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Implementation of Global Auditing Standards Enhances Financial Reporting Quality

In an era of uncertain economic landscapes, the reliability of audited financial reports gains crucial support from the growing adoption of international standards. Recent findings spearheaded by a scholar from the University of Toronto’s Rotman School of Management have shed light on the significant improvements in financial auditing across nations that have embraced the International Standards on Auditing (ISA). These standards, promulgated by the International Federation of Accountants—the global umbrella organization for the accounting profession—have proven instrumental in elevating the trustworthiness of financial disclosures.

The research, conducted by Ole-Kristian Hope, who holds the Deloitte Professorship of Accounting at the Rotman School, indicates a general enhancement in audit quality following the adoption of ISA. However, Hope points out that the impact of these standards is also contingent on the robustness of local enforcement mechanisms. This dual dependency highlights the complexities of implementing international norms within diverse regulatory frameworks.

ISA was initially formulated from global best practices and oriented towards principles rather than rigid regulations, ISA was officially established as a standard in 1991. In the subsequent decades, paralleling the trend towards economic globalization, over 160 countries and jurisdictions have adopted ISA to varying extents within their regulatory and practice frameworks. Countries like Canada have fully integrated these standards into their domestic auditing practices, while the U.S. has adopted them partially. Despite widespread adoption, comprehensive research into the actual efficacy of ISA in enhancing audit quality has been sparse, leaving a gap in understanding their exact impact on financial transparency and reliability.

Prof. Hope and a team of three other researchers embarked on an exhaustive study involving manual data analysis from 41 countries that had assimilated ISA into their auditing standards between 2001 and 2018. The staggered adoption timeline across these nations provided a fertile ground for comparative analysis. The findings were particularly striking for domestic and smaller auditing firms, which benefited most from adopting ISA. These entities, generally less equipped than their larger global counterparts, found a valuable framework to elevate their auditing standards in ISA, often surpassing those of more prominent firms that already maintain stringent audit practices due to their extensive resources and international reach.

Furthermore, the impact of ISA was more pronounced in countries where the enforcement of auditing standards was more vigorous and where ISA had been more comprehensively integrated into local practices, for example, through mandatory application. The research team assessed audit quality primarily by examining the levels of discretionary accruals—adjustments in financial statements that, while legitimate for reflecting estimated earnings not yet received, can also be manipulated to obscure proper financial health. Lower levels of these accruals were indicative of higher audit quality. The study corroborated these findings with alternative measures of audit quality. It explored further through machine learning techniques, suggesting that the benefits of ISA are mainly due to their emphasis on critical areas such as a company’s viability, legal compliance, fraud risk, internal controls, and transactions with related parties.

This research underscores the vital role of international standards in fostering more reliable financial reporting. It highlights the importance of enforcement and local adaptation in realizing the full benefits of such global frameworks. The findings serve as a call to action for countries still insisting on fully integrating ISA into their auditing standards. Doing so could significantly bolster the trustworthiness and accuracy of financial reporting, ultimately benefiting investors and other stakeholders in the economic ecosystem.

More information: Ole-Kristian Hope et al, Does Convergence with International Standards on Auditing Improve Audit Quality? The Accounting Review. DOI: 10.2308/TAR-2022-0610

Journal information: The Accounting Review Provided by University of Toronto, Rotman School of Management

Recent Study Reveals Successful Tactics for Entrepreneurs to Communicate Risks While Maintaining Investor Trust

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Entrepreneurs often grapple with whether to disclose the inherent risks in their business ventures. While honesty can bolster credibility, it also risks deterring potential investors. A significant study published in the Strategic Entrepreneurship Journal delves into this issue, offering insights on how entrepreneurs can disclose risks strategically without compromising investor confidence. This groundbreaking research was conducted by Mark T. Bolinger from Appalachian State University, Katrina M. Brownell of Virginia Polytechnic Institute, and Jeffrey G. Covin from the University of Wyoming.

The trio introduced a novel impression management tactic dubbed “compensation,” which has been shown to enhance financing outcomes for entrepreneurs in the early stages of their business. The research comprises three extensive experiments demonstrating how entrepreneurs who acknowledge risks while simultaneously highlighting mitigating factors can significantly enhance their perceived authenticity and the quality of their projects. This dual approach maintains transparency and boosts their chances of crowdfunding success.

