Monthly Archives: September 2024

The True Cost of the ‘Zero-Price Effect’

Researchers at Tel Aviv University have uncovered a surprising economic impact associated with the “zero-price effect” in real estate advertising. Their study observed that homes advertised for free on the Israeli classifieds platform “Yad2” garnered fewer clicks, took longer to sell, and fetched lower prices than those listed through paid ads. This discrepancy amounted to an average net loss ranging from 3.5% to 3.8% of the sale price, translating to a financial shortfall of about $12,000 to $13,000 per transaction. The cost of using the paid service was only about $70, highlighting a significant return on investment for those who opted for paid advertisements.

The findings, which will be published in the “Real Estate Economics” Journal of the American Real Estate and Urban Economics Association, stem from research conducted by Professor Danny Ben-Shahar, Director of the Alrov Institute for Real Estate Research at the Coller School of Management, and Dr. David Ash, a research associate at the institute. Their work delves into the nuances of behavioural economics in the real estate market, particularly how biases in decision-making can lead to suboptimal financial outcomes.

Professor Ben-Shahar explained that their study is grounded in understanding people’s irrational decisions influenced by biases such as the zero-price effect. This effect causes individuals to overvalue products or services offered for free. For example, reducing the price of a product from $2 to $1 might slightly boost demand, but making the product accessible can lead to a disproportionate surge in demand. This phenomenon defies rational cost-benefit analysis. The researchers aimed to explore this effect using real-world data, moving beyond laboratory experiments to examine consumer behaviour and its financial implications.

The study also extended to commercial properties listed for rent on “Yad2.” In July 2019, a natural experiment unfolded when the platform switched from a free to a paid posting service while introducing a more expensive premium service. This change allowed the researchers to observe actual transactions where property owners faced new costs for advertising their properties. The shift led many to opt for the more costly premium service, suggesting that the allure of free options significantly diminished when they were no longer available.

Through an extensive analysis of over 15,000 property ads posted by private homeowners from 2014 to 2016, the researchers demonstrated the tangible costs of the zero-price bias. Despite the relatively low cost of premium listings, about 95% of sellers initially chose the free option. However, those who invested in premium ads saw not only a higher number of clicks and inquiries but also faster sales and higher selling prices. Statistically, properties advertised through paid premium services sold for 3.5% to 3.8% more than those listed for free, confirming a substantial financial advantage for those who choose to invest in their advertisement.

This comprehensive study illustrates the significant economic repercussions of decision-making biases in real estate and provides practical advice for sellers aiming to maximize returns in the real estate market. It clearly shows how seemingly minor costs can lead to substantial financial benefits. It underscores the importance of critically assessing the actual cost of “free” services, especially in significant financial decisions such as property sales. The insights from this research contribute to academic discourse and offer actionable strategies for real estate professionals and sellers.

More information: David Ash et al, Zero-price effect and consumer welfare: Evidence from online classified real estate service, Real Estate Economics. DOI: 10.1111/1540-6229.12508

Journal information: Real Estate Economics Provided by Tel-Aviv University

Study Reveals Three Firms Control Over 19,000 Rental Properties in Metro Atlanta

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A recent study led by Taylor Shelton, a geographer at Georgia State University, has uncovered that nearly 11 per cent of all single-family homes available for rent in the central counties of metro Atlanta are controlled by just three corporate landlords. These findings, detailed in the article “Horizontal Holdings: Untangling the Networks of Corporate Landlords”, published in the Annals of the American Association of Geographers, identify Invitation Homes, Pretium Partners, and Amherst Holdings as the key players holding over 19,000 rental properties. This concentration of ownership, according to Shelton, grants these companies considerable market influence, particularly in specific neighbourhoods where their properties are densely clustered.

Shelton, an assistant professor in the Department of Geosciences at Georgia State, collaborated on this research with Eric Seymour from Rutgers University. Their investigation reveals corporate landlords’ significant presence and impact in metro Atlanta, especially in the wake of the 2007 foreclosure crisis and the COVID-19 pandemic, which saw many small landlords and homeowners selling off their properties. These corporate entities often operate through numerous limited liability companies (LLCs), which complicates the tracing of property ownership and shields the parent companies from direct legal challenges by tenants. Shelton notes that these large landlord firms manage over 190 LLCs across the core counties of Fulton, Clayton, DeKalb, Gwinnett, and Cobb.

The structural complexity within these corporate landlords means tenants often face layers of management when issues arise, obscuring the real decision-makers and reducing tenants’ leverage. This situation is exacerbated by the lack of stringent tenant protections in Atlanta, which is identified as one of the largest markets for such corporate landlord activity in the United States. The scale of investment by these corporate landlords in Atlanta surpasses the combined investments in the next two or three largest U.S. markets. This underscores the urgent need for stronger tenant protections and should serve as a call to action for policymakers and advocates.

