Monthly Archives: November 2025

Research reveals public willingness to accept higher taxes when the value of shared services is clearly explained

The research examines how people’s attitudes toward taxation and government size shift once they gain a clearer understanding of the universal benefits of public goods. Led by Associate Professor Tomoko Matsumoto of Tokyo University of Science, together with Associate Professors Daiki Kishishita and Atsushi Yamagishi of Hitotsubashi University, the team set out to explore whether better public awareness of services such as sanitation and transport infrastructure could influence political preferences. Their findings reveal that when individuals are presented with concrete information about the value of these public goods, support for expanding government—particularly through higher taxation—rises significantly, even without altering views on tax progressivity. This discovery offers a potential pathway for reducing inequality by broadening the scale of government investment while preserving a progressive fiscal structure.

To test this idea, the researchers conducted an online experiment in July 2021 involving around 3,000 participants from across the United States. The U.S. served as a fertile testing ground due to its high levels of political polarisation and comparatively small government size among developed countries. Participants were randomly divided into two groups, one of which received detailed information outlining the government’s role in maintaining public goods, including cost, efficiency, and direct personal benefits. The other group served as a control and received no such information. By comparing responses between these groups, the researchers were able to isolate the influence of increased understanding on political and fiscal attitudes.

The results were particularly striking regarding support for a larger government. Participants who received information were 10 percentage points more likely to endorse a hypothetical 1% increase in the tax rate to fund expanded public services. This is a massive effect in an area where tax increases are typically met with resistance. However, attitudes toward tax progressivity, meaning whether higher earners should pay relatively more, remained essentially unchanged, with only a minor and statistically insignificant shift in opinion. Similarly, when asked how additional tax revenue should be used, the information group showed only a slight decrease in support for directing funds exclusively towards aiding people experiencing poverty. Overall support for existing welfare policies remained unaffected.

One of the most consequential findings was the consistency of these effects across social and political lines. Regardless of income, ideology, race, or gender, participants responded in broadly similar ways to information about public goods. This suggests that clearly explained shared benefits bridge entrenched divides and foster a more unified public stance on government investment. In societies where political disagreements often dominate discussions about taxation and redistribution, this outcome raises the possibility that universal public goods can serve as a foundation for broader consensus.

The broader implication of the study is that reducing inequality does not necessarily require focusing solely on traditional strategies such as increasing tax progressivity or highlighting income disparities. Instead, enhancing public awareness of universally shared services may open alternative avenues for redistribution. If citizens recognise the broad value of public goods, they may be more willing to support expansions in government activity that can promote more equitable outcomes. The researchers note that this approach aligns with the Nordic model, which places universal public goods at the core of redistribution. The study’s evidence suggests that such a model could be relevant beyond its usual geographical and cultural context.

While the findings are promising, the researchers acknowledge limitations and future directions. The results stem from a U.S.-based online survey, and further work is needed to determine how well these patterns apply elsewhere. Additional research must also explore how such shifts in opinion translate into real-world political engagement, including voting and support for specific policies. As Dr Matsumoto reflects, the ongoing rise in global inequality underscores the urgency of identifying sustainable approaches to preserving social cohesion and mutual support.

More information: Daiki Kishishita et al, Public goods provision, preferences over public finance, and distributional effects, Japanese Economic Review. DOI: 10.1007/s42973-025-00228-2

Journal information: Japanese Economic Review Provided by Tokyo University of Science

Researchers at Chung-Ang University Pioneer Next-Generation AI for Advanced Non-Destructive Inspection

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Across sectors such as semiconductors, energy, automotive manufacturing, and steel production, the stability of equipment and structures depends on the flawless integrity of their internal components. Even microscopic cracks or defects—often hidden deep within materials—can have serious and sometimes catastrophic consequences. Because these flaws cannot be observed directly, engineers rely on non-destructive testing techniques to examine internal conditions without harming the structure. Although these methods have advanced considerably over the years, accurately detecting and characterising minor or complex internal defects remains difficult, as sensor signals are frequently distorted by geometric features, material irregularities, and the complex environments in which real systems operate.

These physical limitations have led researchers to ask a compelling question: could artificial intelligence reveal what human inspection tools cannot? This question has driven a significant innovation from a research team in South Korea led by Assistant Professor Sooyoung Lee of Chung-Ang University. Professor Lee, who heads the Industrial Artificial Intelligence Laboratory in the School of Mechanical Engineering, and his team have developed a diffusion-based AI system named DiffectNet. This model is designed to produce high-fidelity ultrasonic images that reveal hidden internal defects with far greater clarity than traditional signal interpretation techniques. Their findings were released online in September 2025 and subsequently published in the journal Mechanical Systems and Signal Processing.

DiffectNet represents more than an incremental improvement to existing methods. According to Professor Lee, it marks a fundamental shift in how AI can address engineering challenges. By learning to reason from complex, noisy sensor data, the system can reconstruct the probable shapes and locations of cracks or flaws within structures in real time. This generative ability allows the AI to overcome long-standing physical constraints associated with signal distortion, enabling a more precise and reliable view of internal conditions than was previously thought possible. In Professor Lee’s view, such capabilities have the potential to redefine safety standards across numerous industries.

