Monthly Archives: August 2024

Facing the Fear of Exclusion: How Being Left Out Influences Mental Health and Burnout at Work

Recent research from the University of Nottingham’s Schools of Psychology and Medicine sheds light on the detrimental impact of the Fear of Missing Out (FoMO) on employee mental health and its potential to exacerbate burnout, particularly in the face of information overload. This study analysed responses from 142 employees to explore the adverse effects of digital work environments. The findings published in SAGE Open indicate that employees who struggle with FoMO and an excess of information are more prone to stress and burnout.

Elizabeth Marsh, a PhD student leading the quantitative analysis at the School of Psychology, underscored the significance of digital workspaces as critical assets for organisational strategy. These platforms boost productivity and adaptability, especially in hybrid working setups. However, Marsh also pointed out the possible negative impacts on employee well-being, intensified by the increased reliance on digital communication tools post-COVID-19 pandemic.

The study elaborates on the protective role of mindfulness in digital workplaces, helping shield employees from stress, anxiety, and the burdens of information overload. In this context, FoMO is characterised as anxiety linked to missing crucial updates, information, and opportunities for interaction and relationship building. While traditionally associated with social media, the study reveals FoMO’s significant repercussions in professional environments.

Participants described their encounters with the ‘dark side’ of digital workplaces, including stress, overload, anxiety, and FoMO, and how these factors impinged their well-being. The findings pinpoint issues specifically related to information—such as the fear of missing out and its overwhelming nature—as particularly detrimental. These challenges affect well-being directly and magnify the overall stress linked with digital work.

Elizabeth Marsh highlighted the challenges presented by the constant stream of information through emails, intranets, and collaborative tools, which can overwhelm employees and contribute to feelings of exclusion. She advocates for a comprehensive approach to managing this information overflow, focusing on optimising information handling and boosting information literacy to mitigate feeling overwhelmed. The study recommends that employers invest in strategies to manage the flow and distribution of information, which could guide HR policies and training programs aimed at helping employees navigate and utilise information more efficiently.

Dr. Alexa Spence, a psychology professor, emphasised the need to consider digital workplaces in job design to enhance productivity and promote employee well-being. Neglecting this aspect can result in increased stress, burnout, and a decline in mental health. The research underscores the information ecosystem within organisations as a pivotal focus for internal policy and broader research engagement, highlighting the necessity for a balanced approach to managing digital work environments.

More information: Elizabeth Marsh et al, Overloaded by Information or Worried About Missing Out on It: A Quantitative Study of Stress, Burnout, and Mental Health Implications in the Digital Workplace, SAGE Open. DOI: 10.1177/21582440241268830

Journal information: SAGE Open Provided by University of Nottingham

Home Office Setup Could Be Key to Work-from-Home Achievement

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In a recent survey, Dutch employees who worked remotely reported higher productivity levels and reduced burnout when satisfied with their home office setups. The study further highlighted the positive correlation between improved air ventilation in the home office and increased productivity. This research was conducted by Martijn Stroom and his team at Maastricht University in the Netherlands and was published in the open-access journal PLOS ONE on August 7, 2024.

Over the past few years, mainly due to the COVID-19 pandemic and technological advancements, working from home has transitioned from a rarity to the “new normal” for many employees who traditionally operate from an office setting. This shift has prompted researchers to delve into various factors that could influence job satisfaction and productivity for remote workers, including the suitability of different jobs for remote operations.

Despite the growing interest, limited research has focused on the potential impact of home office physical conditions on productivity and job satisfaction. To bridge this gap, Stroom and his colleagues surveyed 1,002 Dutch remote workers, exploring various aspects of their home office environments, their productivity levels, job satisfaction, and other related metrics. The researchers employed logistic regressions and structural equation modelling techniques to decipher the relationships among these variables.

Their findings revealed that employees who were content with their home office arrangements—including environmental aspects like temperature and noise and hardware such as office chairs and monitors—reported higher productivity and were less likely to experience professional burnout.

Moreover, the study uncovered that enhanced air ventilation within the home office was statistically associated with increased productivity, a greater inclination to continue working remotely in the future and a reduced risk of burnout. This aligns with previous studies that have established a connection between air quality and productivity in the workplace. The research also pointed out a significant discrepancy between the level of ventilation and self-reported satisfaction with indoor air quality, highlighting the limitations of relying solely on self-reported data, which has been common in much of the existing literature and policy-making.

