School of Business and Management Department of Finance 201 Department of Finance Mortality Risks and Corporate Outcomes Supervisor: Vidhan Krishan GOYAL / FINA Student: DONG Nianqi / MATH-FAM Course: UROP 1100, Spring The opioid crisis, a major public health emergency in the United States, profoundly affects life insurance companies by elevating mortality rates and increasing policy surrenders, particularly among working-age adults. Using causal inference methods like instrumental variables and regression discontinuity design, this study analyzes data from CDC Wonder and NAIC filings to assess effects on liability duration, asset allocation, and premium adjustments. Expected findings suggest opioid-related deaths shorten liability duration, particularly for ages 25-54, increase liquidity risk, and reduce equity holdings. Prolonged mortality shocks may raise premiums and increase hedging via Mortality Contingent Bonds. Client demographics and product structures heighten insurer exposure, with smaller firms most vulnerable. The study provides valuable insights for insurers, policymakers, and public health stakeholders. Mortality Risks and Corporate Outcomes Supervisor: Vidhan Krishan GOYAL / FINA Student: HO Sze Lok / QFIN Course: UROP 1100, Spring This study examines how international opium price fluctuations influence prescription opioid dispensation in the U.S. and whether effects vary across states with differing regulatory stringency. Using opioid dispensing rates and opium price data, instrumental variable regressions isolate exogenous variation via drought shocks in Afghanistan. Results show lower opium prices significantly increase dispensation of natural/semi-synthetic opioids, driven by reduced production costs and aggressive pharmaceutical marketing. Effects are amplified in states with weaker PDMPs and in regions with high pre-existing demand. Post-2010, this relationship weakened due to OxyContin reformulation and stricter regulations. Conversely, synthetic opioids show no sensitivity to price changes. Findings underscore supply-side economic incentives as a critical driver of the opioid crisis and highlight the moderating role of regulatory frameworks. Mortality Risks and Corporate Outcomes Supervisor: Vidhan Krishan GOYAL / FINA Student: LIN Zhenyi / ECOF Course: UROP 1100, Spring In this UROP project, I aim to study the financial consequence of the opioid crisis in the USA through three tasks. The first task is to review relevant literature on published finance journals and evaluate how authors invent hypotheses and use econometric techniques to identify relationships. The first task involves literature mainly focused on learning the financial impact of opioid abuse. The second task is to collect other relevant literature related to the opioid crisis to acquire a holistic understanding of its social impact and research questions raised by scholars. This task helps to pave the final task – to think about new research questions that study the economic impact of the opioid crisis and try to propose methods to test the hypothesis. Through these tasks, I gained insights on how the opioid crisis, a social and medical phenomenon, can have a significant impact in the finance sector.
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