Shelton and his team aim to democratise their investigative methods, making them accessible to the public to encourage transparency and accountability in property ownership. This initiative seeks to equip individuals with the necessary tools to conduct similar analyses, irrespective of their technical skills, by simplifying the investigative process and focusing on the availability of relevant data. This approach not only highlights the growing influence of corporate landlords in key urban areas but also provides a potential pathway for more informed tenant activism and policy advocacy, empowering individuals to make a difference in their communities.

More information: Taylor Shelton et al, Horizontal Holdings: Untangling the Networks of Corporate Landlords, Annals of the American Association of Geographers. DOI: 10.1080/24694452.2023.2278690

Journal information: Annals of the American Association of Geographers Provided by Georgia State University

Experts Emphasise the Importance of Prioritising Safety and Wellbeing in the Workplace

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Work is often seen as a hazard, overshadowing its potential to enhance well-being, instil life values, promote development, and foster health. A special issue of WORK is challenging this perspective: A Journal of Prevention, Assessment & Rehabilitation, which, in partnership with the Journal of Back and Musculoskeletal Rehabilitation and published by IOS Press (now part of Sage), addresses the urgent need to examine this balance through the lens of cutting-edge social and health research.

Work fulfils essential human needs in many respects—it not only provides income but also facilitates social interactions and, for many, represents a significant life value that encourages social and intellectual growth. Returning to work is often seen as a primary goal in musculoskeletal rehabilitation. Yet, transforming the workplace into a health-promoting environment remains a substantial challenge.

Karen Jacobs, Guest Editor from Sargent College of Health and Rehabilitation Sciences, Boston University, and the Editor-in-Chief of WORK, expressed her enthusiasm about the collaboration between the two journals on the critical issue of work-related pain. She emphasised the goal of heightening awareness of the existing challenges and initiating a call to action to ensure workplaces are safe and supportive environments where individuals can thrive and secure a sustainable livelihood.

Remko Soer, another Guest Editor from the University of Groningen and the Editor-in-Chief of the Journal of Back and Musculoskeletal Rehabilitation, highlighted the necessity of moving beyond viewing work as just a risk factor. He advocates for a paradigm where work results in well-being, life values, development, and health. There’s much to learn from those who continue to work despite musculoskeletal issues and how employers can better support individuals with disabilities, those from minority backgrounds, or older workers.

Dr. Soer also noted that while physically demanding jobs significantly increase the risk of musculoskeletal injuries, ensuring workplace safety is fundamental to fostering a healthy working environment. Particularly in low- and middle-income countries, working conditions in some industries are often substandard. In the West, the emergence of a 24-hour online culture has blurred the lines between personal and professional life, contributing to increased work-related stress and associated conditions like burnout, depression, and chronic pain syndromes such as fibromyalgia.

The special issue includes 15 insightful papers focusing on various aspects of work-related pain, including burnout, work ability, quality of life, occupational rehabilitation, return to work strategies, and ergonomics. One notable article is a systematic literature review on the effectiveness of occupational rehabilitation in facilitating return to work for individuals with back pain, authored by Linda Kalski and her team. Their review underscores the varied nature of rehabilitation programs and their differential impacts on return-to-work outcomes, highlighting the need for a standardised approach incorporating a high physical activity level.

This issue also acknowledges the increasing recognition of psychological and social factors in managing pain, with strategies like cognitive behavioural therapy (CBT) and acceptance and commitment therapy (ACT) gaining prominence. This marks a shift towards non-pharmacological pain management strategies, particularly significant in the context of the opioid crisis. Additionally, the issue explores the application of emerging technologies such as virtual reality (VR), artificial intelligence (AI), and wearable devices in pain management. These technologies are poised to revolutionise treatment by providing more personalised and real-time solutions.

These articles demonstrate that managing work-related pain necessitates a comprehensive, interdisciplinary approach that integrates medical, psychological, and occupational therapies. When prevention of work-related issues is not feasible, the focus should shift to crafting tailored interventions and rehabilitation programs. Addressing work-related pain also involves navigating the complexities associated with disclosing pain conditions in the workplace due to the stigma and the unpredictable nature of pain symptoms. Dr Jacobs calls upon researchers, clinicians, employers, and policymakers to continue focusing on this critical issue and to enhance efforts to improve conditions globally, thereby fostering a healthier, more inclusive workforce.