Based on these insights, the researchers advocate for investments in home office hardware and environmental improvements, supported by objective indoor climate measurements, to enhance the effectiveness of remote work policies. Further investigations are recommended to elucidate any causal relationships among the examined factors.

The authors conclude by emphasising the critical role of the physical conditions of the home office in influencing productivity for those working from home. They suggest that varied home office conditions could lead to differing levels of willingness and success in remote work scenarios.

More information: Martijn Stroom et al, Does working from home work? That depends on the home, PLoS ONE. DOI: 10.1371/journal.pone.0306475

Journal information: PLoS ONE Provided by PLOS

Innovation Continues to Thrive in Research

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The 1960s marked a revolutionary era with the discovery of mRNA, introducing groundbreaking findings that spearheaded new advancements. Such discoveries are termed “disruptive” because they create entirely new pathways in scientific inquiry. Conversely, discoveries that enhance or expand upon existing knowledge are described as “consolidating.” These are equally vital, exemplified by the development of pivotal mRNA vaccines to address the COVID-19 pandemic. However, these vaccines would not have been possible without the foundational research on mRNA.

Both disruptive and consolidating discoveries are crucial. Nonetheless, a 2023 study published in Nature suggests a current imbalance in this dynamic, with a noticeable decline in the rate of groundbreaking discoveries within the scientific community. However, this imbalance is not a permanent state. The potential for future disruptive discoveries remains, offering hope for the future of scientific research.

The study involved US researchers conducting an analysis examining millions of scientific articles from 1945 to 2010 and patents from 1976 to 2010. They employed the CD index, which assigns a scale from 1 (completely disruptive) to -1 (ultimately consolidating) based on how often a scientific paper or patent is cited in conjunction with earlier works.

The implications are significant for patents. Suppose a patent, referred to as patent C, is only cited by subsequent patents and not alongside earlier patents. In that case, it is considered disruptive, marking the beginning of a new citation stream. On the other hand, if subsequent patents also cite previous patents along with patent C, it falls into the consolidating category, indicating that it is only partially novel.

The decline in disruptive research noted by the Nature study has raised concerns about the scientific community’s overall innovative capacity. However, Dr Christian Rutzer from the Center for International Economics and Business (CIEB) and Professor Rolf Weder, both at the University of Basel, met this conclusion with scepticism. Upon reviewing the data, they identified significant measurement errors in the original study.

In collaboration with Professor Jeffrey Macher from Georgetown University, who was a visiting professor at the Faculty of Business and Economics in spring 2023, they conducted their analysis on patents. Their findings, which were later published in Research Policy, highlighted a critical oversight in the Nature study. This collaborative effort underscores the inclusive nature of the scientific community, where collective knowledge and insights lead to progress.

This reevaluation sheds light on the importance of accurate measurement methods in assessing the nature of scientific progress. It also underscores the intricate balance needed between disruptive and consolidating research to foster true innovation. As members of the scientific community, your role in maintaining this balance is crucial and empowering.

More information: Jeffrey T. Macher et al, Is there a secular decline in disruptive patents? Correcting for measurement bias, Research Policy. DOI: 10.1016/j.respol.2024.104992

Journal information: Research Policy Provided by University of Basel

Transform Your Health and Well-being in Just 15 Minutes a Day

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Workplaces constantly adapt to new wellness initiatives such as Corporate Cup events, lunchtime yoga sessions, and ‘walk and talk’ meetings to enhance employee physical activity. Recent research by the University of South Australia has uncovered that merely 15 minutes of targeted activity per day can significantly improve an individual’s health when augmented with gamification elements. This study examined the effectiveness of a gamified wellness programme, the ’15 Minute Challenge’, which involved 11,575 employees across 73 companies in Australia, New Zealand, and the UK. The findings revealed that 95% of participants met or exceeded the recommended exercise guidelines.

Over six weeks, the challenge resulted in an average increase of 12 minutes in daily physical activity, translating to an additional 85 minutes per week. Typically, participants engaged in 45 minutes of exercise daily. Notable improvements were observed: fitness levels rose by 14%, energy by 12%, overall health by 8%, sleep quality by 8%, and mood by 7.1%. These improvements are particularly significant given the World Health Organization’s recommendation that adults aged 18-64 undertake 150–300 minutes of moderate-intensity or 75–150 minutes of vigorous-intensity aerobic physical activity each week.