The practical implications are far-reaching. In high-risk environments such as power plants, where even a tiny crack might lead to devastating accidents, AI-based real-time inspection could provide crucial early warnings. In semiconductor fabrication facilities, where production cannot easily be paused for detailed inspections, DiffectNet could allow virtual assessment of internal defects without interrupting equipment operation. This would support both improved quality control and sustained productivity. Similar benefits apply to the monitoring of critical infrastructure—bridges, tunnels, buildings, and transport networks—where concealed deterioration often goes unnoticed until it becomes severe. AI-driven reconstruction enables continuous, high-resolution evaluation, contributing to safer, more resilient urban environments.

This research illustrates the broader evolution of AI within engineering. No longer confined to data analysis, AI systems are becoming active participants in the discovery and interpretation of physical phenomena. Professor Lee emphasises that his team’s work is part of a larger movement toward AI-driven engineering technologies that can reshape the field’s very foundations. As such systems mature, they may transform how industries predict failures, maintain essential infrastructure, and ensure everyday safety.

Ultimately, DiffectNet offers a promising advance in safeguarding the reliability of the systems upon which modern life depends. Through its ability to reveal what was once hidden, this breakthrough points to a future where engineering decisions are guided by unprecedented insight and precision.

More information: Dongwon Lee et al, DiffectNet: diffusion-enabled conditional target generation of internal defects in ultrasonic non-destructive testing, Mechanical Systems and Signal Processing. DOI: 10.1016/j.ymssp.2025.113454

Journal information: Mechanical Systems and Signal Processing Provided by Chung Ang University

New study suggests that widely used efficiency rankings may give a distorted picture

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For many years, governments, banks, hospitals and schools have depended on data-driven tools to determine which organisations operate efficiently and which fall behind. Yet new research from the University of Surrey suggests that these long-trusted methods may be offering an unreliable picture. The study argues that traditional efficiency rankings consistently overlook how performance shifts over time and the impact of unexpected shocks such as recessions, pandemics, or major supply chain disruptions. By treating efficiency as a fixed snapshot rather than a changing process, these older models risk producing assessments that are both misleading and unfair.

The research, published in Expert Systems With Applications, introduces an alternative approach, Time Envelopment Analysis (TEA). Unlike conventional models, TEA is designed to track how an organisation’s efficiency changes across multiple periods, offering a more fluid and realistic portrayal of performance. Using extensive economic data from 63 countries, the researchers found that widely used methods routinely misrepresent performance. They often fail to capture either the abrupt effects of crises or the gradual improvements that accumulate through steady investment or policy change. TEA, by contrast, highlights fluctuations that static tools cannot accommodate.

A distinctive feature of TEA is its combination of three analytical components. One examines how shocks unfold and influence organisations over time; another ranks organisations in relation to one another; and a third tests how external pressures shape their performance. Together, these tools produce a more comprehensive and resilient efficiency assessment. After running 400,000 tests, the research team showed that TEA offers far greater reliability than the methods currently relied upon by policymakers and industry leaders.

Dr Mehdi Toloo, co-author of the study and Reader in Business Analytics at the University of Surrey, underscored the consequences of relying on outdated evaluation models. He noted that critical decisions—whether involving government budgets, investment choices, or even hospital safety ratings—are often based on tools that freeze organisations at a single point in time. Such an approach fails to recognise that no institution operates in isolation from real-world shocks. By incorporating the effects of crises, whether financial, social or health-related, TEA provides an assessment that mirrors the complexities that organisations actually face. Misjudging efficiency, Dr Toloo warned, leads to flawed policy, misallocated resources and unjust comparisons.

The study also highlights the usefulness of TEA in situations involving minor, recurring disturbances. For example, gradual declines in technical performance or shifts in operational conditions can accumulate in ways that conventional models fail to register. Yet TEA handles these subtleties while remaining robust in the face of major disruptions. This versatility has significant implications. Governments could use TEA to evaluate how health systems recover from crises such as Covid-19, while businesses might rely on it to measure the long-term returns of adopting new technologies.

Dr Toloo added that TEA encourages more accountable decision-making by replacing one-off efficiency scores with dynamic assessments that change alongside real conditions. For those responsible for shaping policy or overseeing investment, TEA offers fairer comparisons, stronger risk evaluation and more unmistakable evidence to guide reform. In a world where shocks are increasingly common, such an approach promises to bring much-needed nuance and accuracy to organisational assessment.

In all, the research calls for modernising efficiency measurement. As institutions confront economic volatility, technological shifts, and unpredictable global events, tools that account for how performance evolves are becoming indispensable. TEA represents a significant step in that direction, offering a methodology better suited to today’s complex and fast-changing environment.

