Monthly Archives: December 2024

Emerging AI Economy Predicts and Sells Your Choices Before You Make Them, Experts Caution

Shortly, AI assistants may predict and shape our decision-making processes early, selling these nascent “intentions” to businesses equipped to fulfil these needs before we even become aware of our decisions. This concept forms the basis of what researchers from the University of Cambridge have termed the “Intention Economy,” a potentially lucrative yet unsettling new market for digital indications of intent ranging from purchasing cinema tickets to selecting political candidates.

AI ethicists at Cambridge’s Leverhulme Centre for the Future of Intelligence (LCFI) suggest that the rapid development of generative AI and our growing comfort with chatbots are paving the way for this new era of “persuasive technologies,” a development that has been subtly hinted at in recent announcements by major technology firms. These anthropomorphic AI agents, from chatbot assistants to digital tutors and virtual companions, will have access to extensive personal psychological and behavioural data, primarily acquired through casual spoken conversations.

By integrating knowledge of our online activities with a disturbingly precise ability to resonate with our personal preferences—emulating personalities and anticipating responses—, these AIs are expected to forge a level of trust and familiarity capable of facilitating social manipulation on a massive scale. Researchers warn that tremendous efforts are being made to integrate AI assistants into every facet of our lives, raising important questions about whose interests these assistants genuinely serve.

The dialogue we engage in, the manner of our speech, and the inferences that can be drawn in real-time are argued to provide a deeper and more intimate glimpse into our lives than mere records of online interactions. The development of AI tools designed to elicit, interpret, and ultimately manipulate and commercialise human intentions is advancing, raising significant ethical and privacy concerns.

Historian of technology Dr Jonnie Penn of Cambridge’s LCFI points out that attention has been the currency of the internet for decades. Our engagement drove the digital economy as we interacted with platforms like Facebook and Instagram. However, without proper regulation, the intention economy is poised to treat our underlying motivations as the new commodity, creating a “gold rush” for those targeting and steering human intentions.

Therefore, it is crucial to contemplate the potential impacts of such a marketplace on human aspirations, including the integrity of elections, the freedom of the press, and fair market competition, to prevent becoming victims of its unintended consequences. In a recent Harvard Data Science Review article, Penn and Dr Yaqub Chaudhary discuss how the intention economy represents the temporal mapping of the attention economy, linking patterns of user attention and communication styles to subsequent behavioural choices.

While some intentions may be fleeting, targeting and classifying those that persist could prove highly profitable for advertisers. In an intention economy, Large Language Models (LLMs) could efficiently target users based on various attributes such as speech patterns, political views, and even susceptibility to flattery, all at a relatively low cost.

This information would then be utilised within brokered bidding networks to enhance the probability of achieving specific goals, like facilitating a cinema visit after sensing someone’s need for a break (“You mentioned feeling overworked, shall I book you that movie ticket we’d talked about?”). This could extend to directing conversations to favour specific platforms, advertisers, businesses, and political entities.

While the intention economy is still more of an aspiration within the tech industry, early indicators of this trend can be seen in published research and hints from major tech firms. For instance, OpenAI’s 2023 blog post called for “data that expresses human intention… across any language, topic, and format,” Shopify’s director of product (an OpenAI partner) spoke about using chatbots to capture user intent at a conference.

Moreover, Nvidia’s CEO has discussed using LLMs to decode intentions and desires, while Meta released a dataset for human intent understanding, dubbed “Intentonomy,” in 2021. Apple’s 2024 “App Intents” developer framework also suggests future developments in predicting and suggesting user actions through Siri, Apple’s voice-controlled assistant.

Meta’s CICERO, which achieves human-level performance in the strategy game Diplomacy, relies heavily on inferring and predicting intent and using persuasive dialogue to advance a player’s position. This implies that companies traditionally selling our attention are poised to sell our intentions before we fully understand them ourselves.

Penn emphasises that while these advancements are not inherently harmful, they have the potential to be highly destructive. Public awareness of these impending changes is crucial to ensure we steer clear of deleterious paths and safeguard our freedoms and privacy in the face of such transformative technological developments.

More information: Yaqub Chaudhary et al, Beware the Intention Economy: Collection and Commodification of Intent via Large Language Models, Harvard Data Science Review. DOI: 10.1162/99608f92.21e6bbaa

Journal information: Harvard Data Science Review Provided by University of Cambridge

Deciding Between Human and Algorithmic Decision-Makers

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In contemporary society, algorithms have permeated various sectors, significantly impacting decision-making processes in critical areas such as criminal justice, healthcare, and finance. This growing reliance on algorithmic decision-making, however, has not been without controversy. Critics argue that it institutionalizes biases and compromises the principles of fairness. These concerns are not unfounded, given the opaque nature of some algorithms and the data on which they are trained.

To explore public perception and acceptance of algorithmic versus human decision-makers in high-stakes situations, researchers Kirk Bansak and Elisabeth Paulson conducted an extensive pre-registered study involving 9,000 participants from the United States. This study specifically focused on two scenarios: pretrial release and bank loan applications, both contexts where decision-making can have profound implications on individuals’ lives.