Dr Ben Singh, the lead researcher from UniSA, highlighted the effectiveness of the ’15 Minute Challenge’ in bolstering workplace health and wellness. He underscored the broad benefits of regular physical activity, which not only assists in managing and preventing chronic diseases such as cardiovascular conditions, diabetes, and cancer but also alleviates symptoms of depression and anxiety. Given that approximately half of the Australian adult population does not meet the recommended levels of physical activity, there is a critical need for workplace wellness programmes like the ’15 Minute Challenge’.

The study’s results underscore the potential of the ’15 Minute Challenge’ to address physical inactivity. The challenge’s unique approach motivates participants to exceed the minimal goals set by the challenge itself, effectively cultivating regular exercise habits. This is particularly beneficial for those who lead sedentary lifestyles. The 15-minute daily target serves as a catalyst, encouraging participants to engage in more extensive physical activity. Many found themselves not only achieving but surpassing national health recommendations, affirming the efficacy of the challenge.

Professor Carol Maher, a co-researcher at UniSA, attributed part of the programme’s success to its gamification elements and the social dynamics promoted through the app. The app encourages team collaboration and accountability via friendly competition, which plays a vital role in motivating participants to remain engaged and connected. Maher stressed that addressing physical inactivity requires a collective effort and that employers who implement effective, enjoyable, and cost-efficient programmes like the ’15 Minute Challenge’ can enjoy dual benefits. These include improved employee health and well-being, as well as enhanced productivity and satisfaction.

Such initiatives not only improve the health and well-being of employees but also enhance their productivity, satisfaction, and stress levels whilst reducing the likelihood of illness. This underscores the importance of sustainable and scalable wellness programmes as essential components of any organisation’s health and wellness strategy, positioning the ’15 Minute Challenge’ as a model for fostering positive change within workplace environments.

More information: Ben Singh et al, Evaluation of the “15 Minute Challenge”: A Workplace Health and Wellbeing Program, Healthcare. DOI: 10.3390/healthcare12131255

Journal information: Healthcare Provided by University of South Australia

Workplace Support Fails to Deter Retaliation Among ‘Stuck’ Employees, Study Finds

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Recent research reveals that employees trapped in undesirable jobs without the possibility of leaving do not experience positive effects from organizational support once they perceive their employer has broken trust. These “stuck” employees, held back due to a lack of alternative jobs, family commitments, or other barriers, constitute more than half of the global workforce. Such individuals are more likely to engage in unproductive behaviours as a form of ‘retaliation’ against perceived organizational injustices, including actions ranging from feigning busyness to damaging equipment and speaking negatively about the company.

Joint studies by The Pennsylvania State University in the USA and the Centre for Responsible Business at the University of Birmingham in the UK have shown that supportive workplace policies do not decrease retaliatory intentions among stuck employees if they feel betrayed by their employer. This research, detailed in the Journal of Business and Psychology, underscores supportive policies’ limitations in changing stuck employees’ behaviour when trust is compromised. Solon Magrizos, Associate Professor of Marketing at Birmingham Business School, notes that while general positive support can reduce retaliation intentions, this effect does not extend to stuck employees when safety is compromised.

The researchers surveyed 327 working adults in the United States, asking them to rate their desire to leave their current jobs, the ease of leaving, and the perceived organizational support at their workplace. The participants were then presented with one of three scenarios involving employer decisions on COVID-19 safety measures, ranging from decisions that enhance safety by retaining protective measures to those that reduce safety by removing restrictions. The third scenario was a control condition in which the employer complied with continued state mandates.

The study’s findings indicate that general perceived organizational support helps buffer adverse reactions to decisions that decrease safety but does not affect stuck employees, who show stronger retaliatory intentions. Caroline Moraes, Professor of Marketing and Co-Director of the Centre for Responsible Business, explains that stuck employees tend to have a more transactional relationship with their employers, making them feel a more profound violation of the social exchange when trust is breached.

This research suggests that while general organizational support might paradoxically increase retaliation intentions among employees who feel unable to leave, it is still crucial for employers to be supportive. Moraes and Dr. Magrizos stress the importance of employers understanding and supporting the unique perspectives and needs of ‘stuck’ employees. This understanding can mitigate negative feelings and improve overall workplace dynamics. They advocate for clear and honest communication, the promotion of self and career development opportunities, and creating avenues for employees to express concerns, which can enhance the workplace for everyone, especially those who feel ‘stuck ‘.

