Sharon Tennyson, associate professor of policy analysis and management, in her Martha Van Rensselaer office. Robert Barker/University Photography
Should the government impose even more stringent regulations on the insurance industry or should regulatory fetters be loosened? Should the government set limits on insurance prices and require companies to sell insurance to all consumers at those prices? Just how much should the insurance sales process be regulated? Should the ways that insurance agents get compensated be more flexible or more regulated?
These are some of the questions that Associate Professor Sharon Tennyson, one of the newest members of the faculty in the Department of Policy Analysis and Management (PAM), faces in her work and research.
"My primary interest is in government intervention in the economy and the economics of regulation. I look at the insurance industry as an example of an interesting market that is regulated," said Tennyson, who came to the College of Human Ecology in August after eight years as an assistant professor of insurance and risk management at the Wharton School at the University of Pennsylvania. "Insurance is part of our financial system and plays an important role in our market economy and so it is heavily regulated. In part this is because of its importance and in part it is because of the great potential for information problems in the market.
"You have agents who may not give all the appropriate information as they try to make a sale, and you have consumers who may not understand the insurance product. Also, the structure of the product itself is unusual and open to all kinds of problems: consumers pay money to a company that promises to pay them back under a certain set of conditions -- that can be pretty murky," said Tennyson, who is probably best known among her colleagues for her studies of problems in automobile insurance markets.
Originally from Indiana, Tennyson is the seventh of nine children, all of whom are now in law or business; Tennyson ended up as the only academic. After earning her B.A. (1980) from the University of California at Los Angeles, Tennyson worked for a congresswoman and for the Defense Department doing cost evaluations of new systems, while she took math courses at night to prepare for graduate work in economics. She then earned an M.A. (1985) and Ph.D. (1990) in economics from Northwestern University, writing her doctorate on industrial organization and regulation, specifically on how price regulation affects insurance markets.
Her dissertation work as an economist who looked at insurance markets landed her a job in Wharton's Department of Insurance and Risk Management, the top-ranked U.S. department and probably the world's most prestigious department in that area. In addition to teaching insurance and risk management to undergraduate, graduate and M.B.A. students, Tennyson continued to study automobile insurance markets and developed expertise on insurance marketing channels and issues related to insurance fraud.
Tennyson, who is the author of more than a dozen academic journal articles, said she's excited to be at Cornell because it gives her an opportunity to "return to my roots as an economist. At Wharton, my research focus shifted more to the business side of insurance issues, but here, I want to renew my interests in the regulated aspects of insurance markets and to delve into similar issues in other consumer markets."
She's launching several new research projects, including one that focuses on the regulation of sales and distribution practices in insurance and a look at how effective consumer education might be as an alternative or supplement to direct regulation.
Tennyson is also excited about her new teaching responsibilities. "We have students in PAM who are interested in financial services, health care issues, law and public policy. So, being here gives me the opportunity to teach about a broader range of topics to students with varied intellectual perspectives and interests." She is teaching a course on the economics of consumer policy, which examines government intervention in consumer markets, and a course in risk management and policy, which examines both private sector approaches and government policy managing risk. Beginning next year, she also will be teaching master's students in the Sloan Program in Health Services Administration.
When not teaching, conducting research or serving on various PAM committees, Tennyson is settling into her recently built house with her husband, Stephen Coate, the Kiplinger Professor in Economics at Cornell, and her 4-year-old daughter, Amanda.
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