Participants in the study were divided into three groups. Each group was asked to choose between different pairs of decision-makers: one between two human decision-makers, another between two algorithmic decision-makers, and the third between one human and one algorithmic decision-maker. To inform their decisions, participants were provided with simulated statistics detailing the decision-makers’ past performance in terms of efficiency and fairness.

The study’s results revealed a notable trend: across all groups, participants showed a predominant preference for efficiency over fairness. This pattern held true regardless of the decision-makers’ nature—whether algorithmic or human. The inclination towards efficiency was consistent across diverse demographic lines, including race, political affiliation, education level, and personal beliefs about artificial intelligence. These findings suggest a broad, underlying preference that transcends individual demographic differences.

However, it is interesting to note that there was a slight but significant overall preference for human decision-makers over algorithms. This preference was more marked among Republicans than Democrats, highlighting a potential ideological divide in trust or scepticism towards algorithmic decision-making.

A paradox emerged when participants were asked about their values: a large majority claimed that fairness was their top priority. Yet, this priority did not significantly influence their choices, which predominantly favoured efficiency. This discrepancy raises questions about the cognitive dissonance between expressed values and actual decision-making behaviour.

Bansak and Paulson suggest that these findings have broader implications for adopting algorithmic decision-making systems across different sectors. They hypothesize that as algorithms become demonstrably more efficient, they are likely to gain wider acceptance, potentially overcoming existing cultural and psychological barriers. According to the authors, for algorithms to be embraced by all groups, their efficiency must be proven and clearly communicated and understood by the public.

The study highlights the complex dynamics of accepting algorithmic versus human decision-makers. It underscores the need for ongoing research to understand the factors influencing public trust in these systems. As algorithms evolve and become more integrated into critical decision-making processes, it will be crucial to address these challenges and ensure that they are employed to uphold the principles of fairness and transparency.

More information: Kirk Bansak et al, Public attitudes on performance for algorithmic and human decision-makers, PNAS Nexus. DOI: 10.1093/pnasnexus/pgae520

Journal information: PNAS Nexus

Job Satisfaction and Salaries Decline for Individuals Who Stutter

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A recent study by the University of Florida has unveiled that individuals who stutter face significant disadvantages in earnings, employment opportunities, and job satisfaction compared to their non-stuttering counterparts. This investigation, spearheaded by a researcher from the UF College of Public Health and Health Professions, meticulously analysed data spanning over two decades from those afflicted by stuttering to understand its long-term impacts on professional outcomes. The research findings have been published in the American Journal of Speech-Language Pathology.

The study highlighted a consistent disparity in income across all levels. Still, it is particularly noted in the higher salary bracket of $100,000, where individuals who stutter are nearly four times less likely to earn this amount or more. Additionally, the research found that individuals who stutter are 25% more likely to express job dissatisfaction, a sentiment that tends to increase as time progresses. Dr Molly Jacobs, the study’s lead author and an associate professor of health services research, management and policy, emphasised the importance of job satisfaction as it correlates directly to employee turnover and retention—key factors contributing to economic stability and productivity within the workforce. Dr. Jacobs expressed concern over the low levels of job satisfaction among respondents with stuttering, suggesting a general sense of unhappiness and unfulfillment at work among this group.

Stuttering is identified as a neurodevelopmental condition affecting around 3 million Americans. It is commonly seen in young children, with many outgrowing the condition by age five or six. However, about 3% to 5% of these children will continue to experience stuttering into adulthood. Despite the absence of a cure, various treatments can enhance speech fluency. These treatments are vital and should remain accessible to adults, as early career choices influenced by stuttering could lead to what is known as role entrapment—where individuals might opt for or be directed towards roles that demand less verbal interaction.

The study utilised data from the National Longitudinal Study of Adolescent to Adult Health by utilising collaborative efforts from Dr. Hope Gerlach-Houck of Western Michigan University and Dr. Patrick Briley of East Carolina University. This nationally representative study has monitored participants for decades, collecting extensive data on their social, economic, psychological, and physical well-being. The findings reveal that in their late teens and early twenties, those who stutter were less likely to expect to attend college or earn a middle-class income. This outlook seemed to predict poorer employment outcomes later in life, as evidenced in follow-up surveys conducted when participants were in their late thirties to early forties, showing that those who stutter reported significantly lower earnings and were less likely to have graduated from college.

The researchers suggest multiple reasons behind these employment disparities, including discrimination, self-stigmatisation, and the sheer exhaustion and frustration that come with stuttering. While further research is necessary to understand these dynamics fully, the current findings underscore the urgent need for continued support and resources for adults who stutter.

Dr. Jacobs also advocates for a more supportive workplace environment for individuals with speech fluency challenges, urging patience and understanding from coworkers. She points out that hurrying someone who stutters or speaks over them fails to assist and does not benefit the workplace environment. Allowing individuals the time they need to communicate is a small but significant step towards inclusivity, leveraging the unique contributions everyone can make to their workplace.

