Graduate Student Profile - Jason Hsu
Management

Jason Hsu is challenging the commonplace observation in financial circles that consumer behavior doesn't respond to changes in the stock market. The idea is "that other facets of life seem to have a much bigger impact on consumption than stock investment,"says Jason, a doctoral candidate in the Anderson School at UCLA. "It's almost as if people don't mind the risk of stock market investments."

Jason disagrees. To reach their conclusion, the experts compare stock market fluctuations with aggregate measures of consumption, and Jason believes that this is where they go wrong. Only 20% to 30% of Americans own stocks or mutual funds in their own name (rather than, for example, shares in corporate retirement funds). It's these people who bear the actual burden of risk, as Jason sees it.

Focusing on "the selective fraction of the economy that actually holds stock," Jason says, produces empirical evidence that stock market fluctuations produce significant effects on consumer spending. "The people who matter to the stock market, who have the money and the background to invest, are changing their consumption profile as bull and bear markets come and go," he says.

In his study of equity investment, Jason also found that many Americans are effectively barred from the stock market by their lack of available cash. "Even if they understand that wealth accumulation is greatly facilitated by participating in the equity market," Jason says, "it's simply too hard for them. The amount of their disposable income doesn't permit it."

This kind of social conclusion, although it's a small part of his equity study, provides a common thread linking the seemingly diverse research topics bound together in Jason's dissertation. Another part of his work looks at how to encourage large pharmaceutical companies to do research in socially useful but not very lucrative areas.

Pharmaceutical companies "would be happiest if they could spend all their time looking for a cure to the common cold or creating drugs that help people in the United States," Jason says, "but then there's the rest of the world." While other countries depend on U.S. research for advances in medical treatment, their people often lack the income to pay for new and expensive drugs.

Grants and extended patent protection are the most common incentives used to persuade pharmaceutical companies to look beyond U.S. borders. Jason's analysis suggests that "a type of co-payment plan"—in which a government or foundation would pay the difference between what customers can afford and what companies need to turn a profit—"has superior properties for inducing research activity."

Jason's interest in finance began during his undergraduate years at the California Institute of Technology, where he earned degrees in both economics and physics. He elected to do graduate work in economics. "I could have gone either way and been happy with the choice," he says, but "pursuing a business education appeared to be a better career move."

After a year at Stanford University, Jason spent a couple of years in his native Taiwan, where he was a research fellow and visiting lecturer at Taiwan National University and did some business consulting.

Returning to the United States, he decided to pursue a doctoral degree rather than a master's because he wanted to teach. He came to UCLA because he admired the work of two faculty members, Eduardo Schwartz and Dick Roll, who became his advisers. Professor Schwartz first got to know Jason as a teaching assistant in a basic corporate finance class. "He was incredibly good," Professor Schwartz says. "The students loved him."

This may stem in part from the fact that Jason loves teaching. Being a lecturer at the Taiwan National University "was a blast," he says. "That's when I knew that I would really enjoy teaching and that I was pretty good at it." His success as a teacher, he says, comes from "knowing what people might be confused about or might not understand. I go through the same process with the material, so I can empathize."

His empathy also arises from his experience at age 11, leaving Taiwan, where he was always first in his class, and coming to the United States, "where I had no idea what was going on," he says. "When it came to doing homework, I had the most basic limitation of not knowing what was assigned." Although learning English was an enormous challenge, history was actually "my most dreaded subject," he says. "Most people knew who George Washington was. For me that was a brand new thing."

By the time he entered junior high school, Jason was up to speed, and he credits the teachers in his public schools, who "were so unbelievably supportive," taking time with him instead of just sending him off to ESL classes. He is also a big fan of the professors in the Anderson School. Their support and counsel during his years at UCLA "are more than I could ever ask for."

Published in Fall 2003, Graduate Quarterly