The study highlights several key findings. Firstly, strategic risk disclosure is adequate: entrepreneurs who utilize the compensation tactic—pairing risk information with positive details—tend to achieve higher funding success than those who downplay risks or preset without mitigating context. Secondly, authenticity plays a crucial role in boosting investor confidence: investors are more likely to support ventures that openly address potential challenges, as this transparency fosters trust.

An interesting aspect of the study is its focus on gender dynamics. The research finds that female entrepreneurs benefit from the compensation strategy, potentially countering biases within entrepreneurial finance. This insight is crucial as it suggests that strategic risk disclosure can be tailored to enhance equity and inclusivity within the entrepreneurial ecosystem.

The study provides actionable insights for entrepreneurs seeking funding through platforms like crowdfunding, venture capital, or other investor-driven models. By strategically integrating risk disclosure with positive framing, entrepreneurs can establish credibility and maintain investor confidence without sacrificing transparency. The approach recommended by the study encourages a balance between openness and optimism, ensuring that potential risks are neither understated nor overly highlighted.

Lead author Mark T. Bolinger summarises the research sentiment: “Our findings show that honesty about risks doesn’t have to scare investors away. Instead, pairing transparency with evidence of preparedness can strengthen investor trust and improve funding outcomes.” This statement underscores the study’s central thesis, which is that effective communication, particularly about risks, can indeed align with business success. The research provides a practical framework for startup founders navigating the complexities of funding communications and enriches the discourse on strategic communication in entrepreneurial settings.

More information: Mark T. Bolinger et al, Keeping it real: How entrepreneurs effectivelydisclose risk, Strategic Entrepreneurship Journal. DOI: 10.1002/sej.1525

Journal information: Strategic Entrepreneurship Journal Provided by Strategic Management Society

Rounding Up, Exact Pricing, or Just Below: How Cultural Norms Influence Product Pricing Decisions

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It is broadly acknowledged that cultural influences extend to consumer behaviours; however, the specific impact of culture on pricing strategies has garnered less attention. Price endings are one aspect where cultural influence might manifest, evident in various forms such as round numbers (e.g., $10.00), just below a round number (e.g., £9.99), or precise amounts (e.g., €9.87). Despite the ubiquity of these pricing strategies, their prevalence in different markets and the underlying reasons for their adoption remain underexplored.

Recently, a team of researchers in Germany embarked on a study to understand if cultural dimensions—namely individualism, uncertainty avoidance, and long-term orientation—have a bearing on the prevalence of specific price endings. Dr Meikel Soliman, a researcher at Leuphana University Lüneburg and a co-author of the study published in Frontiers in Behavioral Economics, emphasised the potential for cultural factors to influence behavioural, cognitive, and emotional aspects and pricing strategies. Their research uncovered notable correlations between cultural dimensions and the choice of price endings.

The investigation drew upon a dataset comprising 9,200 price points collected from 23 countries to discern patterns aligned with cultural traits. The findings presented some unexpected results: higher levels of individualism correlated with a more significant occurrence of round pricing and a reduced preference for just-below pricing. Dr Soliman suggested that in cultures valuing individuality, such as those in Australia, Canada, and the Netherlands, retailers might avoid just-below pricing to avert any association with lower quality, thereby maintaining a high-quality brand image that appeals to consumers’ sense of individuality.

Conversely, cultures characterised by high uncertainty avoidance appeared to favour just-below pricing, which is typically associated with cost savings and perceived value. This preference could stem from a desire to mitigate the anxiety related to economic transactions by signalling lower prices and better deals. In these cultures, including countries like Greece, Portugal, and Belgium, round prices might not effectively convey quality or reliability, thus doing little to alleviate uncertainty.

Additionally, the study revealed that cultures with a long-term orientation tended to prefer round prices, which may convey trust and quality, aiding in establishing long-term customer relationships. This was observed in countries such as Estonia, Germany, and Spain, with a cultural inclination towards long-term planning and deferred gratification for future benefits.

These insights are particularly relevant in a globalised marketplace, where businesses often cater to a diverse clientele from various cultural backgrounds. Understanding the cultural underpinnings of pricing preferences can help companies tailor their strategies to meet culturally specific expectations and enhance market penetration. Although the study focused on a limited number of countries and one e-commerce platform, limiting its generalisability, the findings provide a valuable perspective on how cultural dimensions can influence pricing decisions.