More information: Molly Jacobs et al, Differential Impacts of Anticipated Success on Employment Outcomes Among Adults Who Stutter, American Journal of Speech-Language Pathology. DOI: 10.1044/2024_AJSLP-24-00202

Journal information: American Journal of Speech-Language Pathology Provided by University of Florida

Enhanced Environmental Practices Increase Profits and Reduce Expenses

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Sustainable business practices are more than just an ethical imperative; they are a prudent financial strategy. A study conducted by researchers from Kyushu University and published on December 10, 2024, in the journal Corporate Social Responsibility and Environmental Management, has highlighted that organisations demonstrating superior environmental performance and transparent reporting can achieve lower operational costs and heightened profitability.

The investment community increasingly values companies’ role in achieving carbon neutrality, fuelling environmental, social, and governance (ESG) investing expansion. In response to this growing trend, the Sustainability Accounting Standards Board (SASB) has developed an industry-specific framework aimed at assisting businesses in effectively conveying their sustainability risks and opportunities to investors. Numerous companies across various countries have started adopting this framework for disclosing their environmental data, with many jurisdictions moving towards making such transparency compulsory.

Despite these progresses, the precise impact of corporate environmental strategies on cost and profit metrics remains ambiguous. To clarify this, Professor Hidemichi Fujii and his team from the Faculty of Economics at Kyushu University comprehensively analysed financial and environmental data collected from 8,547 companies in 34 countries from 2015 to 2022.

To facilitate their analysis, the researchers devised two quantitative metrics: materiality-based scores, which focus on the relevance of disclosed environmental information, and overall ecological scores, which evaluate the extent of a company’s environmental initiatives. Siyu Shen, a graduate student at Kyushu University’s Graduate School of Economics and the study’s lead author, elaborates on the concept of financial materiality, which recognises that environmental priorities differ by industry. Thus, the idea of financial materiality aids investors in making informed decisions based on the relevance of the disclosed data.

According to the SASB’s categorisation, environmental concerns are divided into six sectors: greenhouse gas emissions and water and wastewater management. The relevance of each area varies by industry; for example, water management is crucial for the mining sector but of lesser importance to the financial services industry. Materiality-based scores assess how effectively a company addresses relevant environmental challenges, whereas overall environmental scores provide a broad measure of a company’s environmental efforts.

The application of these metrics revealed that companies with robust environmental engagement are likely to experience superior financial results, including improved profitability over both short and long terms, alongside reduced operational costs. Notably, firms focusing on disclosure and actual environmental performance tend to achieve better financial outcomes and attract more investor interest.

Professor Fujii stresses the importance of action over mere disclosure: “Investors are more concerned with what companies actually do for the environment rather than what they claim to do.” By actively addressing environmental issues, companies reduce perceived risks and enhance their market appeal as stable and ethical investment opportunities.

However, the researchers discovered that while overall environmental scores positively correlate with financial performance, materiality-based scores exhibit only a limited connection. This unexpected finding prompted further investigation into how ecological efficiency is valued differently across various countries.

An in-depth examination of the global data indicated that environmental efficiency holds more significance in financially robust nations like the USA and Japan than in developing countries such as Chile and Indonesia. Shen suggests that this disparity mirrors differences in environmental regulations and public awareness, explaining that in more developed economies, companies with established sustainability practices can leverage improvements in ecological efficiency to boost profitability and market valuation. Conversely, in less developed regions, where regulatory frameworks are still evolving, more emphasis is placed on environmental performance and transparency than efficiency.

The research team continues exploring how macroeconomic factors, including regulatory and social environments, influence corporate sustainability practices and financial outcomes globally. Through ongoing studies, they aim to provide empirical evidence of how environmental information disclosure and conservation efforts impact economic performance. Professor Fujii hopes that the insights gained from these international comparative studies will be instrumental in shaping effective policy planning and promoting proactive environmental responses worldwide.

More information: Siyu Shen et al, Does environmental materiality matter to corporate financial performance: Evidence from 34 countries, Corporate Social Responsibility and Environmental Management. DOI: 10.1002/csr.3062

Journal information: Corporate Social Responsibility and Environmental Management Provided by Kyushu University

Researchers at Chungnam National University Investigate the Influence of Corporate Social Responsibility on Global Online Shopping

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Online shopping transforms how we engage with and acquire goods from international markets. Despite the sector’s expansion, many consumers still resist buying products from overseas businesses due to issues related to trust, cultural discrepancies, and unfamiliarity with the products offered. A recent study spearheaded by Assistant Professor Ha Kyung Lee from Chungnam National University delves into how international corporations can address these barriers by streamlining online shopping and emphasising their commitment to corporate social responsibility (CSR). The findings of this research were made accessible online on August 28 2024, and subsequently published in the November 1, 2024, issue of the Journal of Retailing and Consumer Services, Volume 81.

