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Brexit and the Startup Divide: UK closes doors to EU, but Europe keeps investing

Following the United Kingdom’s departure from the European Union, a significant shift has taken place in the flow of venture capital between the UK and continental Europe. Whereas London once served as a central node in European startup funding, the Brexit referendum in 2016 marked the beginning of a cooling in the UK’s outward investment appetite. In contrast, investors across the EU have continued to direct funds into the UK market, demonstrating a resilience that runs counter to the retreat on the British side. This asymmetry is the focus of a detailed study recently published in Research Policy, co-authored by scholars Vincenzo Butticè, Annalisa Croce, and Andrea Odille Bosio of Politecnico di Milano, along with Simone Signore and Andrea Crisanti of the European Investment Fund (EIF).

The research investigates over ten years of venture capital activity, analysing how investors responded to the shifting political and economic context around Brexit. The study divides this timeline into three phases: the pre-announcement period, the uncertainty window between the 2016 referendum and formal withdrawal, and the post-Brexit phase that began in 2020. Notably, UK investors acted swiftly in the immediate aftermath of the referendum, slashing cross-border investments and refocusing their attention on domestic ventures. Their response was one of caution and risk aversion, spurred by the political ambiguity and expected market disruptions.

In contrast, European investors exhibited a delayed but ultimately more assertive response. Rather than reacting instantly to the referendum outcome, they waited for clarity and concrete developments before making strategic decisions. Once the UK’s departure was finalised, EU-based funds increased their investments in British startups. This measured approach highlights the extent to which uncertainty—rather than Brexit itself—was the main deterrent for European investors in the interim. According to Professor Vincenzo Butticè, “European investors, instead, waited for greater clarity before changing their behaviour,” which underscores how institutional investors often prefer to base their strategies on settled conditions rather than speculation.

The authors propose several explanations for the continued flow of European capital into the UK. One compelling hypothesis is that British venture capital funds, facing difficulties in raising capital in the wake of Brexit, became less competitive, thus creating room for European funds to step in. At the same time, both sides began to adapt by forming new cross-border partnerships. Analysis of syndication data suggests that investors from both the EU and the UK are increasingly co-investing in startups, utilising collaborative structures to navigate the regulatory and logistical barriers introduced by Brexit. These partnerships may serve as a mechanism to preserve access to innovation opportunities despite the political rupture.

The study sheds light on a broader phenomenon: the reconfiguration of innovation finance across Europe. Capital flows, especially those driven by venture funding for high-growth startups, are not just economic signals but also reflections of confidence, collaboration, and policy alignment. The UK’s retreat from European investments suggests a growing inward focus, which may be to its detriment, while Europe’s continued engagement with the UK market reveals a more pragmatic stance. This divergence may have lasting consequences on how startups in both regions access growth capital and build transnational networks.

For Italy, which currently plays a modest role in the European venture capital ecosystem, the post-Brexit realignment presents an opening. With the UK’s influence in continental venture capital waning, other EU countries have an opportunity to strengthen their positions. Italy could capitalise on this shift by enhancing its domestic startup environment, fostering cross-border investment partnerships, and positioning itself as a more prominent hub within the restructured European innovation economy. The findings of this study, therefore, extend beyond mere statistics; they provide a lens through which policymakers and investors can understand and adapt to a new era of entrepreneurial finance in post-Brexit Europe.

More information: Vincenzo Butticè et al, How Brexit reshaped venture capitals market: An analysis of UK and EU investments, Research Policy. DOI: 10.1016/j.respol.2025.105289

Journal information: Research Policy Provided by Politecnico di Milano

Domestic Politics Drive the Ultra-Rich to Hide Wealth Offshore

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A recent study has shed new light on the impact of political conditions in the home countries of ultra-wealthy elites on their strategies for hiding wealth offshore. Published on 16 July 2025 in the open-access journal PLOS One, this research was conducted by Ho-Chun Herbert Chang, Brooke Harrington, and Daniel Rockmore of Dartmouth College in the United States. Their work addresses long-standing gaps in our understanding of offshore finance, a sector notoriously shrouded in secrecy, by exploring how political dynamics shape the motivations and behaviours of those who seek financial concealment across borders. This study makes a significant contribution to debates about economic inequality, regulatory evasion, and the ever-evolving global shadow economy.

Offshore financial centres—jurisdictions that offer minimal taxation, corporate secrecy, and legal protections—have long attracted the attention of elites seeking to obscure the connections between their identities and their assets. The motivations for such concealment vary widely. Some individuals aim to avoid taxes, while others may seek to conceal illicit gains, obscure questionable ownership histories, or protect themselves from becoming targets of extortion, litigation, or political retaliation. The appeal of these centres lies in their ability to offer both legal and structural anonymity. However, the very secrecy that makes them attractive has historically hindered rigorous academic study. As a result, much of the literature on offshore finance has relied on indirect indicators or conjecture rather than robust, data-driven analysis.

To bypass this obstacle, the researchers employed an innovative methodological approach by drawing on large-scale leaks of confidential data, specifically the Panama Papers of 2016 and the Paradise Papers of 2017. These document troves offered unprecedented insight into the offshore holdings of elites across 65 countries. The team then linked these financial data with a range of indicators that describe each country’s political environment, including levels of corruption, the quality of civil and criminal justice systems, and the enforcement of regulations. Unlike earlier studies that relied heavily on expert perceptions or composite indices, this research utilised observable network behaviour, capturing the actual choices made by elites within the offshore system.

Their analysis revealed a compelling relationship between domestic political conditions and the offshore strategies deployed by wealthy individuals. For instance, elites from highly corrupt nations often spread their assets across multiple jurisdictions rather than concentrating them in a single location. This strategy—akin to diversifying a financial portfolio—serves as a hedge against political instability or abrupt policy changes in any single country. By doing so, these individuals minimise the risk of asset exposure or seizure, suggesting that they are not only acutely aware of their country’s weaknesses but also sophisticated in their financial manoeuvring.