While supportive policies are generally beneficial, it’s important to acknowledge that they may not always curb the retaliatory behaviours of ‘stuck’ employees if these employees perceive a breach of trust, particularly regarding their safety. However, this should encourage employers to implement and maintain supportive policies. Instead, it should reinforce the need for employers to consider the specific dynamics and feelings of their ‘stuck’ employees when making tough decisions. By fostering an environment where all employees feel valued and heard, employers can reduce potential conflicts and enhance organizational health.

More information: Jean M. Phillips et al, Examining Retaliation Intentions Among Stuck Employees, Journal of Business and Psychology. DOI: 10.1007/s10869-024-09971-6

Journal information: Journal of Business and Psychology Provided by University of Birmingham

Research reveals that the US lacks affordable housing, not a housing shortage

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While it’s a widely held view that the United States is grappling with a housing shortage—a notion even driving national policy under the Biden administration’s efforts to tackle the perceived lack of housing supply—recent findings from the University of Kansas suggest a different scenario. The study, spearheaded by Kirk McClure, professor emeritus of public affairs & administration at KU, alongside Alex Schwartz of The New School, paints a picture not of a shortage in housing numbers but a critical lack of affordable units for lower-income households. Their research, detailed in the journal Housing Policy Debate, utilised U.S. Census Bureau data spanning two decades, from 2000 to 2020, to compare new households with new housing units. The analysis revealed a significant imbalance, with just four of the nation’s 381 metropolitan areas and 19 of the 526 micropolitan areas experiencing a housing shortage within the study period.

The researchers’ examination of household income categories—exceptionally very low income (30% to 60% of area median family income) and meagre income (below 30% of area median family income)—highlighted the growing disparity. Despite a surplus of 3.3 million housing units created from 2000 to 2020, household formation surpassed the number of available homes in the last decade, suggesting a shift in the type of housing demand, primarily driven by affordability issues rather than sheer availability. This surplus in the earlier decade had compensated for the later shortfall.

Their findings indicate that while nearly all metropolitan areas have adequate housing for homeowners, there needs to be more rental units affordable to very low-income earners. The national total vacancy rates, which stood at 9% in 2000, rose to 11.4% by 2010 at the height of the housing bubble and the Great Recession and slightly reduced to 9.7% by the end of 2020, also shed light on housing availability. These rates suggest a considerable number of vacant units, yet availability is more complex, encompassing factors such as habitability and cost, which can restrict accessibility to suitable housing.

The detailed analysis of different housing markets across the country revealed a national surplus of 2.7 million housing units over households in the studied period for metropolitan areas, with micropolitan areas showing a smaller surplus of around 300,000 units. The researchers also delved into housing affordability, noting that shortages only became apparent in data concerning renters, particularly those earning between 30% to 60% of the median family income—a bracket roughly aligning with federal poverty levels and eligibility for rental assistance. The study found that only two metropolitan areas had a deficit of units for very low-income renters, illustrating the selective nature of housing shortages.

McClure and Schwartz argue that enhancing the affordability of existing housing through federal assistance programs and addressing income levels could be more effective and economical than expanding construction in hopes of reducing housing prices. This approach aligns with their findings that the primary barriers to housing affordability in the U.S. stem from high housing costs met by insufficient incomes rather than a straightforward shortage of housing units. Their insights challenge the prevailing narrative and suggest that policy focus should shift towards financial accessibility rather than merely increasing housing stock. This nuanced understanding could guide more targeted and effective interventions to address the complex issue of housing affordability in the United States.

More information: Kirk McClure et al, Where Is the Housing Shortage? Housing Policy Debate. DOI: 10.1080/10511482.2024.2334011

Journal information: Housing Policy Debate Provided by University of Kansas

A Simple Strategy That Assists Low-Income Households in Overcoming the Poverty Cycle

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Many low-income families aspire to relocate to safer, quieter neighbourhoods with better schools, but they seldom need to make such moves. A high-profile experiment led by MIT economists reveals that with just a modest amount of logistical support, the likelihood of these families moving to areas with better economic opportunities significantly increases. The study, conducted in the Seattle area, found that the number of families using housing vouchers to move jumped from 15 per cent to 53 per cent with the aid of additional information, financial support, and, crucially, the assistance of a “navigator” who helped overcome logistical hurdles.