More information: Madjid Tavana et al, Time envelopment analysis: A new method for effectively incorporating time series in data envelopment analysis, Expert Systems with Applications. DOI: 10.1016/j.eswa.2025.127791

Journal information: Expert Systems with Applications Provided by University of Surrey

In gig-economy platforms, incentive bonuses often carry hidden complications

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In today’s rapidly expanding gig economy, companies are increasingly dependent on freelance workers whose availability they cannot reliably manage or predict. To stabilise their labour supply, many platforms turn to bonuses to attract contractors and keep them active. Yet new research led by Cornell University suggests that these incentives may not deliver the advantages firms expect. Instead, bonuses can create unintended drawbacks for both platforms and workers, with their impact varying markedly depending on labour conditions.

The study, “Bonus Competition in the Gig Economy,” published in Production and Operations Management, examines how different types of bonuses affect the delicate balance among platform profits, contractor incentives, and operational efficiency. Its central insight is that not all bonuses function in the same way, and that their success depends heavily on whether workers are plentiful or scarce. By exploring how platforms compete for labour, the research dismantles the assumption that financial incentives offer an uncomplicated means of improving workforce stability.

When the supply of gig workers is abundant, fixed bonuses—sometimes called subsidies—provide clear benefits for companies. These bonuses are embedded directly into contracts, giving platforms a tool for managing pay in a way that minimises unnecessary competition. Because firms do not need to outbid rivals for workers during periods of high labour availability, fixed bonuses help them maintain profits by allowing greater flexibility in structuring compensation. However, this flexibility tends to suppress workers’ earnings. As the researchers note, firms can adjust whether they pay more through bonuses or through commission, opting for whichever form costs them less, leaving contractors with reduced income overall.

The motivation for examining this dynamic arose from trends seen among major ride-sharing platforms such as Uber and Lyft, which began offering increasingly aggressive bonus schemes in recent years. According to Yao Cui, associate professor of operations, technology and information management, companies were “burning through” substantial sums to incentivise drivers, even as they reported significant financial losses. The apparent contradiction between high bonus spending and declining profitability prompted the researchers to investigate the underlying economic forces shaping these strategies.

Platforms like Uber, Lyft, TaskRabbit and freelancer.com operate within a highly uncertain labour environment. Contractors often work across multiple platforms, selecting whichever offers the most appealing job at a given moment. Bonuses, therefore, serve as a means of persuading workers to favour one platform over another. Yet both fixed and contingent bonuses introduce their own complications. While they can temporarily boost worker participation, they also reshape behaviour in ways that may not align with operational efficiency or long-term profitability.

The study uses game-theory modelling to compare bonus strategies, showing that the benefits of fixed bonuses disappear when labour is scarce. In such conditions, contingent bonuses—rewards given only after consistent service over time—prove more effective. These incentives help firms attract workers initially and then retain them long enough to ensure reliability. Yet contingent bonuses also create inefficiencies: workers motivated to maintain their eligibility may accept suboptimal tasks, such as jobs requiring long pickup times, to stay on track for the payout. This behaviour weakens the precision of demand matching, undermining the platform’s operational effectiveness.

Taken together, the findings reveal that bonuses are far from a one-size-fits-all solution. They reshape labour markets, influence worker behaviour, and alter platform competitiveness in complex ways. Rather than offering a guaranteed advantage, bonuses introduce trade-offs that both firms and workers must navigate carefully within the evolving gig economy.

More information: Li Chen et al, Bonus Competition in the Gig Economy, Production and Operations Management. DOI: 10.1177/10591478251389408

Journal information: Production and Operations Management Provided by Cornell University

New data shows AI uses less energy than expected

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Recent analysis suggests that the environmental impact of artificial intelligence is less significant than many assume, and in some cases, AI may even deliver ecological and economic benefits. A new study challenges the prevailing belief that rapid AI growth inevitably leads to a significant increase in global greenhouse gas emissions. Instead, the authors argue that AI’s overall contribution to global energy demand is modest, and that its potential to support cleaner technologies could outweigh its direct energy use.

The research, undertaken by teams at the University of Waterloo and the Georgia Institute of Technology, assessed the scale of energy consumption associated with AI within the United States. To do this, the researchers combined detailed economic data with estimates of AI adoption across sectors. By modelling how AI-driven automation might expand over the coming years, they aimed to understand the broader effects on energy demand and emissions. Their approach treated AI as part of the wider economic system, rather than isolating it as a standalone technology, allowing them to capture its indirect influences on productivity and energy use.

A key finding of the study is that, although AI in the United States consumes an amount of electricity comparable to Iceland’s total energy use, this still represents only a tiny fraction of national and global energy consumption. The U.S. economy remains heavily dependent on fossil fuels—around 83 per cent of national energy demand is met by petroleum, coal, and natural gas. Against this backdrop, the additional electricity required to power AI systems barely registers globally. However, the researchers emphasise that this does not mean the impact is uniform. AI-related energy use is concentrated in regions where data centres are located, and these areas may face significant local grid pressures.