Another key finding was the use of identity-concealing strategies among elites from countries with a high likelihood of asset confiscation. These methods include registering assets under the names of trusted associates, relatives, or opaque shell companies, effectively shielding the actual owner from detection. Interestingly, this practice was not limited to authoritarian regimes or failed states. Elites from countries such as Sweden—known for a strong rule of law—also employed such strategies. The researchers propose that while the motivations may differ, the perceived threat of legal exposure, whether due to rigorous enforcement or lack of civil protections, prompts similar behaviours across disparate political systems.

The study also found that elites from countries suffering both from systemic corruption and weak legal systems—examples include Liberia and Belize—were more inclined to use blacklisted offshore financial centres. These jurisdictions, flagged by international watchdogs for their lack of transparency and cooperation, carry significant reputational and practical risks. Yet for these elites, the protection offered by such financial havens may outweigh potential consequences. Their use underscores a particularly troubling dynamic: those with wealth and influence can operate with relative impunity, even when engaging in high-risk financial strategies that are condemned on the global stage.

While the researchers are careful to avoid definitive claims about causation, they assert that the correlations observed between political environments and offshore behaviour are strong enough to merit further study. Daniel Rockmore notes that the team’s broader aim is to uncover patterns of secrecy in global finance, which they see as part of a larger shadow system that privileges the wealthy at the expense of ordinary taxpayers. Ho-Chun Herbert Chang reflects on the interdisciplinary nature of the work, praising the combination of machine learning, network analysis, and sociological insight brought by co-author Brooke Harrington. Their study offers not only new empirical tools but also a renewed urgency to debates about transparency, accountability, and the global mechanisms that sustain inequality.

More information: Ho-Chun Herbert Chang et al, Secrecy strategies: Global patterns in elites’ quest for confidentiality in offshore finance, PLOS One. DOI: 10.1371/journal.pone.0326228

Journal information: PLOS One Provided by PLOS

Friday Finance Follies: End-of-Week Risk-Taking Rises Without Reward, Study Finds

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In Shakespeare’s Julius Caesar, the famous warning to “beware the Ides of March” serves as a poetic caution against looming danger. But in our modern, data-driven world, investors may need a different kind of warning—one tied not to political betrayal, but to the calendar itself. New research suggests that the end of a work week, a month, or even a year is when financial decision-making becomes especially vulnerable. Rather than guiding people toward prudent choices, these temporal landmarks seem to foster a sense of unwarranted optimism, which leads to riskier investment behaviour, often with disappointing returns.

This pattern was documented in a recent study by Professor Avni Shah from the University of Toronto Scarborough and Professor Xinlong Li of Nanyang Technological University. They found that during specific end-of-period timeframes, investors exhibited a greater willingness to take financial risks. These moments, though socially constructed and arbitrary, appeared to serve as psychological thresholds—a kind of “mental reset” where people felt emboldened to act more aggressively, even when doing so was statistically unwise. It’s as if the end of a chapter, whether it be a week or a year, carries an implicit promise of renewal, which distorts sound judgment.

The researchers examined this phenomenon using data from Prosper, a U.S.-based peer-to-peer lending platform. Over the course of three years, they analysed more than five million investment decisions. Prosper allowed individual lenders to bid on loan requests, with borrowers setting the maximum interest rate they were willing to pay. Loans with higher interest rates carried more risk due to a higher likelihood of default, although they also promised potentially larger returns if repaid. Shah and Li found that lenders were significantly more likely to bid on high-interest, high-risk loans on Fridays than on other weekdays. Moreover, this tendency extended to the eve of public holidays and the final days of each month.

The risk appetite reached its zenith on 31 December, the last day of the year, when investors showed the strongest preference for high-interest bids. This correlation between calendar endings and financial boldness suggested that something more than rational analysis was at work. To test this, the researchers conducted a series of controlled experiments. Participants who were prompted to think about Fridays or month-ends expressed increased optimism and a heightened willingness to engage in risky financial scenarios. The data suggested that focusing attention solely on time-related transitions could influence decision-making at a profound psychological level.

Despite this swell of optimism, the results were far from encouraging. Loans made during these end-of-period moments performed notably worse than those made at other times. The returns were significantly lower, and the higher interest rates did not compensate for the added risk of borrower default. In short, the timing of the investment—not the quality of the opportunity—seemed to be steering investor behaviour—optimism, when untethered from reality, proved to be a costly sentiment. The study raises important questions about how much of our financial conduct is influenced by emotional undercurrents we scarcely acknowledge.

Given these findings, Shah and Li recommend that platforms like Prosper make the risks associated with high-interest lending more visible and explicit, particularly at times when people are prone to making optimistic decisions. A simple nudge—such as a well-timed notification or cautionary prompt—could help prevent impulsive bids. However, they also acknowledge a possible upside: for individuals who are overly cautious or hesitant by nature, these end-of-period moments might provide the psychological push needed to take beneficial risks that they would otherwise avoid. Context matters, and so does temperament.

Professor Shah concludes that these findings highlight the subtle but powerful role of “temporal landmarks” in shaping behaviour. Although such moments may seem arbitrary, they carry deep symbolic weight in our mental frameworks. We perceive them as opportunities for reinvention, for change, for a break from the past. But when applied to financial decision-making, this sentiment can become a double-edged sword. Recognising this pattern is not just academically interesting—it has real implications for how we design financial platforms, assess investor behaviour, and cultivate self-awareness in our daily choices. Rather than fearing the Ides of March, modern investors may be better served by approaching each year-end Friday with a cooler head and a sharper eye.