More information: Linda Kalski et al, Efficacy of occupational rehabilitation in return to work for back pain: A systematic literature review, Work. DOI: 10.3233/WOR-230277

Journal information: Work Provided by IOS Press

Love Not for Sale: TikTok Users Crave Authenticity in Sponsored Posts, Opting for Lesser-Known Creators Over Major Influencers

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Prominent TikTok influencers might need to rethink their strategies for brand-sponsored campaigns, as research suggests followers prefer the authenticity of smaller creators over super influencers for paid content. A study from the University of Ottawa’s Telfer School of Management, published in Psychology & Marketing, aimed to guide brands and businesses in formulating more effective social media strategies by examining how users engage with sponsored content. The study discovered that engagement with brand-sponsored posts on TikTok aligns with the platform’s identity as unfiltered, genuine, and raw. While super influencers, with followers numbering over half a million, have noted a decline in engagement with sponsored content compared to their regular posts, smaller influencers, with around 15,000 followers, do not experience this drop, suggesting that their size helps maintain a robust trust connection with their audience.

Despite challenges, when high-profile influencers promote smaller, lesser-known brands, their efforts often maintain strong engagement. However, endorsing large, well-known brands can lead to decreased consumer interest attributed to a perceived lack of authenticity. Argiro Kliamenakis, an Assistant Professor of Marketing at Telfer, suggests this is due to popular creators being perceived as prioritizing commercial interests over genuine connections, which the vastness of their audiences may dilute. The issue is exacerbated when these influencers advocate for large brands, frequently seen as inauthentic and driven by profit, thus dampening engagement.

For brand managers, the key to effective audience engagement is leveraging the authenticity of micro-influencers or niche content creators who maintain engaged followings. This strategy can lead to more favourable responses to sponsored content. In contrast, more prominent brands might find more success by sponsoring multiple smaller creators and using diverse promotional strategies with major influencers to encourage organic content. This approach helps preserve the authenticity crucial for engagement on platforms like TikTok, where consumers are particularly savvy about overt marketing efforts.

Kliamenakis emphasizes the need for further research, particularly into TikTok Lives and other emerging content formats, to understand their influence on engagement and perceived authenticity. His insights highlight the importance of adapting to the nuances of consumer behaviour on social media platforms, which can significantly enhance how brands and businesses strategize their promotional efforts. This ongoing research sheds light on the evolving dynamics of digital marketing and the critical role of authenticity in maintaining consumer interest and engagement.

More information: Darlene Walsh et al, Authenticity in TikTok: How content creator popularity and brand size influence consumer engagement with sponsored user-generated content, Psychology and Marketing. DOI: 10.1002/mar.22075

Journal information: Psychology and Marketing Provided by University of Ottawa

Ought Celebrities and Influencers Disable Their Social Media Comments? Recent Research Indicates Reduced Persuasiveness and Likeability

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A study conducted by researchers from the University of Alabama and Vanderbilt University, soon to be published in the Journal of Marketing, explores the adverse effects that celebrities and influencers experience when they turn off social media comments. This study is encapsulated in their forthcoming paper, “No Comments (From You): Understanding the Interpersonal and Professional Consequences of Disabling Social Media Comments,” by Michelle Daniels and Freeman Wu.

Public figures such as Addison Rae, Hailey Bieber, Justin Timberlake, and even Oprah often disable comment sections in response to negative feedback, which raises the question of whether such a move is counterproductive. The research suggests that it is. Findings indicate that influencers who turn off their comment sections are generally seen as less persuasive and less likeable than their peers who keep these sections open, regardless of the negativity of the comments they might receive.

In the digital era, celebrities and influencers are crucial in transcending their status as mere public figures. They often act as conduits between brands and consumers, weaving personal narratives into sponsored content. Despite their widespread appeal, these influencers frequently face criticism, prompting many to shut off their comment sections as a defensive strategy against harsh feedback. This action, however, tends to negatively impact how consumers perceive them and respond to the content they promote.

The interaction between influencers and their followers is typically personal and informal, fostering perceptions of sincerity and approachability. These positive perceptions stem primarily from how influencers engage with their audience—directly addressing them in posts and treating them more as friends than consumers. This approach can significantly boost consumer engagement but also brings its own set of challenges.

As followers get used to influencers’ accessibility, they may feel more empowered to voice critical feedback. However, the overwhelming nature of continuous feedback can adversely affect influencers’ mental health, prompting many to occasionally shut down their comment sections to shield themselves from negative comments. This research underscores the unintended negative consequences of such well-meaning actions.