Dr Juan Moreno-Cruz of the University of Waterloo notes that local communities hosting data centres could experience a doubling of electricity demand, particularly in areas where power generation still relies heavily on fossil fuels. While the national impact remains minimal, these local effects warrant careful attention, as they may lead to increased emissions and strain on infrastructure. The researchers also note that their work did not examine these local economic and environmental dynamics in detail, highlighting an area for future study.

Despite these concerns, the study offers a more optimistic viewpoint for those worried that AI represents a new and unavoidable source of carbon emissions. The authors argue that AI can play a constructive role in advancing environmental progress. It has the potential to accelerate the development of green technologies, improve energy efficiency, optimise industrial processes, and support climate modelling and mitigation strategies. Rather than viewing AI as inherently damaging, the researchers suggest that its broader benefits outweigh its direct energy requirements when deployed responsibly.

To deepen their understanding, the authors plan to extend their analysis to other countries, recognising that the effects of AI adoption will vary depending on national energy systems and economic structures. Countries with cleaner electricity grids may see even lower environmental impacts from AI growth, while those reliant on coal or gas may face more significant challenges. By comparing different regional contexts, future research could provide a more comprehensive picture of AI’s global environmental footprint.

Overall, the study invites a more measured and evidence-based discussion of AI’s environmental role. While acknowledging that localised impacts matter, it challenges the notion that AI poses a significant threat to climate goals. Instead, it proposes that AI could become an essential tool in the transition to a more sustainable future—provided its growth is managed with foresight and attention to regional conditions.

More information: Anthony Harding et al, Watts and bots: the energy implications of AI adoption, Environmental Research Letters. DOI: 10.1088/1748-9326/ae0e3b

Journal information: Environmental Research Letters Provided by University of Waterloo

Researchers uncover £90K ‘golden threshold’ for crowdfunding triumph

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A new study from the University of East Anglia (UEA) has shed light on what motivates investors to back start-ups through crowdfunding. Drawing on data from more than 1,000 successful campaigns hosted on the investment platform Seedrs, the researchers set out to identify which elements most strongly influence the amount of money raised. The findings point to a delicate balance of financial realism, persuasive language, and team composition that determines whether a campaign captures investor interest or fails to gain momentum. Their analysis suggests that success in crowdfunding is not random but built upon a combination of credible targets, transparent offers, and emotionally resonant messaging.

One of the most striking revelations is the existence of a £90,000 “sweet spot” for funding targets. According to the research, campaigns that aimed to raise around this amount were significantly more likely to succeed than those that set higher goals. Investors appeared to perceive £90,000 as an attainable figure that indicated both ambition and realism. In contrast, projects seeking substantially more were often viewed with scepticism, perhaps because such targets imply unrealistic expectations or heightened risk. This “sweet spot” acts as a psychological threshold, balancing investor enthusiasm with confidence in the entrepreneur’s ability to deliver results. By pitching within this range, start-ups position themselves as both promising and pragmatic.

The percentage of equity offered in return for investment emerged as another critical factor. Campaigns that offered a higher equity share attracted greater interest, whereas those with lower offers deterred investors. This finding runs counter to earlier research that suggested offering too much equity signals weakness or desperation. Professor Peter Moffatt, co-author of the study and Professor of Econometrics at UEA, explained that equity levels send an essential message about how much entrepreneurs value external investors. If a company offers too little equity, it might appear to undervalue the role of backers or suggest that the business’s self-assessment is overly inflated. In contrast, a higher equity percentage may signal transparency and partnership, giving investors the sense that their contribution is genuinely significant to the venture’s success.

Language was also shown to have a measurable effect on funding outcomes. The study found that pitches using terms such as “health,” “healthy,” and “organic” were notably more successful, whereas those using words like “entertainment” or “information” tended to perform poorly. This indicates that investors may be drawn to sectors they perceive as socially valuable, sustainable, or aligned with personal well-being. Words that evoke positive associations, ethical responsibility, or long-term societal benefits appear to create a deeper emotional connection. Such language not only conveys a business’s mission but also influences how trustworthy and forward-thinking it seems to potential backers. In essence, carefully chosen phrasing can subtly shift a campaign’s appeal from merely interesting to genuinely investable.

Team size proved to be another decisive factor. The researchers found that around 19 team members offered the best balance between expertise and manageability. Smaller teams often struggled with limited skills or capacity, while huge groups risked conflict and inefficiency. This optimum number suggests that diversity of talent and competence is attractive to investors, but only when combined with cohesion and clarity of leadership. A well-structured team signals reliability and preparedness, qualities that are essential when individuals are deciding where to place their money. Investors tend to view strong collaboration and balanced expertise as indicators of stability, making team composition a critical yet often overlooked component of crowdfunding success.

The study, conducted in collaboration with the University of Manchester and published in the Bulletin of Economic Research, analysed 1,189 campaigns. The researchers collected data on each campaign’s target amount, funds raised, equity offered, team size, and language choice in the one-paragraph project description. Using advanced econometric methods, they identified the variables most closely associated with successful fundraising outcomes. Their findings offer valuable insights for entrepreneurs seeking to refine their crowdfunding strategies. By setting realistic financial goals, offering investors a meaningful stake, using persuasive yet authentic language, and building balanced teams, start-ups can significantly improve their chances of securing investment. The study underscores that while innovation remains essential, clarity, strategy, and communication are equally powerful tools in transforming an idea into a fully funded enterprise.