More information: Avni Shah et al, The Last Hurrah Effect: End-of-Period Temporal Landmarks Increase Optimism and Financial Risk-Taking, Journal of Marketing Research. DOI: 10.1177/00222437241286785

Journal information: Journal of Marketing Research Provided by University of Toronto, Rotman School of Management

Africa’s Economic Future Depends on Scaling Firms, Not Just Starting Them

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Many policymakers and academics continue to champion the “entrepreneurial ecosystems” (EE) blueprint as a cure-all for Africa’s economic malaise, arguing that if only roads, finance, regulation and skills were better aligned, a wave of start-ups would propel the continent forward. Yet Africa already boasts the world’s highest incidence of own-account workers and necessity entrepreneurs—people who run micro-enterprises essentially because formal jobs are scarce. Before prescribing yet more entrepreneurship, it is worth asking whether encouraging still greater numbers of small start-ups can deliver broad-based prosperity, or whether a different development emphasis is required.

That question motivated a recent study led by Professor Alex Coad of the Waseda Business School in Japan. Working with Dr Clemens Domnick and Dr Pietro Santoleri of the European Commission’s Joint Research Centre and Assistant Professor Stjepan Srhoj of the University of Split, Croatia, Coad’s team interrogated the relevance of the EE paradigm for African economies. Their findings, released as an open-access article in The Journal of Technology Transfer on May 27, 2025, are freely available for anyone wishing to scrutinise the evidence firsthand. The authors explicitly set out to test whether the recommendations so often advanced by entrepreneurship scholars rest on solid empirical ground or merely on ideological conviction.

“We became uneasy,” Coad explains, “that a sizeable faction of the literature was advancing prescriptions for Africa that looked suspiciously like a one-size-fits-all dogma, untethered from the facts on the ground.” To probe the issue, the researchers placed EE next to two alternative, and historically successful, development templates: the state-led strategies that underpinned East Asia’s post-war miracle, and Schumpeterian growth theory, which relates policy choices to a nation’s technological positioning. In doing so, they uncovered striking divergences between what EE promotes and what has worked elsewhere.

East Asian economies, such as Taiwan and South Korea—followed by Singapore and, to some extent, Malaysia—have catapulted themselves from poverty to high-middle-income status within two generations by nurturing large, internationally competitive firms. The state offered targeted support, promoted technology transfer, and invited foreign direct investment (FDI) from multinational corporations willing to embed sophisticated production networks. Crucially, these countries oriented firms towards export markets, using global demand to achieve scale and drive learning. The EE playbook, by contrast, tends to celebrate micro-enterprise and self-employment, urges governments to refrain from “picking winners,” and emphasises local market dynamism over export discipline. Coad and colleagues do not argue that Africa can replicate East Asia line by line. Still, they do suggest that adapting its focus on scale, technological upgrading, and strategic state involvement would make far more sense than doubling down on atomised start-ups.

Schumpeterian growth theory, too, offers a cautionary note. It posits that the optimal mix of policies depends on how far a country lies from the global technological frontier. Followers can proliferate by absorbing existing know-how, whereas leaders must innovate at the cutting edge—a costlier, riskier proposition. By any yardstick, Sub-Saharan Africa sits among the world’s technological laggards. The region scores lowest on the Economic Complexity Index and, between 2020 and 2023, captured less than 1% of global venture capital flows. Under such conditions, an investment-led strategy—importing machinery, courting FDI, and building capabilities within sizable firms—ought to yield higher returns than an entrepreneurship-led strategy that scatters scarce resources across thousands of small, low-productivity ventures.

The empirical record supports that view. Africa is home to remarkably few large corporations, even relative to its level of income, and mid-sized firms are similarly scarce because the vast majority of enterprises remain informal and struggle to scale. Where big firms do operate, they anchor supply chains, boost export earnings and create wage jobs that micro-businesses rarely provide. Conversely, international data reveal a negative correlation between very high self-employment rates and GDP per head—a pattern economists attribute to the proliferation of subsistence businesses that neither innovate nor invest.

Taken together, these threads lead to a stark conclusion. As Coad summarises, “Africa occupies the bottom rung of the global development ladder despite topping the league table for entrepreneurial prevalence. Pouring yet more effort into fomenting start-ups risks worsening the congestion of low-productivity firms and diverting attention from the real bottleneck: the absence of large, efficient companies.” The authors therefore call for a pivot in policy discourse—from celebrating the sheer number of entrepreneurs to fostering the emergence and expansion of firms capable of achieving scale, upgrading technology and competing beyond their localities. Such a shift would entail improving infrastructure and human capital, yes, but also deploying patient industrial policy, leveraging FDI, and—where appropriate—allowing the state to nurture priority sectors rather than pretending all sectors hold equal promise.

In short, the continent’s greatest developmental need is not another wave of necessity entrepreneurs; it is the creation of robust, growth-oriented enterprises that can absorb labour, lift productivity and integrate Africa more firmly into the global economy. Encouraging fewer, but better-resourced and better-connected, firms may ultimately do more to transform living standards than continuing to idolise entrepreneurship for its own sake.

More information: Alex Coad et al, Does Africa need entrepreneurial ecosystems thinking? The Journal of Technology Transfer. DOI: 10.1007/s10961-025-10213-x

Journal information: The Journal of Technology Transfer Provided by Waseda University

Melancholy and Mementos: How Emotion Drives Souvenir Buying

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New research from Cornell University casts new light on the psychology behind souvenir buying, revealing that our emotional state—particularly the experience of sadness—plays a significant role in motivating the collection of mementoes. According to the findings, recently published in the Journal of the Association for Consumer Research, the urge to obtain keepsakes is not merely a matter of preserving memories, but is strongly influenced by the emotional timing of an experience’s conclusion. When a meaningful event nears its end, such as a farewell concert or a sports team’s final game of the season, people often feel a deep sense of poignancy. This sadness, far from being incidental, actually predicts a heightened desire to acquire tangible reminders of the moment.