The researchers acknowledged limitations in their approach, including the lack of a causal link between cultural dimensions and price endings and the absence of an exploration into the mechanisms underlying these relationships. Despite these limitations, the study offers critical insights into the complex interplay between culture and pricing strategies, highlighting the need for businesses to consider cultural nuances when establishing prices in a competitive global market.

In conclusion, Dr Soliman’s research sheds light on how cultural factors shape pricing strategies. It offers valuable guidance for retailers looking to adapt their pricing to meet the varied expectations of a culturally diverse customer base. This research not only enhances our understanding of the culture-price relationship but also underscores the importance of cultural considerations in the strategic decisions of global market participants.

More information: Meikel Soliman et al, Round, just-below, or precise prices? Cultural differences in the prevalence of price endings in E-commerce, Frontiers in Behavioral Economics. DOI: 10.3389/frbhe.2025.1296207

Journal information: Frontiers in Behavioral Economics Provided by Frontiers

VCU Research Identifies Two Key Strategies to Narrow Employment Disparities for Autistic Job Seekers

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Autistic individuals frequently encounter significant challenges during job searches, particularly when it comes to interviews. Recent research from Virginia Commonwealth University highlights the enduring benefits of neurodiversity training for employers, especially when candidates openly disclose their autism diagnosis during the hiring process. This approach has shown promise in bridging the employment gap for those on the autism spectrum, a group for whom less than 60% are employed full-time or engaged in higher education if they do not have an intellectual disability.

Christopher Whelpley, PhD, an assistant professor at VCU’s School of Business, has delved into this issue, motivated by reports of discrimination from autistic candidates during interviews. Despite the subjective nature of such claims, which makes them difficult to prove, Whelpley was determined to identify and quantify any potential biases. His research began by comparing the performance of autistic and neurotypical candidates in video interviews and interviews where only transcripts were reviewed. Surprisingly, autistic candidates were more likely to be selected based on the transcripts alone, suggesting a disparity in how they are perceived when seen versus when evaluated purely by their responses.

Further studies by Whelpley and his colleague, Cynthia May, PhD, from the College of Charleston, revealed that autistic candidates were more likely to be hired when they disclosed their diagnosis during the interview, but this only held if the interviewers had received prior neurodiversity training. This finding underscores the importance of such training, though it also highlights that training alone does not alter hiring outcomes. Whelpley suggests that providing universal interview accommodations, such as offering one-on-one interviews instead of panel settings, could reduce biases and make hiring more accessible to autistic applicants.

In their most recent study, Whelpley and his team recruited undergraduate students, half diagnosed with autism, to participate in video job interviews. These videos were then shown to students and U.S. adults undergoing neurodiversity training. This exercise aimed to measure whether the training’s effects persisted over time. Impressively, the researchers observed that the positive impacts of the training lasted for at least two months, enhancing the perceived trustworthiness of autistic candidates and equalizing their likelihood of being hired with that of neurotypical candidates.

This progress is vital, Whelpley notes, mainly as more children and adults in the United States are diagnosed with autism each year. He believes that employers stand to benefit significantly from recognizing the unique skills autistic individuals bring to the table, which is often overlooked due to misconceptions equating autism symptoms with awkwardness or antisocial behaviour. He advocates for a paradigm shift in hiring practices, urging organizations to consider what unique skill sets candidates bring and how these can be mutually beneficial.

The study, however, is not without its limitations. The mock interviews did not involve actual HR professionals or hiring managers, who might react differently to neurodiversity training and candidates disclosing their diagnoses. Moreover, while the research suggests that combining diagnosis disclosure with interviewer training can level the playing field, the exact mechanisms of this effect—potentially involving increased empathy and understanding—are not fully understood. Whelpley hopes that further research will clarify these dynamics, paving the way for more inclusive and equitable employment practices that recognize and value diversity in the workplace.

More information: Christopher Whelpley et al, How Long Does it Last? The Enduring Benefits of Neurodiversity Training and Diagnostic Disclosure on Hiring Outcomes for Adults with ASD, Journal of Autism and Developmental Disorders. DOI: 10.1007/s10803-025-06751-w

Journal information: Journal of Autism and Developmental Disorders Provided by Virginia Commonwealth University

Do Business Conferences Have the Same Impact as the Olympics? The Role of Major Business Events in Enhancing Community Wellbeing

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Business gatherings like the ESTRO Congress (European Society for Radiotherapy and Oncology) draw thousands of attendees to their host cities, proving to be as crucial to local economies as major sports events like the Olympics, suggests a new study from the University of Surrey. The Events Industry Council (EIC) indicates that around 1.5 billion people annually participate in meetings, conferences, and exhibitions worldwide, contributing approximately £1.6 trillion to the global GDP.