More information: Xuerui Ma et al, Determinants of Amount Raised in Equity Crowdfunding Campaigns: An Application of Truncated Regression, Bulletin of Economic Research. DOI: 10.1111/boer.70015

Journal information: Bulletin of Economic Research Provided by University of East Anglia

When Technology Feels Like Magic, It Becomes Easier to Accept

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It is commonly assumed that people who are confident with technology are the ones most eager to adopt artificial intelligence. However, recent research published in the Journal of Marketing challenges this view. The study, led by Stephanie Tully, Chiara Longoni, and Gil Appel, finds that consumers with lower levels of AI understanding are actually more willing to use AI-powered tools. Rather than analysing how the systems work, they tend to experience AI as something wondrous and almost magical, which encourages curiosity and openness rather than hesitation.

When AI is presented as capable of producing results beyond ordinary human effort—such as creating expressive art, writing poetry, or offering compassionate support—less tech-savvy users feel a sense of awe. Tully explains that limited AI knowledge does not necessarily lead to mistrust; instead, it can create space for fascination. Those who know less about how the systems operate are often more excited to explore them. In contrast, consumers who understand AI more deeply tend to approach it with a critical eye. Longoni notes that greater technical literacy often brings attention to AI’s limitations and ethical risks, which can slow down adoption.

The implications of this pattern are significant for companies and communicators promoting AI-driven products. Tools that emphasise creativity, emotional resonance, or seemingly extraordinary abilities are particularly appealing to users who are less familiar with the underlying technology. Highlighting these capabilities can make AI feel accessible and inspiring. At the same time, the researchers caution against overselling AI’s power. If marketing leans too heavily into the idea of magic, it can lead to disappointment or mistrust when users encounter real constraints. Appel stresses that honesty and clarity are essential to maintaining credibility while still encouraging enthusiasm.

The study also points to a broader challenge: how to increase public understanding of AI without diminishing the curiosity that drives early engagement. The researchers suggest that education need not eliminate wonder. Instead, thoughtful communication can help people appreciate the real possibilities of AI while still recognising its limits. In this balance between excitement and awareness lies the path to responsible, sustainable adoption.

More information: Stephanie Tully et al, Lower Artificial Intelligence Literacy Predicts Greater AI Receptivity, Journal of Marketing. DOI: 10.1177/00222429251314491

Journal information: Journal of Marketing Provided by American Marketing Association

Gaps in the Literature: The Minimised Dangers of Multi-Level Marketing Schemes

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Many people continue to be persuaded by new versions of network marketing and multi-level marketing schemes, even when these organisations closely resemble pyramid structures. The promise is nearly always the same. Individuals are encouraged to believe they can earn an excellent income by selling specialised products or joining a unique business opportunity. Yet the model usually depends less on selling products and more on recruiting new members, creating a system in which only a very small number of people at the top have any real chance of profit. Two researchers, Claudia Groß from Radboud University and William Keep from the College of New Jersey, have examined how these business models are treated in academic writing. They found that many scholarly publications, especially in marketing, describe MLMs in surprisingly favourable terms. Their findings, published in the Journal of Marketing Management, raise questions about why risks are often downplayed.

Companies such as Herbalife and Tupperware are commonly associated with this sales approach. The way people are recruited has changed in recent years, particularly through social media platforms like TikTok and Instagram. Influencers and online mentors now present MLM involvement as a path to financial freedom, personal development or entrepreneurial success. They may promote online trading, dropshipping, or expensive coaching programmes. The marketing is usually polished and highly persuasive, presenting stories of dramatic success and independence. However, most participants do not earn a significant income. In fact, many lose funds by purchasing products they cannot sell or by investing in training or advertising that yields little return. Groß warns that young people are especially vulnerable, as they may be unfamiliar with how business models work and easily impressed by glamorous online lifestyles.

Groß and Keep reviewed both legal and marketing scholarship to understand how academics discuss MLMs. From the legal publications they examined, they noted that the risks of MLMs are clearly recognised. These works often describe misleading income promises, the structural similarity to pyramid schemes, and the financial disadvantage most participants face. A recurring point is that profit mainly comes from recruiting new members rather than from selling products, making the system unsustainable for the majority. Legal studies also highlight the questionable claims sometimes made about the products themselves, such as supplements claimed to cure serious illnesses. These legal analyses make clear that MLMs can create financial harm, spread misinformation, and exploit trust.

However, the marketing research they reviewed told a very different story. Many marketing articles presented MLMs in a positive light, focusing on themes such as personal growth, empowerment, and potential earnings. Instead of addressing financial losses, structural problems or misleading statements, these publications often emphasised success stories or motivational aspects. Some papers even included claims that appeared to minimise the risk or dismiss the typical pattern of financial failure. This contrast between legal and marketing scholarship was striking. It suggested not only a difference in research focus but also in tone, interpretation, and underlying assumptions about what MLMs represent and how they affect participants.