The study suggests that people become more sentimental when they anticipate that a significant chapter in their lives is coming to a close. This emotional swell prompts a stronger inclination to commemorate the event with a souvenir. In contrast, when the experience is routine, repeatable, or lacks personal meaning, the emotional drive to collect mementoes is markedly reduced. In such cases, consumers are less inclined to feel that a keepsake is necessary. Suzanne Shu, a marketing professor at Cornell and co-author of the study, explains this phenomenon by pointing out that, “Sometimes we collect things not just to remember but to ease the pain of something coming to a close.” Her comment encapsulates the study’s central theme: that souvenir buying is not simply about memory preservation, but also about emotional self-soothing in moments of transition or loss.

To explore this dynamic further, the researchers conducted a series of studies, including one involving college students attending a major football game. Those students who were about to graduate—and thus saying goodbye to their collegiate sports experience—were significantly more likely to retain mementoes from the game than their underclassman peers, who still had future seasons to enjoy. Interestingly, this difference could not be attributed to differing levels of fandom, as both groups had attended a similar number of games. What distinguished them was the looming sense of finality felt by the graduating students, which amplified their sentimental response and desire for tangible tokens of remembrance.

Another experiment investigated how the perceived uniqueness or meaningfulness of an event affects memento-buying behaviour. Participants were asked to imagine attending a series of sporting events. One group was told these events marked a special and unrepeatable family season, while the other was informed that the games were routine and would continue. As predicted, those who imagined a one-time, emotionally significant experience spent more money on souvenirs at the final match. In contrast, those who anticipated that the experience could be repeated showed a lower level of interest in purchasing keepsakes. This highlights the power of psychological scarcity—when something feels fleeting or irreplaceable, we are more motivated to grasp hold of it in whatever ways we can, even if only symbolically.

The implications for marketers are striking. Businesses that operate within emotionally charged or time-bound environments—such as sports franchises, concert promoters, airlines, theme parks, and universities—may benefit from offering specially timed souvenirs as an event nears its conclusion. “Last chance” merchandise or commemorative items marketed around finales, graduations, or closing nights could resonate deeply with consumers, precisely because they align with the natural human impulse to cling to significant moments before they slip away. The strategic timing of these offers can be just as important as the items themselves, turning a simple mug or T-shirt into a vessel for emotional attachment and nostalgia.

For consumers, the study provides valuable insight into their behaviours. The impulse to buy a tour poster, snap a final photograph, or purchase a graduation hoodie may seem superficial at first glance. Still, it is rooted in a complex emotional landscape. Rather than being purely rational decisions, these actions often represent attempts to anchor ourselves in cherished experiences that are emotionally ending. The desire for a physical keepsake may not be about memory alone; it is about staving off the sense of loss, marking the transition, and creating continuity between past and present through a tangible object.

Ultimately, this research reveals that souvenir-buying is not a trivial or purely commercial act. Instead, it is a reflection of the profound and sometimes bittersweet ways we engage with time, meaning, and memory. As we navigate endings—whether they are expected or sudden, joyous or sorrowful—we seek out ways to hold on. In this light, a souvenir is not just a trinket, but a quiet, emotional gesture —a way of saying, ‘This mattered to me.’

More information: Suzanne Shu et al, Of Photographs, Souvenirs, and Ticket Stubs: When Do Consumers Desire Mementos During an Experience? Journal of the Association for Consumer Research. DOI: 10.1086/737278

Journal information: Journal of the Association for Consumer Research Provided by Cornell University

Pusan National University Study Finds Cost-of-Living Crisis Most Severe for South Korea’s Middle Class

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In the aftermath of the global pandemic and the ongoing conflict in Ukraine, inflation has surged across nations, placing immense pressure on household budgets. Historically, such economic shocks tend to impact low-income families the most severely, given their limited financial resources and higher proportion of spending on essentials. However, recent findings in South Korea suggest a strikingly different narrative. Contrary to traditional expectations, it is the middle class—particularly upper-middle-income households—that has felt the heaviest burden from rising prices, according to a recent study by Dr Taiwon Ha of Pusan National University. His research, published online on June 4, 2025, in the Asian-Pacific Economic Literature, challenges longstanding assumptions about the distributional effects of inflation.

Dr Ha’s study reveals that while the Consumer Price Index (CPI) remains the standard tool for gauging inflation, it fails to capture the diverse ways in which different households experience cost increases. “The CPI is designed for broad analysis by policymakers and researchers,” Dr Ha explains, “but it lacks the granularity needed to reflect real-life impacts.” To address this limitation, he developed a household-specific price index, allowing for a more nuanced examination of how inflation affects different income levels. The study shows that items such as fuel and restaurant meals—products and services more frequently consumed by employed, commuting families—were the primary contributors to inflation during the studied period.

This trend is not unique to South Korea. Similar patterns have emerged in the United States and parts of Europe, where middle-income households have found themselves disproportionately affected by inflationary pressures in sectors such as transportation and services. While lower-income households are often more vulnerable due to their financial fragility, in this case, they saw relatively minor increases in their core expenditures, which are more likely to be subsidised or price-controlled. Meanwhile, middle-class consumers, who consume more fuel and discretionary services, bear the brunt of escalating prices. Yet, these nuances are mainly absent in the CPI, which presents an average picture that obscures such divergences.

To better understand these dynamics, Dr Ha decomposed the inflation data into specific categories—such as fuel, food, housing, and transport—and analysed their effects across different household types. His findings highlight the importance of differentiated policy responses. For instance, a tax cut on petrol may disproportionately benefit car-owning commuters. At the same time, food subsidies might better serve lower-income households who allocate a larger share of their income to groceries. “This study offers valuable insights to support more targeted policymaking,” Dr Ha notes, “enabling governments to design either universal or selective benefits depending on who is most affected.”