The research aimed to understand the drivers behind residential segregation, questioning whether it was due to personal preferences or if logistical constraints hindered mobility. “Just pairing people with [navigators] broke down search barriers and created dramatic changes in where they chose to live,” noted Nathaniel Hendren, an MIT economist and co-author of the study. The results were compelling enough for the U.S. Congress to allocate $25 million twice, funding replications of the experiment in eight other U.S. cities.

This experiment builds on insights from the 2018 “Opportunity Atlas” and a 1990s federal initiative, both of which explored the geography of economic mobility but with mixed outcomes. The current study, Creating Moves to Opportunity (CMTO), not only provided housing vouchers but also short-term financial help, more comprehensive information, and navigator support. This comprehensive bundle significantly enhanced the effectiveness of the assistance, demonstrating that the main impact came from the comprehensive support, especially from navigators.

The finalised study, published as “Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice” in the American Economic Review, underscores the importance of tailored support in overcoming diverse familial barriers, from lease terms to school selection. The researchers found that emotional support from navigators was particularly valued, highlighting the significant impact of this study on understanding the stressful nature of moving.

With the success of the Seattle experiment, there is now keen interest in seeing if these outcomes can be generalised to other cities. Funded replications in cities like Cleveland, Los Angeles, and New York City are underway to test the program’s effectiveness across different urban landscapes and societal contexts. This nationwide testing could confirm whether the Seattle model can serve as a blueprint for reducing residential segregation and enhancing economic mobility.

The Seattle study represents a significant step forward in understanding and combating the systemic issues that perpetuate intergenerational poverty and residential segregation. By providing financial assistance, information, and personalised navigational support, the experiment has demonstrated a potential pathway to empowering low-income families to move toward better opportunities, with implications for policy and practice across the United States.

More information: Peter Bergman et al, Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice, American Economic Review. DOI: 10.1257/aer.20200407

Journal information: American Economic Review Provided by Massachusetts Institute of Technology

The Increased Spending Associated with Cashless Transactions

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A study led by researchers from the University of Adelaide reveals that individuals tend to spend more when using cashless payment methods than traditional cash. The study, spearheaded by PhD student Lachlan Schomburgk, unearthed evidence of a “cashless effect” where consumers increase their spending, particularly on status-signalling products like jewellery, while this effect does not extend to donations or tips.

Lachlan Schomburgk, alongside Professor Arvid Hoffmann of the University of Adelaide and Dr Alex Belli from the University of Melbourne, found that contrary to their expectations, cashless payments do not lead to higher donations or tips compared to cash. This discovery highlights the continuing effectiveness of traditional cash-based methods for collecting money, such as tipping jars and spiral wishing wells, which perform on par with modern cashless terminals.

Schomburgk advises consumers to be aware of the payment method chosen, especially during the current cost-of-living crisis, to avoid overspending. He recommends using cash to help manage spending better, as the physical act of counting and handing over money makes the transaction more tangible and real, helping to maintain awareness of expenditures.

The research underscores the significant impact of payment methods on consumer behaviour, especially as society moves towards predominantly cashless transactions. Schomburgk stresses the importance of this research in illuminating aspects of this transition that are often overlooked, empowering consumers to make more informed decisions about their spending habits.

The findings, published in the Journal of Retailing, also have implications for businesses and policymakers. Schomburgk points out that companies must adopt cashless methods to avoid inadvertently harming their revenue potential. Moreover, he suggests that policymakers should help those unfamiliar with cashless payments, like unbanked individuals, understand the risks of overspending associated with such methods.

Schomburgk also calls for further research into emerging payment technologies, such as buy-now-pay-later services and cryptocurrencies, due to their unique features and the limited current research on their impact on spending behaviours.

The study involved a comprehensive analysis of 71 published and unpublished papers from 17 countries, involving over 11,000 participants. Through this meta-analysis, the researchers identified factors that either strengthen or weaken the cashless effect, providing new insights that had not been fully understood in previous studies. Schomburgk emphasises the value of this extensive review in uncovering often overlooked dynamics in consumer behaviour, paving the way for future investigations into this evolving field.