In this research, the team examined the shopping habits of 1,033 online consumers from South Korea and Japan. It was discovered that companies’ societal contributions, such as support for environmental or social projects, notably enhance the positive impact of ease of online shopping on the frequency of purchases. Professor Lee noted, “When online shopping platforms are user-friendly, consumers are more inclined to buy internationally. Interestingly, CSR initiatives considerably amplify this relationship between the ease of making online purchases and the frequency of such transactions.”

One intriguing aspect of the study was the observed variance in consumer reactions between South Korea and Japan. The Japanese, who typically engage less frequently in online shopping than South Koreans, responded more robustly to CSR initiatives. Professor Lee observed, “For Japanese consumers, CSR signals likely bridge their positive views on online shopping with their reluctance to participate, thereby intensifying the influence of social contributions on purchasing behaviours more in Japan than in South Korea.” This indicates that while CSR can facilitate trust-building and mitigate consumer hesitancy, the effectiveness of these strategies may be shaped by cultural inclinations.

Companies can leverage these insights by enhancing user-friendliness and transparency on their platforms while integrating CSR communications. This tactic is especially vital in markets where trust in foreign brands is yet to be firmly established. For firms venturing into new territories, CSR can be a tactical means to bolster consumer trust and navigate cultural or digital hurdles.

Looking forward, the implications of these findings could be profound and enduring. CSR might emerge as a pivotal element in customising approaches to countries with lesser penetration of online shopping. Professor Lee surmised, “In the future, CSR might evolve into a fundamental aspect of global e-commerce, playing a crucial role in bridging the digital gap and extending the reach of online shopping to a broader audience.”

More information: Changju Kim et al, How do online sales channels affect global product purchases? The role of CSR and cross-country differences, Journal of Retailing and Consumer Services. DOI: 10.1016/j.jretconser.2024.104049

Journal information: Journal of Retailing and Consumer Services by Chungnam National University Evaluation Team

Embracing AI Necessitates a New Communication Skill Set for Sales Managers

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Artificial intelligence (AI) is significantly reshaping the workplace, including the financial sector. A compelling study conducted at the University of Eastern Finland has shed light on AI’s impact on the roles and communication skills required of sales managers within financial institutions. The research delved into how AI’s incorporation into sales teams transforms the interpersonal communication competencies demanded of sales managers.

The findings from this study are particularly enlightening. It discovered that delegating routine tasks to AI not only enhances efficiency but also provides sales managers with the opportunity to tackle more intricate tasks. Nonetheless, sales managers are encountering new communication challenges as AI becomes more integrated into their daily operations. These challenges stem primarily from addressing team members’ apprehensions and resistance to embracing change.

Associate Professor Jonna Koponen from the University of Eastern Finland highlighted the evolving demands on sales teams. “Sales teams require encouragement to use AI and support in fostering their autonomy. The role of sales managers is critical in adapting to ongoing digital transformations and preserving trust within the team,” she explained.

This extensive study spans five years, from 2019 to 2024, and includes insights from 35 expert interviews alongside secondary data collected from one of Scandinavia’s most prominent financial groups. The results underline that, beyond traditional interpersonal communication skills, ethical considerations and the ability to adapt are increasingly crucial in integrating AI within sales teams.

Sales managers are at the forefront of guiding their teams through daily tasks and strategic implementations. As AI becomes integral to the digital transformation of sales teams, managers and their team members must acquire new skills.

The integration of AI raises benefits and concerns and poses distinct communication challenges that necessitate a blend of traditional and new AI-related communication skills. Advanced AI tasks, which include customer interactions, require a collaborative effort with humans, thus demanding learning and adaptation.

The emphasis on people management is becoming more pronounced. Effective management of sales teams in this technologically evolving landscape requires sales managers to integrate their traditional interpersonal communication skills with new AI-related competencies. These traditional competencies include a motivation to interact and lead, a thorough understanding of communication and leadership principles, and the ability to utilize AI-generated data in managing sales and teams.

Moreover, the research highlighted the importance of empathy, listening, argumentation skills, and the capacity for open information sharing and supporting collaborative management within the team. Another noteworthy skill is the ability to formulate effective AI prompts and communicate politely like AI.

Adaptability also emerged as a crucial skill. The ability to modify interpersonal communication strategies to suit different contexts and meet various employee needs is essential in the evolving role of a sales manager.

“Our findings indicate that the integration of AI by sales teams has shifted the focus of sales managers towards more people-oriented management, rather than mere task management. With AI’s introduction, ethical considerations and the understanding of AI as a team member have become central,” said Professor Koponen.

The study suggests that a sales manager’s interpersonal communication skills significantly influence team dynamics, trust-building, community sense, employee engagement, and job satisfaction. “With robust interpersonal communication skills, sales managers are better equipped to achieve work goals, make informed decisions, and communicate the importance of human roles in the AI era,” concludes the study.

This nuanced understanding of sales managers’ evolving role in an AI-transformed landscape offers valuable insights into the future of leadership and team management in the financial sector.