The research also explores which demographics were most able to adjust their behaviour in response to inflation. Female-led households, the elderly, those with higher levels of education, and the unemployed were found to be more flexible in adapting their consumption habits. Larger families and those residing in urban areas also demonstrated greater resilience, benefitting from economies of scale or better access to public transport. These findings underscore the importance of not only income but also lifestyle, location, and demographic factors in determining a household’s vulnerability or adaptability during periods of inflation.

Ultimately, the study recommends a more nuanced approach to inflation monitoring and policy intervention. While aggregate inflation metrics, such as the CPI, serve a useful purpose, they are insufficient on their own. Policymakers must delve deeper into household-level data to understand how different groups experience economic shocks. Spending patterns, consumption flexibility, and demographic composition can all act as early warning signs for where policy support is most urgently needed. As inflation continues to challenge economies worldwide, this research presents a compelling case for tailored, data-informed strategies that go beyond averages and address the lived realities of diverse households.

More information: Taiwon Ha, Heterogeneous Effect of Cost-Of-Living Crisis: Evidence From South Korea, Asian-Pacific Economic Literature. DOI: 10.1111/apel.12458

Journal information: Asian-Pacific Economic Literature Provided by Pusan National University

U.S. Trade Deficit Eased by Education Exports, but Policy Shifts on Tariffs and Visas Put Progress at Risk

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As American policymakers escalate tariffs on imported goods—particularly those originating from China—a growing body of research suggests this strategy may inadvertently jeopardise one of the country’s most valuable and quietly effective exports: higher education. A forthcoming study from the University of California, San Diego’s School of Global Policy and Strategy argues that instead of shielding American economic interests, protectionist trade policies could undermine a critical revenue stream that not only offsets the trade deficit but also sustains public universities and enriches the nation’s intellectual and innovation capital.

The study examines the effects of China’s 2001 entry into the World Trade Organization (WTO), a pivotal moment that greatly expanded Chinese exports to the United States and significantly increased household incomes in Chinese cities. As families prospered, many were able to afford the high cost of American university tuition, leading to a surge in student enrollment. The researchers found a clear link between increased trade exposure and the number of students sent abroad. Cities such as Qingyang and Shantou, which benefited most from reduced tariffs, experienced substantial growth in student migration to the U.S., in contrast to less-exposed cities like Wuwei and Lincang. A 10-percentage point increase in trade exposure, they found, resulted in 34 more students per million residents—a major contributor to the 40% rise in Chinese student enrollment between 2002 and 2013.

This phenomenon effectively turned education into a high-value American export. International students, particularly those from China, have brought billions into the U.S. economy, not only through tuition fees but also through their spending on housing, transportation, and other services. According to the study’s authors, the tariffs imposed during the first Trump administration led to a 25% decline in the number of Chinese students, resulting in an estimated $1.1 billion loss in tuition revenue per year. These figures do not even account for the broader economic contributions of these students, nor their long-term role in driving innovation and filling critical workforce gaps. With the potential for even more severe tariffs and tighter visa restrictions under a second Trump administration, the risks to this sector are mounting.

The changing demographics of Chinese students further underscore the economic importance of these international flows. While earlier cohorts were primarily graduate students in STEM disciplines, many supported by scholarships, the post-WTO period saw a sharp rise in undergraduate enrolments, particularly in business and social sciences. These students typically paid full fees, becoming an essential lifeline for public universities grappling with funding cuts. Khanna’s previous research indicates that between 1996 and 2012, every 10% drop in state appropriations led to a 12% increase in international student enrolment at public research universities. In effect, many institutions chose to attract fee-paying international students rather than drastically raise in-state tuition or scale back academic programmes.

However, growth in international student enrolment—particularly from China—has slowed dramatically. From 2007 to 2013, enrolments grew at an annual rate of 22%. In recent years, that figure has slipped below 5%, a decline driven by rising global competition, uncertain visa policies, and growing geopolitical tensions. Countries such as Canada, Australia, and the United Kingdom have capitalised on this shift, offering more welcoming immigration policies and capturing a growing share of the international education market. As the U.S. makes it harder for students to enter and stay, its competitive advantage in higher education begins to erode.

Ultimately, the study challenges a widespread assumption in trade and immigration discourse—that the two operate in tension. Instead, it reveals that trade and migration can work synergistically, each reinforcing the other. Increased trade with China helped to generate a new middle class with the means and aspirations to pursue education abroad. In turn, American universities benefited from this influx, both financially and intellectually. As Gaurav Khanna puts it, “America’s edge has always been its universities. If we make it harder for international students to come here, we’re not just closing the door on them—we’re closing the door on one of our greatest economic strengths.”

More information: Gaurav Khanna et al, Trade Liberalization and Chinese Students in U.S. Higher Education, The Review of Economics and Statistics. DOI: 10.1162/rest_a_01378

Journal information: The Review of Economics and Statistics Provided by University of California – San Diego

Apparently, ‘team’ does come with a little ‘me’ after all

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A recent study conducted by Texas A&M University has upended traditional assumptions about how teams best learn and retain complex skills. While teamwork is often praised for its collaborative learning benefits, the research reveals a paradox: practising skills alone may be more beneficial to team performance in the long run than group-based refresher training. Published in the journal Human Performance, the study was led by Dr Winfred Arthur Jr., professor of psychology at Texas A&M’s College of Arts and Sciences. His team investigated how individuals and collectives acquire, forget, and regain complicated task-based skills, offering new insights into how organisations might approach training and development.

