence from Florida” (with Joshua Graff Zivin and Yann Panassi√©)
Current version: April 2021. In submission.
– Also NBER Working Paper #27542

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 applicationsto 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 thelocal economic profile toward higher-income groups. Our findings suggest that market responses to destructive natural disasters can lead to uneven and lasting demographicchanges in affected communities, even with a full recovery in physical capital.

Work in Progress

“Negative Rebound: Fuel Economy Standards and Miles Traveled” (with Mark Jacobsen)

“Sea Level Rise and the Social Cost of Flood Insurance Subsidies” (with Terrence Iverson and Niko Jaakkola)


Graduate Courses

  • ECON 281: Economics of the Environment (2016, 2017, Scripps Institute of Oceanography, UCSD)
    Co-instructor with Mark Jacobsen

  • GPEC 488: Environmental and Regulatory Economics (2017, School of Global Policy and Strategy, UCSD)
    Co-instructor with Joshua Graff Zivin

Undergraduate Courses

  • ECON 120A/B: Econometrics (2014-2019)
  • ECON 5: Data Analytics/Social Sciences (2018)
  • ECON 152: Public Economics (2018)
  • ECON 1: Principles of Microeconomics (2015, 2018)
    Teaching assistant at the Department of Economics, UCSD

Teaching Interests

  • Econometrics (R/Stata)
  • Economics of Climate Change
  • Environmental Economics