Groß and Keep found a likely explanation for this difference. Out of the 68 marketing publications they reviewed, 40 had direct ties to the MLM industry. This included research funded by lobbying organisations or authors who held fellowships or advisory positions with groups that promote direct selling. Although the exact nature of these connections was not always clearly described, the links were significant enough to suggest that industry influence may shape how MLMs are presented in academic writing. The researchers argue that this influence can create a misleading impression that MLMs are safer, more profitable, or more empowering than they actually are, especially for the majority who lose money. This situation resembles past cases in other industries, such as the tobacco industry’s use of sponsored research to downplay health risks.

The concern raised by Groß and Keep is not only about MLMs themselves, but about how financial interests can shape academic research. Suppose marketing scholarship repeatedly promotes a positive view of MLMs while legal scholarship highlights the harm. In that case, it becomes difficult for the public, policymakers and potential recruits to gain a clear understanding of the real risks involved. Industry influence makes it easier for MLM companies to claim legitimacy and to argue that no additional regulation is required. As a result, harmful practices can continue with limited oversight. The researchers suggest that greater transparency in funding, more independent studies, and stronger consumer education are needed to prevent vulnerable individuals from being misled. Their work invites readers to question not only the promises of MLMs, but also the sources that appear to endorse them.

More information: Claudia Groß et al, The law and consumer harm in multi-level marketing: a review, Journal of Marketing Management. DOI: 10.1080/0267257X.2025.2578617

Journal information: Journal of Marketing Management Provided by Radboud University Nijmegen

Research reveals ethical fallout from inflating prices on basic necessities

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When companies raise the prices of necessities such as staple foods, prescription drugs, or medical devices, they may see their profits rise quickly. Yet the gain can come with a cost that is less visible but more enduring. The research proposed by Margaret C. Campbell at UC Riverside demonstrates that when people depend on something essential and then feel priced out of it, they do not respond only with frustration or disappointment. Instead, they experience the situation as a kind of harm, because access to these goods is tied to health, dignity, and daily functioning. When consumers feel that a company has knowingly profited from their vulnerability, the company’s reputation suffers in a way that can last for many years and ultimately become more damaging than any short-term revenue boost.

The study highlights that consumers do not evaluate prices for essential items with the same logic they might apply to non-essential goods. For luxury items or those seen as optional, people may accept high prices as part of market dynamics. But when the product in question is necessary for physical well-being or basic participation in society, such as hearing aids, insulin, eyeglasses, or lifesaving allergy devices, the emotional stakes are entirely different. Campbell explains that consumers look at such pricing not only in economic terms but also in moral ones. They ask themselves whether the company is being fair. If they conclude that the company is taking advantage of their need, they will often withdraw their goodwill and avoid future purchases, even if doing so inconveniences them. In effect, the firm loses trust, and once lost, it is difficult to regain.

One of the most significant ideas to emerge from the research is what Campbell and her colleagues call the “moral harm model of price fairness.” Across eight controlled experiments involving more than 3,000 participants, the researchers examined how people infer harm from prices that limit access to essential goods. To capture this response, they developed a measure called “inferred harm,” which represents the psychological and emotional costs consumers feel when they believe someone is being prevented from accessing something necessary. The idea is that the price itself becomes a sign of how a company views human need: as either something to respect or something to exploit. This does not require the company to be intentionally cruel; consumers may still feel the effect even when the company insists it is merely following standard market logic.

The study also found that consumers view not only price increases as unfair but also situations where companies fail to lower prices when their production costs fall. This was demonstrated in an experiment involving eyeglasses. When participants were told that the cost of producing the glasses had decreased but the company continued charging the same amount, many interpreted the pricing as unethical, even though the company had not raised its price. The moral element became even stronger when the hypothetical retailer served low-income communities. The idea that a company could reduce harm but chose not to do so deepened the sense of wrongdoing. This demonstrates that fairness is not only about the amount charged but also about what consumers believe the company could have done differently.

Interestingly, the research shows that consumers are not opposed to pricing differences when they believe those differences support fairness rather than undermine it. In one experiment, participants who were placed in the role of retailers chose to lower prices for vulnerable customers, even at personal cost. In another, participants viewed senior discounts positively, even when it resulted in slightly higher prices for others, including themselves. These responses suggest that consumers are not simply looking for the lowest price; instead, they are looking for signs that the company recognises human need and is willing to act with care. When companies act in ways that demonstrate sensitivity to vulnerability, they strengthen trust. When they act in ways that disregard it, they weaken the social contract that allows businesses to function sustainably.