More information: Jonna Koponen et al, Sales managers’ perceptions of interpersonal communication competence in leading AI-integrated sales teams, Industrial Marketing Management. DOI: 10.1016/j.indmarman.2024.11.012

Journal information: Industrial Marketing Management Provided by University of Eastern Finland

Corporate Audits Benefit from Industry Experience, Research Reveals

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Recent research findings suggest that corporations engaging auditors with specialised expertise in their respective fields gain significant cost benefits and attain a more accurate financial overview, enhancing investor trust.

The research, led by Birendra Mishra and Theodore Mock from the School of Business at UC Riverside, delves into the impact of auditors’ industry-specific experience on the pricing and quality of audits. This study scrutinises over 32,000 auditing instances in India, a nation whose corporate financial regulations mirror those of the U.S., uncovering that auditors—termed “partners” in the study—who possess profound industry knowledge not only elevate the quality of audits but also reduce costs for clients during initial audits.

Mishra, an esteemed professor of accounting, underscores the significance of expertise in the auditing field by comparing skilled auditors to adept surgeons whose experience ensures swiftness and precision, subsequently benefiting clients through cost reductions. He emphasises that such expertise allows auditors to tackle complex issues more adeptly, ensuring high-quality audit outcomes.

Furthermore, the study advises against choosing auditors who initially undercharge—”low-balling”—to compensate for their lack of experience. This practice often increases fees in subsequent years as these auditors strive to offset initial discounts, resulting in escalated costs and diminished audit quality over time. Mishra highlights that auditors with ample industry experience do not need to resort to low-balling, as their efficiency enables them to offer competitive pricing initially without subsequent significant fee increases. He points out that focusing on cost recovery can detract from the primary goal of conducting thorough and accurate audits.

The research utilises a robust dataset from India, where auditing regulations require the disclosure of lead auditors in financial reports. This transparency has enabled the researchers to precisely track the industry-specific experience of individual auditors and develop a novel metric, “INDEXP_PTNR,” which quantifies an auditor’s cumulative years of industry experience. By employing sophisticated statistical models, the study assesses the influence of this experience on the pricing of initial-year audits, adjustments in fees in later years, and overall audit quality.

Mishra notes the close resemblance between Indian and U.S. auditing standards, which amplifies the study’s international relevance. He suggests that the insights gained could revolutionise how companies select their auditing partners and influence regulatory frameworks in the U.S. and other countries. Given that U.S. law mandates annual audits for publicly traded companies, which can be costly, enhancing audit processes could significantly impact a company’s financial transparency and, by extension, its market value.

Highlighting the broader implications of high-quality audits, Mishra points out that they strengthen the correlation between reported earnings and stock prices, thereby boosting investor confidence. The rigorous link established through reliable auditing practices can elevate a company’s stock valuation and market standing.

Mishra concludes by recommending that companies in the process of selecting an auditor prefer candidates with substantial industry-specific experience. These candidates are more likely to deliver superior results and maintain manageable audit costs over time, potentially enhancing the company’s stock performance.

More information: Naman Desai et al, The Effects of Audit Partner Industry Experience on Lowballing, Subsequent Audit Fees, and Audit Quality, Auditing A Journal of Practice & Theory. DOI: 10.2308/AJPT-2022-133

Journal information: Auditing A Journal of Practice & Theory Provided by University of California – Riverside

New Study Explores How Job Advertisements Influence Gender and Racial Segregation in the UK Workforce

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A recent study led by Lancaster University in the UK raised concerns about the unintended consequences of using equality, diversity, and inclusion (EDI) in job advertisements. This language, intended to create a more gender-balanced workplace, is counterproductive. The study indicates that such language, while designed to attract racial minorities, does not effectively change the racial makeup of the workforce.

The research shows that workplaces with more female employees often include job ads featuring language related to family-friendly policies and flexible work arrangements. This type of language attracts more female than male applicants, potentially increasing gender segregation within these organisations. Similarly, workplaces with a significant number of racial minority employees frequently use EDI policies and language that signals a commitment to a diverse and inclusive workplace culture. However, these messages have little effect on the actual racial composition of the workforce.

The study’s findings are published in PNAS Nexus, an official journal of the National Academy of Sciences of the United States of America. The paper, titled ‘Language in Job Advertisements and the Reproduction of labour force gender and racial segregation,’ offers an extensive audit of how gender and EDI language in job advertisements influence the gender and racial composition of the workforce. It also examines how the existing composition of the labour force affects the use of gender and EDI language in job ads.

This research was a collaborative effort involving universities from the UK, Canada, and the USA, supported by funding from the UKRI Economic and Social Research Council (ESRC) in the UK and the Social Sciences and Humanities Research Council (SSHRC) of Canada. The project is part of a more extensive study focusing on AI and labour market equality. The research team, comprising sociologists, management scholars, and data scientists, analysed 28.6 million job advertisements in the UK from 2018 to 2023 using advanced natural language processing techniques. Combined with ONS labour force statistics, this approach makes it the most comprehensive study.

Professor Yang Hu from Lancaster University, the study’s lead author, emphasised the importance of understanding and addressing persistent gender and racial segregation in the labour force to enhance equality and diversity in the job market. Associate Professor Nicole Denier from the University of Alberta highlighted how job advertisements are the initial contact point between job seekers and employers, shaping the labour force by influencing who applies for jobs and how candidates are evaluated.