The research involved 81 participants grouped into 27 three-person teams who engaged in a simulation exercise called Crisis in the Kodiak: Oil Rig Search and Rescue. Participants took on specific roles — including oil rig personnel, helicopter pilots, and boat captains — and collaborated to extinguish an oil rig fire and rescue survivors. Following two days of initial training, the participants returned after an average of 73 days to assess how much of their skills they had retained. Crucially, some began their refresher session working alone, while others resumed immediately in team configurations. The results revealed a striking difference: although teams initially learn more rapidly, they also forget faster unless individual practice is prioritised first.

Dr Arthur and his colleagues suggest that this pattern may be due to the broader skill base developed during collaborative training. Teams, by learning more and doing more together, have more to forget. In contrast, individuals practising solo tend to lose less over time because they often focus more narrowly and retain a firmer personal grasp of their roles. Arthur quipped, “If one does not acquire any knowledge or skill, then one has nothing to lose,” highlighting that teams may suffer more because they initially gain more. Yet the real advantage lies in the sequence of retraining: starting alone enables individuals to re-engage with the task in its entirety mentally, reinforcing their understanding of all aspects of the operation before narrowing their focus within a group setting.

One of the most revealing findings relates to the value of task integration. When individuals are asked to perform the entire task alone — assuming every role in the simulation — they develop a more comprehensive appreciation of how each function interrelates. This, in turn, enhances their ability to perform their specific role within a team more effectively. On the other hand, beginning with team practice restricts participants to a single, limited function and prevents them from re-establishing a holistic understanding of the task. These results align closely with existing strategies such as cross-training and job rotation, which are designed to cultivate broader competence and adaptive thinking across diverse work scenarios.

The implications of this research are far-reaching. Organisations that rely on high-performing teams — including the military, emergency response units, aviation crews, and corporate project groups — may benefit significantly from rethinking how they structure refresher training. Dr Arthur recommends that after a lapse in activity, retraining should begin with individual practice, allowing each team member to re-familiarise themselves with the full scope of the task before transitioning into team-based exercises. While the study was conducted in a laboratory with co-located students, Arthur believes its conclusions apply just as well to remote and distributed teams. In a modern workplace increasingly characterised by digital collaboration, understanding the value of solitary rehearsal in service of collective success may prove vital.

More information: Winfred Arthur Jr et al, A Comparison of Individual and Team Skill Acquisition, Retention (Decay), and Reacquisition Using a Synthetic Task Environment, Human Performance. DOI: 10.1080/08959285.2024.2436171

Journal information: Human Performance Provided by Texas A&M University

Study Reveals Younger Employees Unprepared for Increasing State Pension Age

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New research conducted by the University of Bath reveals a growing disconnect between rising State Pension ages and the retirement expectations of younger British workers. While many older individuals are delaying their retirement in response to pension reforms, younger cohorts—especially women—appear underprepared for the realities of retiring later. The study warns that many of these individuals continue to harbour expectations of early retirement, despite policy changes that have significantly shifted the landscape. Researchers highlight a concerning gap between retirement aspirations and the financial preparedness needed to make them feasible.

Published in the Journal of Pension Economics and Finance, the study uses data from the UK Household Longitudinal Study. This nationally representative survey tracks individual and household behaviours over time. It examines the impact of the 2011 and 2014 Pension Acts, which accelerated the equalisation of the State Pension age for men and women and raised the eligibility threshold to 66 or 67, depending on one’s date of birth. The findings indicate that a one-year increase in the State Pension age results in an 8.2 percentage point drop in the likelihood of men retiring, and a 6.4 percentage point drop for women.

The research indicates a significant generational divide in how people respond to these changes. Baby boomers—those approaching retirement—are more likely to adjust their retirement plans and work longer. In contrast, members of Generation X, particularly women born in the 1960s and early 1970s, are not aligning their expectations with the new realities. Despite having access to occupational pensions, many in this group are revising their anticipated retirement age downward, assuming they can exit the workforce earlier than current policy allows.

This optimism may prove costly. Many younger workers, researchers note, plan to rely on a mix of occupational pensions and part-time work during retirement to fill the gap left by delayed access to the State Pension. However, these assumptions could lead to shortfalls if expectations about pension income or future job opportunities prove unfounded. The study highlights a significant gap between what workers expect and what transpires: older individuals tend to revise retirement plans only when they are close to retiring, at which point their options for boosting savings or staying in the labour market may be limited.

Dr Ricky Kanabar, lead author and senior lecturer in the Department of Social and Policy Sciences at the University of Bath, stresses the importance of aligning expectations with policy realities. “Ensuring individuals adequately prepare for retirement is of paramount importance,” he explains, “especially as people are living longer and increasingly bearing the responsibility of funding their own later life. There is a real risk that those who assume an early retirement will find themselves having to make abrupt and potentially disruptive adjustments in their fifties or sixties.”

To address this misalignment, the research team urges policymakers to improve communication about the implications of rising State Pension ages, especially among younger women with occupational pensions. Initiatives like the government’s Midlife MOT and the forthcoming Pensions Dashboard could help close the information gap. Dr Kanabar concludes that proactive engagement is essential to strengthen financial resilience in later life: “Overoptimism and misplaced reliance on workplace pensions may lead to hardship or forced labour market changes. Now is the time for policymakers to engage more meaningfully with these vulnerable groups before it’s too late.”

More information: Ricky Kanabar et al, State pension eligibility age and retirement behaviour: evidence from the United Kingdom household longitudinal study, Journal of Pension Economics and Finance. DOI: 10.1017/S1474747225000095

Journal information: Journal of Pension Economics and Finance Provided by University of Bath

Study Reveals 9% of Young American Workers Use Alcohol or Drugs While on the Job

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A recent study has revealed that nearly one in ten young workers in the United States use alcohol, marijuana, or more complex substances such as cocaine while on the job. The research, published in the American Journal of Industrial Medicine, found that 8.9% of respondents aged in their thirties admitted to using substances either immediately before or during their work shifts. Specifically, 5.6% reported drinking alcohol, 3.1% had used marijuana, and 0.8% consumed cocaine or other hard drugs, including opioids. These figures illuminate a troubling reality about substance use in the workplace, particularly among younger employees navigating high-stress jobs with limited support systems.

