What can Nicolas Cage Teach Us About Finance?

Bauer Research Uses Hollywood to Find Connection Between Financial Stress, Job Decisions

Published on December 3, 2019

Bauer Research Uses Hollywood to Find Connection Between Financial Stress, Job Decisions

What can actor Nicolas Cage teach us about finance? The answer: more than you might think.

C. T. Bauer College of Business Assistant Professor Zesong “Zack” Liu wanted to examine how the collapse of the housing market and the unprecedented decline in household wealth impacted job decisions and long-term career trajectories.

But in order to do so, he had to get creative and ultimately turned to an unlikely resource: Hollywood.

For their paper, “Almost Famous: How Wealth Shocks Impact Career Choices,” Liu and his co-authors collected the work histories and property values for actors, writers, and directors in the film industry. Liu and two co-authors were then able to draw conclusions about how people reacted to changes in their housing wealth.

Assistant Professor Zack Liu
Assistant Professor Zesong “Zack” Liu

“We find that individuals who experience a decline in housing wealth change their job search behavior and end up participating in fewer big-budget film productions and are less likely to work with other high-profile stars,” the researchers write. “Additionally, we expect these shocks have negative long-term consequences on their careers.”

For example, after squandering his wealth on multiple properties and luxury items, Academy Award winner Nicolas Cage ended up owing more than $6 million to the Internal Revenue Service. To repay his debt, he took on many low quality direct-to-video projects.

The conclusion of the study: negative household wealth shocks distort job search decisions and can have long-term consequences. The same should hold true for workers outside of the film industry, the authors say. This research can help to explain the speed of economic growth and recovery after the Great Recession, when many workers may have taken low quality jobs that did not contribute to their overall career development.

Liu came to Bauer in 2017 after earning a Ph.D. in Finance at The University of Texas at Austin. His research at Bauer College focuses on corporate finance, innovation, and labor economics. “Almost Famous: How Wealth Shocks Impact Career Choices” is co-authored with researchers from the University of Minnesota and Pontifical Catholic University of Chile.