The research developed a novel inventory to categorise the language used in job ads across six dimensions related to gender and EDI. These include explicit gender references, gendered psychological cues, gendered work roles and skills, family-friendly versus family-unfriendly policies, EDI policy pledges, and EDI cultural references. This inventory helped the researchers map the use of gender and EDI language across different occupations and industries and correlate it with the gender and racial demographics of the respective workforces.

The study identifies three distinct patterns in the interaction between job ad language and workforce composition. Firstly, it suggests that language in job ads can reinforce workforce segregation by using cues that predominantly attract female applicants in sectors already dominated by women. Secondly, it finds that certain language elements in job ads could disrupt workforce segregation by balancing gender representation. Lastly, it reveals that despite the inclusion of EDI language in job ads, there is little impact on the representation of racial minorities in the workforce.

These insights underline the complexities of using language in job ads to influence workforce composition and point to the limitations of such interventions. Professor Hu called for a significant reevaluation of how employers frame their job ads, suggesting more meaningful approaches to communicate and implement EDI strategies.

Professor Monideepa Tarafdar from the University of Massachusetts Amherst, a co-principal Investigator of the project, and Professor Karen Hughes from the University of Alberta highlighted the importance of this cross-disciplinary, international collaboration. They noted that integrating large language models and AI-driven text analysis tools in drafting job ads offers a promising path towards building labour market equality, which this research helps pave the way.

More information: Yang Hu et al, Language in job advertisements and the reproduction of labor force gender and racial segregation, PNAS Nexus. DOI: 10.1093/pnasnexus/pgae526

Journal information: PNAS Nexus Provided by Lancaster University

Marketers Take Note: The Impact of Privacy-Focused Policies at Firms Like Google on Advertising Efficiency

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Researchers from the University of Notre Dame, the University of Southern California, and San Diego State University have conducted a study to explore the unforeseen impacts of privacy-centric policies that limit the duration of consumer data retention. This research is set to be published in the Journal of Marketing under the title “Within-Category Satiation and Cross-Category Spillover in Multi-Product Advertising,” authored by Shijie Lu, Sha Yang, and Yao (Alex) Yao.

Online display advertising, now the predominant form of digital advertising, has cultivated an industry valued at approximately $118 billion in the United States alone. Numerous advertising platforms, including online marketplaces like Yahoo Shopping and JD.com, major online retailers like Macy’s, and social media behemoths like Facebook and Instagram, employ multi-product advertising (MPA) strategies. These MPAs enable showcasing several products within a single advertisement, proving particularly beneficial for platforms with a wide range of offerings.

The strategic layout of MPAs allows for the simultaneous exposure of consumers to various products, thereby capturing more attention. This method of presentation may lead to two primary consumer responses: Firstly, the repeated exposure to similar ads from the same category within an MPA might cause a decrease in interest and click-through rates for those ads over time, as consumers may find less novelty or relevance in subsequent ads for the same product. Secondly, the concurrent display of advertisements from different categories can enhance consumer interest in both categories, creating a complementary effect between them.

This new study aims to assess the unintended consequences of privacy-oriented policies implemented by technology giants like Google, which aim to shorten the period during which consumer behavioural data is retained. The research finds that while these policies safeguard consumer privacy, they inadvertently lead to reduced consumer engagement and satisfaction with advertisements, ultimately diminishing ad performance due to decreased clicks. This reduction in ad performance is primarily attributed to a decrease in the variety of ads shown in MPAs, stemming from the shortened data retention period used for targeting.

Shijie Lu highlights that these privacy measures intensify “within-category satiation”—where consumers lose interest in similar products after frequent exposure—and diminish “cross-category complementarity,” where exposure to ads from different product categories mutually enhances interest. These dynamics are crucial for platforms to consider as they aim to balance consumer privacy with effective advertising strategies.

The study offers insights for Chief Marketing Officers and advertising platforms, emphasising the importance of understanding the trade-offs between privacy policies and advertising efficacy. It suggests that platforms carefully weigh the effects of their privacy measures on ad variety and consumer engagement. Although protecting consumer data is critical, ensuring these measures do not compromise advertising effectiveness is equally important.

Further, the research underscores the potential economic benefits of refining ad-serving policies to include advertisers’ bidding strategies and consumer preferences in ad slot allocations. It reveals the existence of two distinct consumer segments that differ in both baseline preferences and satiation levels in ad-clicking behaviour, suggesting more sophisticated ad-allocation policies that account for within-category satiation and cross-category spillover could prove more beneficial for platforms than strategies solely based on advertisers’ bids.

Lastly, the study sheds light on how platforms might adjust the reservation price in ad auctions to influence consumer behaviour through ad variety indirectly and how such adjustments could benefit the platform. Still, it might adversely affect both advertisers and consumers. Yao (Alex) comments on the study: “Our research highlights the intricate interplay between privacy policies and advertising effectiveness. As privacy concerns continue to influence the digital advertising landscape, both platforms and advertisers must navigate these challenges to optimise ad performance while safeguarding consumer interests.”