The study’s authors point to specific industries as being particularly susceptible to on-the-job substance use. Workers in food preparation and service roles reported the highest rates of use, followed closely by those in safety-sensitive occupations such as construction, maintenance, transportation, and materials handling. These are sectors where substance impairment could result in serious or even fatal accidents, making the findings especially concerning from a public safety standpoint. Even with federal regulations in place—such as those prohibiting substance use among commercial drivers or heavy equipment operators—the study noted that 6% of workers in material-moving jobs reported working while under the influence.

Conducted by Dr Sehun Oh, associate professor of social work at The Ohio State University, alongside Dr Daejun “Aaron” Park from Ohio University and recent graduate Sarah Al-Hashemi, the study draws on data from the National Longitudinal Survey of Youth 1997. This nationally representative cohort has been tracked for decades, with the most recent data on substance use gathered during the 2015–2016 survey wave. According to the researchers, this is one of the few datasets to provide insights into substance use specifically during work hours—a topic that has historically been underexamined due to data limitations and social stigma.

Dr Oh stressed that the root causes of workplace substance use are often linked to working conditions rather than personal failings. “Especially for those working in blue-collar or heavy manual jobs, they often have limited access to support to address substance use,” he explained. “It’s easy to blame someone for using substances, but we want to pay attention to understanding their working conditions and barriers at the workplace.” His remarks underscore the need for a shift in public perception—from moral judgement to structural analysis—when it comes to addressing substance misuse among workers.

Previous research has already indicated that long hours, low wages, limited education, and high stress are all factors that correlate with substance use outside work. This new study reveals that these pressures persist during working hours and may prompt individuals to seek coping mechanisms, even while on the job. Intriguingly, while food service and blue-collar workers had the highest overall usage rates, white-collar professionals were more likely to report drinking alcohol at work. This may be linked to corporate cultures that normalise alcohol during business meetings, client dinners, or celebratory events.

Notably, the authors argue that robust workplace substance policies alone are insufficient without parallel investments in support services. Dr Park highlighted that in a prior study, one in five workers said their workplace had no formal policy on substance use. Industries such as the arts, entertainment, food service, and hospitality were among the least likely to have structured protocols. Meanwhile, another study by Dr Oh revealed that only about half of workers had access to support services such as counselling or treatment referrals—resources that are crucial for addressing substance use as a health issue rather than a disciplinary one.

Moreover, the study revealed that on-the-job substance use was closely tied to broader patterns of misuse outside the workplace. For example, those who used marijuana at work were significantly more likely to be daily cannabis users and heavy drinkers. Similarly, individuals who consumed cocaine or other hard drugs during work hours reported more frequent illicit drug use and higher alcohol consumption in general. This pattern suggests that workplace use is not merely a situational lapse but part of a larger struggle with substance dependency, one that often goes unnoticed or untreated until it results in workplace accidents or disciplinary action.

Ultimately, the findings call for a more holistic approach to workplace substance use—one that balances policy enforcement with compassionate support. The researchers emphasise that for policies to be truly effective, they must be paired with recovery-friendly programmes and accessible mental health resources. “Our research shows that those under adverse working conditions with many barriers to economic and well-being resources tend to use substances as a coping mechanism,” Dr Oh said. “There is a need for more structural support to address these huge implications for the health of workers and others, and to reduce the stigma associated with substance use.” As the labour landscape evolves and younger generations take up the bulk of the workforce, this dual approach may prove essential not only for individual well-being but for the safety and productivity of entire industries.

More information: Sehun Oh et al, Substance Use Right Before or During Work Among the Young US Workers: Evidence From the National Longitudinal Survey of Youth 1997 Cohort, American Journal of Industrial Medicine. DOI: 10.1002/ajim.23737

Journal information: American Journal of Industrial Medicine Provided by Ohio State University

Building Tomorrow’s Cities: Can We Balance Growth and Sustainability?

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As cities continue to grow in population and complexity, the question of whether urban development can proceed without further harming the planet has become increasingly urgent. A new study by the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB) explores this very dilemma. While it stops short of offering a universal answer—recognising that outcomes are highly contingent upon each city’s physical and socio-economic context—it firmly challenges the notion that all growth is inherently optimistic. Instead, the research calls for a fundamental reevaluation of urban development models, emphasising the need for integrated planning, thoughtful governance, and a willingness to challenge prevailing assumptions about growth and progress.

Cities are often portrayed as both culprits and saviours in the climate crisis. On one hand, they account for a significant share of global emissions and environmental degradation. On the other hand, they are hubs of innovation, density, and infrastructure that could mitigate these harms. However, the study notes that continued economic, demographic, and spatial expansion in urban areas is currently driving severe ecological consequences. These range from increased greenhouse gas emissions and resource depletion to loss of biodiversity and soil sealing. While approaches such as green growth, degrowth, and post-growth have gained prominence in policy circles, a striking lack of empirical evidence remains to support their practical effectiveness in urban contexts.

Published in Nature Cities, the study provides the first significant synthesis of how economic models intersect with environmental realities in the urban sphere. Drawing on fields as diverse as urban economics, sustainability science, environmental governance, and spatial planning, the researchers analyse three prominent paradigms. Green growth emphasises technological innovation and efficiency to reduce environmental impact without sacrificing economic output—degrowth advocates for deliberate reductions in production and consumption to protect ecosystems. Post-growth, meanwhile, rejects GDP as the dominant metric of success and calls instead for an emphasis on well-being and environmental limits. These frameworks are not merely theoretical; they offer diverging visions for the future of urban development.