More information: Lachlan Schomburgk et al, Less cash, more splash? A meta-analysis on the cashless effect, Journal of Retailing. DOI: 10.1016/j.jretai.2024.05.003

Journal information: Journal of Retailing Provided by The University of Adelaide

How Certain Regions Assist Citizens in Evading Expensive Debt During Difficult Periods

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A recent national study offers compelling evidence that generous unemployment insurance benefits during the COVID-19 pandemic significantly reduced reliance on high-cost credit. Conducted by Rachel Dwyer and Stephanie Moulton of Ohio State University and published in Nature Human Behaviour, the research demonstrated that lower-income individuals in states with more generous benefits were much less likely to acquire new credit cards, personal finance loans, payday loans or other alternative financial service offerings. The findings underscore the critical role that unemployment insurance can serve in preventing low-income Americans from falling further into economic hardship. Moulton explained that providing more generous benefits helps avoid types of debt that are costly to individuals and society at large, a crucial insight for policymakers, economists, researchers, and individuals interested in social welfare and economic policies.

The study’s robust methodology included a large sample size of 2.3 million Americans, monitored from late 2019 through the end of 2021 using data from Experian. By analyzing the variability in unemployment insurance benefits across states and the timing of benefit expansions and contractions, the researchers could assess how these factors influenced the avoidance of costly debt. Dwyer emphasized the importance of unemployment insurance as a critical safety net component, affecting many people during the economic downturn induced by the pandemic.

Their analysis showed that enhanced unemployment benefits led to decreased usage of costly credit, particularly among the lowest-income households. For instance, the probability of these consumers taking out new credit cards was 9.7% lower in states where benefits were most generous. This trend was even more pronounced with alternative financial service loans, such as payday loans, often outside traditional banking channels and with high interest rates.

Moulton noted the disparity between income groups during the pandemic, explaining that while higher-income households might have used savings or credit cards to manage temporary unemployment, the lowest-income groups often had no such options. With savings or access to traditional credit, these consumers could turn to expensive credit options as a last resort, indicating a significant reliance on less desirable financial solutions when state support was lacking.

The study also explored other consumer behaviours during the recession, like spending on existing credit cards and applying for loans, regardless of approval status. Dwyer’s team found that lower-income consumers consistently fared better in states with generous benefits, suggesting that state support played a crucial role in economic stability for these individuals. These findings also contribute to the broader debate about the efficacy and return on investment of government programs like unemployment insurance, indicating that such programs not only assist individuals directly but also prevent broader economic repercussions like increased credit costs and potential bankruptcies.

The study underscores the potential societal gains from such government interventions by highlighting the link between state-provided benefits and reduced high-cost borrowing. Moulton concluded that preventing high-interest borrowing not only helps individuals avoid financial pitfalls but also mitigates costs that society might eventually bear, demonstrating the ripple effects of economic policies on the broader financial ecosystem.

More information: Lawrence M. Berger et al, Inequality in high-cost borrowing and unemployment insurance generosity in US states during the COVID-19 pandemic, Nature Human Behaviour. DOI: 10.1038/s41562-024-01922-8

Journal information: Nature Human Behaviour Provided by The Ohio State University

Recent Research Unveils the Financial Implications of Sanctions

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While aimed at curbing undesirable actions by target nations, economic sanctions often present a complex challenge with dual impacts. Primarily, they are designed to diminish the gross domestic product (GDP) and, thus, the prosperity of the nations they target, aligning with their strategic objectives. However, the repercussions for the economies of the imposing countries can also be severe. Nevertheless, these adverse effects can be considerably softened through the strategic selection of participant countries in the sanction measures.

This perspective is the crux of a recent study published in Economic Policy. The research, meticulously conducted by economists Sonali Chowdhry from DIW Berlin, Julian Hinz of Bielefeld University and IfW Kiel, Katrin Kamm from IfW Kiel, and Joschka Wanner from the University of Würzburg and IfW Kiel, delves into the economic sanctions imposed on Iran in 2012 due to its nuclear activities, and on Russia following its forceful annexation of Crimea in 2014.

Their analysis focused on the economic impacts of these sanctions, particularly in terms of price fluctuations, prosperity levels in the target countries, and changes in trade flows. Joschka Wanner, Junior Professor of Quantitative International and Environmental Economics at Julius-Maximilians-Universität Würzburg, outlined the methodological approach, noting that the initial step was to quantify the changes in these economic parameters as a direct result of the sanctions.

Their findings indicate a tangible reduction in GDP for the targeted nations; Iran saw a decline of 1.9 per cent, while Russia experienced a 1.44 per cent fall due to the 2014 sanctions. Wanner remarked, “Although 1.4 or 1.9 per cent might not seem significant, from an economic standpoint, these figures represent a severe recession.”