Campbell notes that these ideas map onto real-life controversies such as the pricing of insulin and the dramatic price increase of the EpiPen several years ago. When the price of a two-pack of EpiPens rose from $100 to $600, public response was immediate and fierce, prompting media scrutiny, lawsuits, and congressional hearings. The company eventually introduced a lower-cost generic version to ease the backlash, but the reputational damage had already been done. The lesson, according to Campbell, is that pricing is not just about numbers or market calculations. When the product is essential and the price affects people’s well-being, consumers see the decision through an ethical lens. If they believe a company is causing harm or failing to prevent it when it easily could, they will turn away. Ultimately, fairness in pricing is not only a financial matter. It is a reflection of values, and values are remembered far longer than price tags.

More information: Margaret C Campbell et al, Painful Prices: The Moral Harm Model of Price Fairness, Journal of Consumer Research. DOI: 10.1093/jcr/ucaf045

Journal information: Journal of Consumer Research Provided by University of California – Riverside

Firms that offload assets before acquiring new ones gain an average shareholder uplift of $234 million, research shows

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Companies that sell parts of their businesses to raise money for upcoming acquisitions tend to secure better deals and stronger investor backing, according to recent research from the University of Surrey. The study, which appears in The Journal of Financial Research, shows that firms which divest major assets before purchasing another company are more likely to use cash to complete the deal. This matters because investors consistently respond more favourably to acquisitions funded by clear and deliberate cash sources than to those financed by debt, internal reserves, or new share issues. The findings suggest that how an acquisition is financed carries signals about management intentions and the quality of decision-making, which shareholders closely monitor.

The research analysed more than 21,000 acquisition announcements made by US companies between 1990 and 2019. This large dataset allowed the authors to study patterns that hold across different industries, economic cycles and market conditions. One striking result was that firms that had recently sold sizeable assets were 26 per cent more likely to complete a takeover entirely in cash than firms that did not sell first. These companies also enjoyed significantly more positive market reactions at the time of the announcement. On average, the increase in share price added $234 million in value to the typical firm that had sold assets before its acquisition. In other words, the market did not simply approve of the purchase itself, but seemed to reward the strategic preparation that enabled it.

A key explanation for this effect is how investors interpret the source of financing. Cash raised from selling an asset is seen as direct, transparent and purposeful. It indicates that the firm has taken time to evaluate what it owns, to decide what no longer contributes to its long-term direction, and to reallocate capital to where it can produce more value. By contrast, funding a takeover through debt can raise concerns about future financial strain, while issuing new shares can dilute existing shareholders’ stakes. Using internal reserves may also be viewed as stretching the company too thin. When the money comes from divestment, however, the funding appears cleaner and more disciplined, reassuring investors that management is acting with clear strategic priorities rather than with opportunism or pressure.

The study also addresses a significant misconception. Selling parts of a business can sometimes signal weakness or retrenchment, especially if a company appears to be shrinking its scope. However, in the context of preparing for a well-targeted acquisition, divestment is interpreted quite differently. Investors view this sequence of actions as evidence of careful planning. It signals that the company is pruning its portfolio to build a more coherent, valuable shape, rather than either unquestioningly expanding or clinging to legacy units that no longer fit. The sale is therefore not a retreat, but a step taken to clear space and free resources for stronger, more promising opportunities.

Dr Christos Mavrovitis, Senior Lecturer in Finance and Accounting at the University of Surrey and a co-author of the study, summarises the strategic message clearly. He argues that how companies finance acquisitions speaks volumes about their approach to growth. Selling assets to fund a purchase shows that management is prepared to make hard decisions to focus the organisation and strengthen its future performance. It demonstrates a willingness to let go of underperforming or strategically misplaced parts of the business to invest in areas with greater potential. This mindset, he suggests, is what the market recognises and rewards, because it reflects thoughtful stewardship rather than impulsive expansion.

Taken together, the findings reveal that the sequence of corporate actions surrounding an acquisition can shape investor reactions just as powerfully as the acquisition itself. Growth achieved through addition alone does not impress the market as much as growth undertaken with selective refinement in advance. When firms demonstrate that they are actively shaping their identity, focusing on what matters and redirecting resources towards opportunities that align with their goals, investors respond with trust and confidence. The uplift in shareholder value observed in the study is therefore not merely a financial coincidence, but a reflection of broader market approval for disciplined strategic thinking.

More information: Christos Mavrovitis et al, Selling to buy: Asset sales, acquisition financing,and value creation, The Journal of Financial Research. DOI: 10.1111/jfir.70002

Journal information: The Journal of Financial Research Provided by University of Surrey

Hidden arrangements are inflating the cost of 401(k) retirement plans

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In many workplace retirement schemes, one of the main attractions has been the idea of choice. Employees are typically encouraged to believe they are selecting from a wide range of investment funds tailored to their risk preferences and long-term goals. On average, a 401(k) plan offers about 28 different investment options, which gives the impression of control and personal decision-making. Yet this sense of autonomy can be misleading. Recent academic research suggests that the menu of available funds is not always chosen purely for the benefit of the workers who rely on these plans. Instead, financial arrangements in the background can influence which funds are included.