The research evaluates these models across four dimensions of urban growth—economic, demographic, spatial, and environmental—highlighting how each approach impacts the city’s form and function. Lead author Charlotte Liotta notes that the study’s core contribution is a comparative framework for understanding how these dimensions interact. This model enables researchers and policymakers to evaluate the practical implications of various growth strategies. Real-world examples illustrate this, including Barcelona’s superblocks—which restrict car traffic to enhance liveability—and Amsterdam’s adoption of the doughnut model, which prioritises social and ecological boundaries over traditional economic goals.

Crucially, the study does not endorse any one model as a panacea. It takes a balanced view, pointing out the limitations of each approach. For instance, the evidence that green growth can truly decouple economic activity from environmental degradation is still scarce, raising doubts about its long-term feasibility. At the same time, the idea that cities should shrink—as some degrowth advocates propose—is challenged by the observation that high-density urban areas, if well-planned, can be more sustainable than sprawling ones. Urban density supports efficient public transport, lower per capita energy use, and more compact infrastructure, all of which can reduce environmental pressure if governance and design are effective.

In conclusion, the study urges a departure from simplistic narratives about growth—whether pro or anti—and instead calls for a more flexible, context-sensitive approach. Urban sustainability cannot be achieved solely through ideology; it requires a solid foundation in evidence and a willingness to adapt strategies to meet specific local needs. Growth is not inherently good or bad—it is a tool that must be wielded with care, precision, and foresight. The researchers emphasise that there is no single formula for balancing development and environmental stewardship. Still, by offering an analytical framework and real-world insights, they make a meaningful contribution to one of the most pressing debates of our time.

More information: Charlotte Liotta et al, The debate on growth versus environment at the urban scale, Nature Cities. DOI: 10.1038/s44284-025-00269-z

Journal information: Nature Cities Provided by Universitat Autonoma de Barcelona

It Takes More Than Money to Retire Well

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How much do you know about money? According to Ramesh Rao, the answer to that question may hold more weight than one might think, especially when it comes to retirement readiness. Rao, who holds the McDermott Centennial Chair in Banking and Finance and directs the Langston Wealth Management Center at Texas McCombs, has been investigating the deeper psychological aspects of financial behaviour. His latest research suggests that it’s not just what people know about money that matters — it’s what they believe they know that may have a profound influence on whether they feel prepared for retirement.

For years, financial studies have shown that individuals with a greater appetite for financial risk tend to be more confident about their ability to retire comfortably. However, Rao’s research goes a step further by identifying subjective financial knowledge (SFK) as a critical factor in this relationship. SFK refers to a person’s perception of their financial knowledge, not necessarily their actual competence. The findings indicate that individuals with high SFK tend to feel more secure in their financial futures and are more willing to take calculated financial risks — traits strongly associated with better retirement planning outcomes.

This insight represents a significant challenge to the traditional approach to financial education. Most literacy programmes concentrate on teaching concrete skills — understanding compound interest, managing budgets, or navigating retirement accounts like 401(k)s. While these skills are undeniably valuable, Rao argues that they may only be part of the equation. Confidence, or the belief in one’s financial capability, can be just as important in determining behaviour. In his view, it is often the mindset rather than the mastery that influences whether someone begins saving early or delays critical financial decisions.

The urgency of rethinking financial literacy becomes even clearer when considered alongside broader economic trends. Traditional pension schemes are steadily disappearing in many countries, including the United States, and people are living longer than ever. As a result, individuals are increasingly responsible for building and sustaining their retirement funds over extended lifespans. “There’s a major crisis in America,” Rao states plainly. “Traditional pension funds are disappearing, and people are living much longer, and they’re not saving enough for retirement.” In such an environment, psychological readiness — including financial confidence — could be a crucial determinant of long-term security.

To support their findings, Rao and his colleagues — Congrong Ouyang of Texas A&M University and Khurram Naveed of the College for Financial Planning — analysed data from the 2022 Survey of Consumer Finance. Drawing on responses from 3,267 working adults across the United States, they examined how SFK, risk tolerance, and perceived retirement readiness interacted. Participants rated themselves on scales of financial risk tolerance, subjective financial knowledge, and retirement preparedness. Even after controlling for variables such as income, education, and health, the data revealed robust correlations.

The research found that only 35% of respondents felt satisfied or very satisfied with the adequacy of their retirement savings. A higher tolerance for financial risk corresponded to a 0.54-point increase in perceived savings adequacy on a 1-to-5 scale. Most notably, nearly 40% of the connection between risk tolerance and retirement confidence could be explained by SFK. Rao considers this to be an exceptionally robust effect, highlighting the profound impact that self-belief in financial matters can have, particularly for individuals with lower incomes or less formal education. Boosting perceived financial competence, therefore, may offer a more accessible route to retirement preparedness than focusing solely on formal financial training.

The implications of this research are far-reaching. Rao believes that financial education must evolve to address both knowledge and perception. “Our basic idea is that people’s actions are driven by what they believe,” he says. “It shifts the focus from reality to perceptions of reality.” While it remains essential to equip individuals with analytical tools and factual knowledge, it is equally important to nurture their confidence. If people are encouraged to believe they can manage their finances effectively, they may be more likely to take proactive steps toward achieving financial stability. In this light, retirement readiness is not merely a question of numbers — it’s also a matter of mindset.

More information: Ramesh Rao et al, The Impact of Subjective Financial Knowledge on Perceived Retirement Adequacy for US Working Adults, The Journal of Wealth Management. DOI: 10.3905/jwm.2025.1.270

Journal information: The Journal of Wealth Management Provided by University of Texas at Austin