Moreover, the study assessed the real-world impacts against the theoretical maximum effect of the sanctions under various scenarios—either by broadening the coalition of sanctioning countries or applying the sanctions more comprehensively across all goods. For instance, the current sanctions coalition against Iran achieves only about 39 per cent of the potential GDP decline that could be realised if all countries participated. For Russia, the effectiveness is slightly better at around 58 per cent.

The disparity becomes even starker when comparing scenarios where the sanctions extend to all goods without exceptions. Here, the coalition’s effectiveness drops to only 47 per cent of Iran’s potential GDP decline and a mere 16 per cent for Russia.

The study also highlights the uneven burden of sanctions across different economies. Larger economies like the USA, Japan, and Germany experience relatively minor impacts, whereas smaller countries like Malta, Estonia, and Latvia face significant economic downturns. Wanner explained that for smaller nations, trading restrictions with an essential neighbour like Russia could lead to disproportionately large economic disturbances compared to larger economies.

The research suggests a strategic reshuffle could significantly amplify the effectiveness of sanctions. For example, if countries like China, Vietnam, Belarus, Turkey, and South Korea were to join the sanctions against Russia, the potential impact could increase from 58 per cent to 71 per cent, with China’s participation being particularly pivotal. This potential for a strategic reshuffle offers hope for the effectiveness of future sanctions.

Recognising the unlikely prospect of China joining a Western-led sanctions coalition against Russia, the study proposes a reassuring solution in the form of financial transfers to balance the economic scales for those nations severely impacted by the sanctions. According to the research, approximately 591 million US dollars would be required for Iran-related sanctions and 4.8 billion US dollars for those related to Russia, enabling coalition members to offset their welfare losses. The United States would be the major contributor to this proposed “compensation fund,” followed by the UK and Canada.

This comprehensive analysis underscores the complexity of international economic sanctions and points towards more effective strategies that could enhance their impact while mitigating adverse effects on the sanctioning countries.

More information: Sonali Chowdhry et al, Brothers in arms: the value of coalitions in sanctions regimes , Economic Policy. DOI: 10.1093/epolic/eiae019

Journal information: Economic Policy Provided by University of Würzburg

What are the best locations for future hydrogen production?

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Researchers at the Paul Scherrer Institute PSI have explored the most cost-effective global regions for hydrogen production. This is a step towards establishing an economy that relies on this clean energy source rather than fossil fuels. Their findings highlight that switching to electricity and hydrogen won’t eliminate greenhouse gas emissions. This research is detailed in a publication released in Nature Communications today.

Switzerland’s goal to achieve climate neutrality by 2050 dictates that starting this year, no additional greenhouse gases should be emitted, aiming to mitigate climate change effects. A significant strategy towards this end involves electrifying transportation, industry, and households and transitioning to renewable energy sources like hydro, wind, and solar power. However, not all energy needs can be met through electricity due to its limited storage capacity for certain applications. Here, hydrogen emerges as a beacon of hope, expected to play a crucial role in significantly lowering climate impacts in sectors such as aviation, agriculture, and steel manufacturing and could be further processed into products like fertiliser and synthetic hydrocarbons.

The team, led by Tom Terlouw and Christian Bauer of PSI’s Laboratory for Energy Systems Analysis, gathered geographical and economic data to model the growth of a hydrogen economy under four scenarios. Their projections suggest hydrogen demand could range from 111 to 614 megatonnes annually by 2050, depending on the scenario. Currently, global production is about 90 megatonnes per year.

A vital aspect of the study focused on identifying ideal locations for hydrogen production via electrolysis. The current dominant method of hydrogen production involves steam methane reforming from fossil fuels under high pressure and temperature. More optimistic future scenarios, however, predict a shift towards PEM electrolysers that use electricity and a polymer electrolyte membrane to split water into hydrogen and oxygen. Using renewable energy for this process could dramatically reduce greenhouse gas emissions by up to 90% compared to the traditional method.

The study primarily evaluated economic factors to determine the most cost-effective production locations, considering the availability of renewable energy and land for building necessary facilities. Canada emerged as an ideal region due to its abundant wind and water resources and stable political climate, making it suitable for large-scale hydrogen production. In contrast, Switzerland and other central European countries face limitations due to scarce land for wind turbines and lower solar radiation levels. However, the potential of other regions like the central United States, parts of Australia, the Sahara, northern China, and northwestern Europe, with their renewable energy capabilities and available space, offers a promising outlook for the future of energy production.