More information: Shijie Lu et al, Within-Category Satiation and Cross-Category Spillover in Multiproduct Advertising, Journal of Marketing. DOI: 10.1177/00222429241274727

Journal information: Journal of Marketing Provided by American Marketing Association

ChatGPT’s Shortcomings Indicate It’s Not Ready to Supplant Finance Experts

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Large language models such as ChatGPT have demonstrated proficiency in selecting multiple-choice answers on financial licensing exams, yet they encounter difficulties when tasked with more complex, nuanced activities. This was highlighted in a study by Washington State University, which scrutinised over 10,000 responses from artificial intelligence models, including BARD, Llama, and ChatGPT, to questions from financial exams.

The study, spearheaded by DJ Fairhurst from WSU’s Carson College of Business, involved the models not only selecting answers but also articulating the reasoning behind their choices. These explanations were then evaluated against those given by human finance professionals. Among the models, two iterations of ChatGPT emerged as the most adept at these tasks. Nevertheless, even these versions exhibited significant inaccuracies when addressing more intricate subjects.

DJ Fairhurst remarked, “It’s far too early to be concerned about ChatGPT completely taking over finance jobs.” He explained that while the model performs admirably with well-documented broad concepts, it struggles significantly with unique, specific issues. This study, published in the Financial Analysts Journal, included questions from licensing exams like the Securities Industry Essentials exam and the Series 6, 7, 65, and 66, aiming to mirror tasks that financial professionals might actually undertake.

The researchers took the assessment a step further by requiring the models to produce written explanations for their answers, specifically choosing questions that reflect the practical job tasks of financial professionals. Fairhurst emphasised the necessity of probing beyond the models’ ability to select correct answers to understand their capabilities.

Of all the models tested, the paid version of ChatGPT, version 4.0, was most closely aligned with human expert responses, showing a substantial lead in accuracy—18 to 28 percentage points higher than its counterparts. Interestingly, when the researchers fine-tuned an earlier version of ChatGPT, version 3.5, by providing examples of correct responses and explanations, it nearly matched and occasionally exceeded the performance of version 4.0.

Despite these advances, both versions of ChatGPT still fell short in certain areas. They performed well in reviewing securities transactions and monitoring financial market trends. Still, their responses were less accurate in specialised scenarios such as assessing clients’ insurance coverage and tax status.

Fairhurst, Greene, and WSU doctoral student Adam Bozman are further exploring ChatGPT’s limitations and capabilities in a new project involving evaluating potential merger deals. By focusing on deals concluded after September 2021, a period beyond ChatGPT’s training data, they aim to gauge the model’s effectiveness in real-world scenarios. Preliminary results suggest that the AI model is not particularly adept at these tasks.

The researchers concluded that while ChatGPT may alter the employment landscape for entry-level analysts in investment banks, it is more suitable as a supportive tool rather than a replacement for seasoned financial professionals. The evolving role of AI could potentially lead to a reduction in junior analyst positions, not because ChatGPT outperforms them but because it can handle the more routine tasks that have traditionally been assigned to them. This shift, as Fairhurst notes, could make the traditional practice of hiring a large number of junior analysts and retaining only the best a more costly approach.

More information: Douglas (DJ) Fairhurst et al, How Much Does ChatGPT Know about Finance? Financial Analysts Journal. DOI: 10.1080/0015198X.2024.2411941

Journal information: Financial Analysts Journal Provided by Washington State University

Electronic Tags Can Assist Supermarkets in Reducing Food Waste

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In 2022, US grocers discarded an alarming 5 million tons of food, with 35% of this waste ending in landfills. This statistic comes from ReFed, a non-profit organisation tackling food waste. A significant portion of this discarded food, totalling 2.7 million tons, was due to products surpassing their expiration dates on labels. However, emerging technological solutions propose a promising avenue for mitigating this issue. According to recent studies undertaken at Texas McCombs, transitioning from traditional paper shelf labels to modern digital ones could substantially diminish the amount of food waste generated by supermarkets.

The introduction of digital shelf labels offers many benefits beyond reducing food waste. These labels facilitate the implementation of dynamic pricing strategies, where prices are adjusted in real time to reflect the age of the stock. This approach appeals to budget-conscious consumers and enhances overall efficiency and sustainability. Ioannis Stamatopoulos, an associate professor specialising in information, risk, and operations management at Texas McCombs, emphasises the collective advantages of dynamic pricing. He argues that it significantly reduces food waste and the emissions associated with decomposing food in landfills.

The practicality of changing prices via digital systems cannot be overstated. Grocers can update prices swiftly and effortlessly—a few keystrokes on a tablet are all required. This contrasts sharply with the laborious printing and manually attaching paper labels to shelves. Stamatopoulos advocates for more frequent price updates, which have proven economically viable and beneficial in managing perishable stock more effectively.