A key factor behind these hidden influences is the practice known as revenue sharing. In this arrangement, certain investment funds pay fees to the companies that administer retirement plans, known as recordkeepers. These payments make the funds more likely to be offered as options within a plan. In other words, a fund can effectively “buy” visibility. Employees choosing from the list of offerings would have no obvious way to know whether one fund was selected for its payments rather than its performance or cost-effectiveness. This reveals a quiet conflict of interest: the organisation managing the plan has an incentive to allocate funds that pay them, not necessarily those that will give workers the best results over time.

Research conducted by Clemens Sialm of Texas McCombs, along with collaborators Veronika Pool and Irina Stefanescu, examined the 1,000 largest 401(k) plans in the United States over several years. They found that more than half of these plans included at least one fund that shared revenue with the recordkeeper. Not only that, but revenue-sharing funds were significantly more likely to be added to a plan and less likely to be removed, compared with funds that did not offer such payments. This suggests that revenue sharing plays a major role in shaping the line-up of investment options presented to employees. The advisers and administrators may speak of offering a curated menu of strong choices, but the research indicates that financial incentives can play a quiet, persistent role in the background.

The consequences for employees can be substantial, even if they remain unaware of what is happening. Revenue-sharing funds tend to charge higher fees, and these fees come directly out of the employee’s investments. Because part of the fees collected is passed on to recordkeepers, the employee indirectly covers the cost of the compensation. Worse still, the research found that funds engaging in revenue sharing generally deliver lower returns over time. This means that workers may be paying more and earning less simply because their plan administrator chose funds that benefit the recordkeeper rather than the participant. Given that retirement savings compound over decades, even small additional fees can erode a considerable amount of final savings.

Sialm argues that transparency is crucial. Many employees already struggle to understand the fee structures attached to their retirement plans. The problem becomes worse when important information is buried in dense documents or footnotes rather than presented clearly. A difference of just one percentage point in fees, spread over 30 years of contributions and growth, could cost an employee tens of thousands of pounds in their eventual retirement balance. Workers need straightforward disclosure that allows them to compare funds easily and understand which costs are associated with administrative work and which stem from hidden revenue-sharing arrangements.

The most effective way to address the issue, according to Sialm, may be for employers to pay recordkeepers directly rather than allowing part of the fees to be deducted through investment funds. This would make the cost of plan administration transparent and remove the incentive for recordkeepers to favour higher-fee funds. While this approach could require employers to take on greater responsibility and perhaps higher upfront costs, it would result in a fairer system for employees. Instead of paying indirectly through reduced investment returns, workers would genuinely benefit from the freedom of choice their retirement plans are meant to provide. In short, a more transparent and honest structure would help ensure that retirement savings remain focused on building security for employees, not on generating extra revenue for the intermediaries who manage the plans.

More information: Veronika K. Pool et al, Mutual Fund Revenue Sharing in 401(k) Plans, Management Science. DOI: 10.1287/mnsc.2023.01560

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

Far Away but Greener? Challenging Assumptions About Distance and Food Sustainability

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Consumers often believe that local food is automatically better for the environment, but this is not always true. A recent survey from the University of Göttingen examined how people judge the environmental impact of everyday foods. When choosing something as simple as peppers, many shoppers assume the German-grown option is greener than the Spanish-grown one. The study suggests that this is a common but misleading perception.

The research involved about 1,000 people in Germany. Participants were asked to rate the environmental impacts of peppers, apples, and beef from Germany, other EU countries, and non-EU countries. The results showed a clear pattern: food from abroad, especially from outside the EU, was seen as more harmful to the environment. This judgement was made even when the imported food could have a lower overall carbon footprint than the local product.

A key example concerns peppers. Spanish peppers are often grown in unheated greenhouses, taking advantage of warm-weather conditions. German peppers, however, may require heated greenhouses because of colder weather. Heating these facilities uses a great deal of energy, which can lead to higher emissions. So, although the German peppers are local, they are not necessarily more environmentally friendly.

The study also highlights that many consumers place too much emphasis on transport. While food miles can be a factor in environmental impact, they are only part of a larger picture. Farming methods, energy use, fertilisers, and water consumption can have a far greater influence on total emissions. Simply knowing where a product comes from does not tell us enough about how sustainable it really is.

Because of this, the researchers argue that food labelling should change. Origin labels alone reinforce incorrect assumptions. Instead, clearer information about the actual environmental impact of production would help consumers make better choices. Climate or carbon footprint labels could make these differences more visible and reduce the chance of well-intentioned shoppers choosing products that are less sustainable than they believe.

Overall, the study encourages a more thoughtful approach to understanding food sustainability. Buying local can still be valuable for many reasons, such as supporting nearby farms and ensuring freshness. But environmental friendliness is not guaranteed simply by choosing a product grown close to home. To make genuinely climate-conscious decisions, consumers need accurate and detailed information about how their food is produced, not just where it comes from.

More information: Dorothea Meyer et al, Perceived environmental impact of food: Upgrading of domestic products and downgrading of imported products, Food Quality and Preference. DOI: 10.1016/j.foodqual.2025.105718

Journal information: Food Quality and Preference Provided by University of Göttingen