"A PhD is a bit like a corset"

How well do households, workers and institutions cope when they are hit by major economic shocks? This question has shaped Caroline Espegren’s research, from her PhD at BI Norwegian Business School to her current position as a postdoctoral fellow at Harvard Business School.

“I recently came across the idea that a PhD is a bit like a corset. It teaches you a strict, disciplined way of thinking: What is the actual question? What can the data identify? What assumptions are you making? Are there alternative explanations? It can feel a bit tight at times, but that discipline is very useful for thinking clearly about difficult problems. BI gave me a good corset,” she says.

Before starting her doctoral programme, Espegren worked as a macroeconomist in the Monetary Policy Department at Norges Bank. She wanted to go deeper academically and learn new research methods. But with a demanding job, a toddler at home and another baby on the way, she realised it would not be possible to do so on the side.

Research with policy relevance

Transitioning to academic research, she was positively surprised by how closely connected academia and economic policymaking are.

“I have always been interested in the practical relevance and policy implications of economic analysis. But when I started my PhD, my main goal was to develop my research skills and build a larger toolkit. I thought the exciting work would have to wait until later in my career. But I soon realised how directly relevant academic research can be to current policy issues. My interest in insurance markets, for example, grew from following developments in the US, where rising climate risk is putting pressure on insurance markets. Some of my PhD research was also used as background material for the Norwegian government’s Expert Committee on Climate Adaptation. I find those kinds of contributions particularly motivating.”

In her PhD, Espegren focused on climate risk: the physical risk from natural disasters and extreme weather events, and the transition risk associated with moving towards a low-emission economy. She studied how workers are affected when petroleum jobs disappear, how natural disasters affect household finances, and how uniform pricing in Norway’s natural peril insurance system affects how risk is shared between households.

Because Norwegian households are generally very well insured, she did not expect natural disasters to have a lasting effect on their finances. The data, however, showed persistent losses.

“Insurance replaces the house, but it doesn’t protect against falling house prices or a hit to the local labour market. So, the indirect effects are there, even when the direct effects are fully compensated.”

From BI to Harvard

At Harvard Business School, Espegren works in the Climate and Sustainability Impact Lab, which is part of the AI Institute. She is continuing her research on physical climate risk and economic resilience, now with a greater focus on the United States.

“What I particularly like about HBS is the close connection between academic research and industry. It is also a very interesting time to be part of the AI Institute. I find myself spending a lot of time figuring out how best to use AI in research, both to make better use of new data sources and to work more efficiently. At the same time, we need to make sure that using AI does not compromise research integrity.”

Looking back at her PhD, Espegren particularly values the independence she developed and the support she received from her supervisors.

“A PhD should teach you to become independent and confident enough to run your own research projects in the future. My supervisors were good at turning challenges into opportunities, and they gave clear advice and helped me sort my thoughts. Their support and encouragement were also very important when I decided to apply for research positions.”

Her PhD from BI also brought lasting friendships and a high degree of freedom.

“You can work on exactly what you want, whereever you want, and whenever you want. I had a fantastic time at BI, and I would absolutely choose it again.”

Espegren is nevertheless clear that a PhD may not be the right choice for everyone.

“I definitely became a better economist during my PhD. But a PhD is four years of hard, independent work. If you want to become a researcher, it’s a clear and necessary first step. If you see yourself in a job somewhere else, I would ask: What will a PhD add? Some people may already have a job where they can learn what they want to learn. In that case, maybe you don’t need the whole corset?”