Michelle Daniels highlights that disabling comments makes consumers perceive that the influencer is less open to feedback, which she calls the “consumer voice.” This perception makes influencers appear less sincere, resulting in personal and professional repercussions. By turning off comments, influencers may undermine a crucial asset—their receptiveness to consumer feedback and ability to engage effectively with their audience.

Interestingly, the study notes that influencers who leave their comment sections open, even amidst predominantly negative feedback, are perceived as more willing to engage with the public and learn from their experiences. Conversely, those who turn off comments may be viewed as dismissive of others’ opinions.

There are circumstances under which consumers might understand an influencer’s decision to turn off comments, such as during personal distress or emotional turmoil. However, the consumers ultimately decide what constitutes a reasonable measure of self-protection. For example, disabling comments might be more acceptable to the public if an influencer is grieving over the death of a pet, as opposed to shutting down feedback following an apology for a misstep.

The findings from this study underscore the importance of influencers and brands understanding the delicate balance between setting personal boundaries and managing audience expectations. As the global expenditure on influencer marketing campaigns is projected to increase significantly, even seemingly minor decisions like disabling comments can have substantial professional implications. Influencers need to be strategic about their online interactions and transparent in communicating the reasons for their decisions to maintain and enhance relationships with their audience. This study advocates carefully considering how online interactions are managed and the importance of clear communication to avoid sending the wrong signals to viewers.

More information: Michelle E. Daniels et al, No Comments (from You): Understanding the Interpersonal and Professional Consequences of Disabling Social Media Comments, Journal of Marketing. DOI: 10.1177/00222429241252842

Journal information: Journal of Marketing Provided by American Marketing Association

Russian Incursion into Ukraine May Have Enduring Effects on the Global Economy and Environment

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As the Russian invasion of Ukraine continues into its third year, the ripple effects on international trade are becoming increasingly apparent, exacerbated by the widening sanctions on Russian exports. Researchers have now highlighted the immediate repercussions on global timber markets and the potential long-term consequences on the global economy and the environment.

A recent study, conducted with meticulous attention to detail, examines the impact of sanctions against Russia and the ongoing military disruptions in Ukraine on the global markets for wood products. Utilising the Global Forest Products Market model, researchers outlined two scenarios: one assuming the absence of the invasion and another assessing the current ramifications of the sanctions on wood products alongside trade disruptions up to 2025. This thorough comparative analysis has enabled them to develop a predictive model that forecasts shifts in the global wood product markets over both the short and long term.

The study, led by Rajan Parajuli, Associate Professor of Forest Economics and Policy at North Carolina State University, points to significant immediate effects. “In the short term, defined as within a decade following the invasion’s end, we anticipate a price increase of up to three per cent for commodities like industrial roundwood and finished wood products,” explains Parajuli. As a significant producer of forest products with a global reach, Russia feels the substantial impact of international sanctions. Furthermore, military operations in Ukraine complicate timber harvesting operations, adding to the disruption.

However, the outlook for Russia’s timber market share might improve over the long haul. Projecting up to 2050, the study suggests a diminished overall disruption as Russian markets for industrial timber recuperate. The researchers have based their model on an assumption that the invasion will conclude by 2025, anticipating a gradual return to pre-invasion market levels over the subsequent 10 to 30 years. This potential for recovery offers a glimmer of hope in an otherwise challenging situation.

Yet, not all sectors are expected to recover to their pre-crisis conditions. “We believe that certain products, like wood-based panels and paper and paperboard, may never regain their pre-invasion market levels in Russia or Ukraine,” Parajuli notes. Not being very large, these sectors might face a permanent decline if these countries fail to resume production over the next few years, likely leading other nations to fill the void. “The resulting higher prices could incentivise resource-rich countries such as the USA, Canada, China, and several Asian nations to increase production, capitalising on the elevated market prices,” he added.

This anticipated shift in production and trade dynamics holds profound implications globally, touching economic and environmental spheres alike. The potential for increased production in other countries poses significant economic opportunities but raises environmental stewardship concerns. The study warns that this could result in relaxed environmental regulations and a surge in deforestation, mainly through increased timber logging activities. Developing countries, already grappling with high rates of illegal logging, might bear the severe consequences of heightened deforestation and associated environmental damage.

Thus, while the direct impact of the invasion and sanctions on market disruptions and price changes is clear, the broader implications for the global economy and environmental health point to a complex and challenging recovery path. This underscores the urgent need for careful management and international cooperation to mitigate long-term damage, making it clear that action is needed now.

More information: Prakash Nepal et al, Projected effects of the Russian invasion of Ukraine on global forest products markets, Forest Policy and Economics. DOI: 10.1016/j.forpol.2024.103301

Journal information: Forest Policy and Economics Provided by North Carolina State University