Decory Edwards

Decory Edwards

Houston native, traveling where Economics takes me next.

Research

Job Market Paper

Title: Matching Wealth Moments with Heterogeneous Returns (2025)
Authors: Decory Edwards

Abstract. This paper aims to provide further evidence of the heterogeneous agent modelling framework’s ability to match wealth moments by adding a single source of heterogeneity across households beyond the realization of ex-post shocks to their income. I allow for households differ in the return earned on assets in a setting with rich life cycle dynamics. From there, I interpret the heterogeneity in the returns on safe assets earned by households as variation in deposit rates across the banking sector (as a result of the transmissions channel of monetary policy and its effect on deposits). Lastly, I discuss the implications of various taxation schemes when heterogeneous returns are present.

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Chapter 2 of Dissertation

Title: Moderate Trust and Maximum Perfomance on Financial Investments
Authors: Decory Edwards

Abstract. This paper documents a nonlinear relationship between trust and economic performance, measured as returns to net wealth. I use the RAND Longitudinal version of the Health and Retirement Study to construct return measures over the period 2002–2022 from observed capital income, asset values across waves, debt, and transaction-related information. I estimate this hump-shaped relationship between trust and returns to net wealth in standard OLS regressions for average returns, pooled OLS, and panel OLS regression models; the latter two models chosen with the intent to characterize the individual, persistent component of returns. The estimated level of trust that maximizes returns is consistently in the range of about 6 to 7 on a 1–10 scale, and this result is stable across the standard, pooled, and Correlated Random Effects (CRE) specifications. These patterns persists even after controlling for risk exposure via portfolio composition, which is important since individuals are found to earn different returns on average even among riskless assets.

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Chapter 3 of Dissertation

Title: The Case for a Measure of Wealth Inequality Aversion
Authors: Decory Edwards

Abstract. The inequality literature is notable in its ability to bring together four distinct concepts: (i) measures of inequality, (ii) social welfare functions, (iii) mean values, and (iv) models of choice under uncertainty. This paper provides a theoretical foundation for wealth inequality that incorporates the first three of these concepts. The ranking over wealth distributions is established through a choice under ambiguity model, and the social welfare approach to inequality measures is applied in this setting to derive a measure of wealth inequality aversion. In SCF computations from 1989 to 2022, the ambiguity-based measure exceeds the objective benchmark, implying that the standard objective measure understates wealth inequality. Over time, both model-based measures track the same broad pattern as the widely cited Black-White median wealth gaps in net wealth and gross assets.

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