These events enhance career and training prospects for local communities, advance transport and infrastructure, and elevate the destination’s profile through media exposure. According to the study’s findings, this significant contribution to the local economy is akin to the impact of substantial sports events.

Published in Event Management, this research underscores the less visible emotional and psychological benefits the local populace gains when such significant business events occur in their vicinity. Dr Emma Delaney, Director of Student Success and the study’s author at the University of Surrey, remarked: “Hosting these conferences brings communities profound advantages akin to those derived from major sports events. It’s high time we recognised the worth of community pride and social cohesion that accompanies such hosting roles.”

The study introduces “psychic income,” defined as the positive emotions and enhanced community pride residents feel from hosting business events, regardless of their direct participation. By comparing the effects of sports events and association conferences, the study illustrates how both types of events can amplify local identity and bolster community spirit.

While highlighting that hosting large-scale conferences can significantly stimulate local economies, the study points out that these events cultivate a more dynamic community atmosphere. The influx of delegates and the attention of the media inject excitement and visibility into the area, fostering a sense of inclusion and pride among the residents, which, in turn, strengthens social bonds and community involvement.

Dr Delaney further commented: “By raising local awareness of association conferences, we can maximise these benefits of psychic income. This strategy not only enhances the economic impact of hosting such events but also fortifies the social fabric of our communities. As cities vie to host these business gatherings, they should consider the extensive range of advantages these events offer. Recognising the value of psychic income enables us to develop communities that thrive not just economically, but also socially and emotionally.”

More information: Emma Delaney, Applying the Psychic Income Paradigm to Business Events, Event Management. DOI: 10.3727/152599525X17367484906363

Journal information: Event Management Provided by University of Surrey

Aiming for the Top in Leadership? Consider Debate Training

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For those aspiring to ascend the corporate hierarchy in the U.S., debate training might be the unexpected stepping stone you’ve been overlooking. Recent scholarly work reveals that individuals who grasp the fundamentals of debate are more likely to progress to leadership positions within American firms than their untrained peers. A primary advantage is that debate skills instil greater assertiveness in the workplace. “Debate training enhances the emergence and progression of leadership by nurturing individuals’ assertiveness, a crucial and prized leadership trait in U.S. organisations,” comments Jackson Lu, an Associate Professor at MIT and one of the researchers behind the study.

This study, grounded in two rigorous experiments, provides tangible insights into leadership development—a topic more commonly addressed through anecdotal evidence rather than systematic research. “Leadership development represents a multi-billion-dollar industry where substantial investments are made to foster leadership qualities in individuals,” explains Lu. “However, the effectiveness of these investments remains largely unquantified due to a lack of causal evidence, which is precisely what our research offers.” The paper “Breaking Ceilings: Debate Training Promotes Leadership Emergence by Increasing Assertiveness” was published Monday in the Journal of Applied Psychology. The research team included Lu, an associate professor at the MIT Sloan School of Management; Michelle X. Zhao, an undergraduate at Washington University in St. Louis’s Olin Business School; Hui Liao, a professor and assistant dean at the University of Maryland’s Robert H. Smith School of Business; and Lu Doris Zhang, a doctoral student at MIT Sloan.

Assertiveness in the so-called attention economy is crucial. The researchers conducted two experiments to explore this. In the first experiment, 471 employees at a Fortune 100 company were randomly assigned to either a nine-week debate training program or no training at all. When examined 18 months later, those who had undergone debate training were approximately 12 percentage points more likely to have ascended to leadership roles, a development attributed to their increased assertiveness.

A second experiment involved 975 university participants randomly assigned to either debate training, an alternative non-debate training, or no training. Mirroring the first experiment’s findings, those who received debate training were more likely to take on leadership roles in subsequent group activities, which was directly linked to their enhanced assertiveness. “The inclusion of a non-debate training condition in our study allowed us to assert with confidence that it was specifically the debate training, and not just any training, that fostered assertiveness and facilitated leadership emergence,” notes Zhang.