The efficacy of this technological shift has been substantiated through research conducted on two European grocery chains, although their identities remain confidential. The study, a collaboration involving Stamatopoulos, Naveed Chehrazi from Washington University in St. Louis, and Robert Sanders from the University of California, San Diego, revealed significant increases in the frequency of price adjustments following the adoption of digital labels. For instance, a UK-based chain introduced digital labels for 940 perishable products, which allowed for price adjustments that were 54% more frequent than before. This change was primarily facilitated by the labels’ ability to display base prices and apply discounts as products neared expiration.

One of the chains incorporated a second technological enhancement—expanded barcodes—in addition to digital labels. Unlike traditional barcodes, these can store comprehensive inventory details such as packaging dates, lot numbers, and expiration dates. This feature lets stores strategically reduce prices as items approach their sell-by dates, encouraging timely purchases and reducing waste. Following the installation of these technologies, the frequency of price changes in the EU supermarket chain surged by an astonishing 853%.

Stamatopoulos highlights the dual benefits of such technologies, not just for consumers who prioritise price but also for the stores themselves. By enabling stores to offer discounts on products nearing expiration, they can justify larger inventory orders and exploit economies of scale, ultimately benefiting their bottom line.

Despite the promising outlook of dynamic pricing, there are notable challenges to its widespread adoption. Consumer distrust remains a significant hurdle; many fear that retailers might exploit high demand periods to inflate prices, similar to pricing strategies employed by ride-hailing services like Uber. However, this concern is mitigated in grocery retail, where predicting peak demand for specific products is complex and dynamic pricing could instead focus on reducing prices during low-demand periods to stimulate sales.

Another significant barrier is the cost of implementing digital labels and training staff to manage new systems. Despite these initial expenses, the long-term benefits—such as reduced waste and enhanced profitability—make a compelling investment case. Europe currently leads in adopting these technologies, but momentum is building in the US, with major retailers like Walmart and Amazon Fresh initiating transitions to digital pricing systems.

Stamatopoulos advocates for government incentives akin to those offered for solar panels and electric vehicles to accelerate the adoption of these technologies. Such measures could catalyse a shift towards more sustainable and efficient retail practices, marking a new era in grocery management where technological innovations drive economic and environmental benefits.

More information: Naveed Chehrazi et al, Inventory Information Frictions Explain Price Rigidity in Perishable Groceries, Marketing Science. DOI: 10.1287/mksc.2023.0473

Journal information: Marketing Science Provided by University of Texas at Austin

Scanning the Heavens: UFOs and Their Impact on Economic Focus

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A recent study has introduced a groundbreaking approach to measuring public attention by analyzing Unidentified Aerial Phenomena (UAP) reports, uncovering a surprising correlation between these sightings and economic conditions at various levels across the United States. This novel methodology demonstrates that UAP sightings when analyzed alongside traditional metrics of attention, offer a unique vantage point for examining shifts in public focus that correlate with economic cycles. The significance of these findings lies in their potential to revolutionize the way macroeconomic trends are studied and inform policy, especially in responding to regional economic variations and managing public interest during periods of economic instability.

The research, conducted by Dr Ohad Raveh from the Hebrew University and Dr Nathan Goldstein from Bar Ilan University and published in Humanities and Social Sciences Communications, introduces an innovative metric for capturing public attention through UAP reports. This study effectively bridges the gap between unconventional indicators and macroeconomic analysis by revealing unexpected links between UAP sightings and various economic conditions throughout the U.S. It challenges the traditional dismissal of UAP sightings as merely fringe occurrences, proposing that they are significant indicators of public interest instead.

By meticulously analyzing daily-level data from the National UFO Reporting Center (NUFORC), the researchers have demonstrated that UAP sightings are more frequent in economically affluent regions and display inverse patterns within these regions over time. These findings suggest that public attention to extraordinary phenomena like UAPs can reflect broader economic fluctuations, indicating public focus shifts aligning with the region’s overall economic climate.

The study highlights several key insights: UAP sightings correlate positively with economic conditions across different regions but exhibit inverse patterns within these areas over time. Furthermore, through a quasi-experimental design utilizing variations in COVID-19 lockdown restrictions, the study establishes a causal link between restricted mobility and an increase in UAP reports, thereby validating the use of UAP sightings as a reliable indicator of public attention.

These groundbreaking findings not only enhance the toolkit for macroeconomic analysis but also provide policymakers with crucial insights into managing public attention to mitigate the impacts of economic shocks. The research invites further exploration into unconventional forms of attention, like UAP sightings, and their interplay with economic behaviours. “We hope this work inspires future research to deepen our understanding of the connection between public attention and macroeconomic outcomes,” state the authors, emphasizing the potential for this innovative approach to inform academic research and practical policy formulation.

More information: Nathan Goldstein et al, Looking up the sky: unidentified aerial phenomena and macroeconomic attention, Humanities and Social Sciences Communications. DOI: 10.1057/s41599-024-04182-z

Journal information: Humanities and Social Sciences Communications Provided by The Hebrew University of Jerusalem