Despite these optimistic projections, the study also addressed the ecological drawbacks of a hydrogen-based economy. Residual greenhouse gas emissions will remain challenging, with estimates suggesting nearly one gigatonne of CO2 equivalents annually. Production and distribution of hydrogen contribute to these emissions, including leaks that release hydrogen into the atmosphere, indirectly increasing levels of other potent greenhouse gases like methane and ozone.

The study further discussed the environmental impact of materials used in hydrogen production, such as the rare earth metals in wind turbine magnets and iridium in PEM electrolysis catalysts. The demand for immense land and water resources for hydrogen production poses additional environmental concerns.

The study emphasised the importance of social acceptance for large-scale hydrogen production facilities, particularly in areas where water is scarce and desalination may be required. While this study lays the groundwork for understanding potential strategies for energy transition, further research is needed to evaluate these factors comprehensively. The researchers highlight possible paths for achieving the energy transition, acknowledging that the extent and rigour of these efforts depend on socio-political decisions.

More information: Tom Terlouw et al, Future hydrogen economies imply environmental trade-offs and a supply-demand mismatch, Nature Communications. DOI: 10.1038/s41467-024-51251-7

Journal information: Nature Communications Provided by Paul Scherrer Institute

To Forecast Tax Income, Examine Corporate Profits

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A significant factor in constructing a state budget hinges on the precision of its fiscal predictions: estimating tax revenues intended to finance services for the upcoming year. Since 2001, the accuracy of these forecasts has suffered due to increased volatility in revenue streams, including significant fluctuations in personal income and consumer expenditures. Forecasting errors can lead states to unnecessarily cut spending, increase taxes, postpone essential projects, and implement other changes impacting millions of citizens.

Recent research from Texas McCombs has introduced a method that could significantly enhance the precision of fiscal predictions: tracking the earnings growth of publicly traded, tax-paying corporations. Braden Williams, associate professor at Texas McCombs, co-authored the research with Lillian Mills, dean and professor of accounting at McCombs, and Anthony Welsch from the University of Chicago. They suggest that corporate earnings are a crucial yet underutilized resource for revenue forecasting. Traditionally, states rely on past revenue data and macroeconomic indicators like GDP and unemployment rates, with teams composed chiefly of economists and statisticians but lacking in accounting expertise.

To assess the potential impact of corporate earnings data on revenue forecasting accuracy, the researchers evaluated the combined earnings growth of major industries in the U.S., such as mining, gas, technology, financial services, and healthcare. They correlated this data with the industries’ presence in each state to create a tailored earnings growth metric for each state. They then retrospectively applied this metric to past forecasts to simulate the potential improvements it could have made, finding that including corporate earnings data significantly enhanced forecast accuracy. By including these figures alongside traditional economic metrics, the researchers could explain up to 86% more variation in actual revenue figures.

This approach was efficient in states with diverse industries. States with fewer dominant industries, like Wyoming’s oil sector, already needed more data. However, the earnings growth measure proved particularly useful in states with a balanced mix of industries. Including corporate earnings didn’t just enhance the forecasting of corporate tax revenue but also improved predictions for sales and personal income taxes. Notably, the improvement in individual income tax forecasts was even more significant in monetary terms than corporate taxes.

The study highlighted several ways corporate earnings growth influences other tax revenues: portions of corporate profits are returned to owners as capital gains or dividends, earnings growth can affect wage growth if companies share profits with employees, and business investments and purchases show up in sales taxes. Corporate earnings data can help states avoid mid-year budget cuts by providing a more accurate initial forecast.

The research from Texas McCombs suggests that while traditional economic indicators are valuable, the integration of specific, detailed corporate data can significantly refine fiscal predictions. This not only aids in more accurate budget planning but also plays a crucial role in preventing the socioeconomic disruptions caused by budgetary adjustments during the fiscal year. By providing a more accurate initial forecast, the use of corporate earnings data can help states avoid mid-year budget cuts, thereby ensuring a more stable and predictable financial environment for citizens.

More information: Anthony Welsch et al, Do accounting earnings provide useful information for state tax revenue forecasts? Review of Accounting Studies. DOI: 10.1007/s11142-024-09840-w

Journal information: Review of Accounting Studies Provided by The University of Texas at Austin