To some, fostering assertiveness may not seem beneficial in an organisational context, as it could heighten tensions or undermine cooperation. However, the American Psychological Association defines assertiveness as “an adaptive style of communication where individuals express their feelings and needs clearly, while still respecting others.” Lu elaborates: “Assertiveness should not be confused with aggressiveness. There’s a way to voice your opinions in meetings or classrooms without being overbearing. You can pose questions and articulate your views politely yet effectively. This is starkly different from remaining silent.”

Furthermore, in today’s world, where garnering attention is a competitive endeavour, honing communication skills is more crucial than ever. “From eliminating unnecessary filler words to mastering the pace of speech, learning how to express our views makes us appear more leader-like,” adds Zhang. The study also underscores that debate training is beneficial across different demographics, showing no significant variances in its impact based on gender, national origin, or ethnicity. However, the findings also prompt further inquiries regarding how companies identify leaders. While individuals may be motivated to pursue debate training and other general workplace skills, there is an overarching question about the extent of a firm’s responsibility to recognise and value their employees skills and communication styles. We stress that the responsibility for breaking through leadership barriers shouldn’t lie with individuals,” Lu asserts. “Organisations must also recognise and value different styles of communication and leadership in the workplace.” Lu also points out the need for ongoing research to determine whether firms adequately appreciate the attributes of their leaders. “There’s a crucial distinction between leadership emergence and leadership effectiveness,” concludes Lu. “While our study focuses on the former, it’s equally important to consider that better listeners, more cooperative, and humbler might also be better leaders, warranting their selection for leadership roles.”

More information: Jackson Lu et al, Breaking ceilings: Debate training promotes leadership emergence by increasing assertiveness., Journal of Applied Psychology. DOI: 10.1007/s00394-023-03123-x

Journal information: Journal of Applied Psychology Provided by Massachusetts Institute of Technology

New Study Reveals That Old Beliefs About Cost Efficiency Are Draining Millions From Businesses

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Recent research from the University of Surrey has unearthed that numerous businesses are labouring under the erroneous belief that diversifying their product lines will inherently result in cost reductions. This prevailing misapprehension may lead to annual financial losses amounting to millions for companies, as the study highlights the fundamental flaws in the traditional approaches used to gauge economies of scope.

The study, published in the Annals of Operations Research, critiques the conventional methods used to assess cost savings through diversification, commonly called “economies of scope.” These traditional techniques typically evaluate the costs associated with producing multiple products in tandem rather than independently, yet they overlook the crucial efficiencies derived from shared resources. The research advocates for a departure from simplistic calculations, which frequently result in overstated and erroneous cost estimates, proposing a more precise methodology for evaluating production costs instead.

The researchers illustrated their point by considering the scenario of companies looking to expand into new markets by manufacturing both smartphones and tablets. They suggested that companies should move past basic assumptions of cost-sharing and consider the complexities involved in managing supply chains, allocating resources, and navigating production bottlenecks. This is crucial to avoid the dissipation of anticipated cost savings into unforeseen expenses, such as inefficiencies and quality issues.

To substantiate their methodology, the researchers simulated two virtual companies specialising in different products, using data from existing diversified enterprises. By comparing the costs associated with these specialised firms to those incurred through joint production, they provided a more transparent view of when diversification genuinely leads to cost savings.

Dr Mehdi Toloo, co-author of the study and Reader in Business Analytics at the University of Surrey commented on the findings, stating, “Many businesses are entrenched in antiquated notions of cost efficiency. Our research challenges these outdated beliefs and offers actionable insights for companies to make more informed decisions about their operations and strategic directions.” He further explained, “We examined the cost implications for companies that produce varying products by assessing whether producing them collectively is more economical than doing so separately. Our innovative approach revealed that while some companies indeed benefit financially from combined production efforts, others may incur higher expenses.”

The study demonstrates that firms relying on obsolete methods might be squandering resources and overlooking opportunities to reduce expenditures. By adopting this revised strategy, businesses can more accurately determine the cost-effectiveness of producing multiple products conjointly, moving away from unquestioningly adhering to archaic practices. Additionally, the research underscores companies’ need to re-evaluate their mergers and multi-product production decisions. It offers explicit recommendations on how businesses can sidestep inefficiencies and enhance profitability amidst the fiercely competitive landscape of today’s market.

More information: Jafar Sadeghi et al, Evaluating economies of scope and potential merger: an alternative approach, Annals of Operations Research. DOI: 10.1007/s10479-024-06418-2

Journal information: Annals of Operations Research Provided by University of Surrey

Tax Cuts and Investment: Surprising Insights from Tepper School Researchers

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A recent publication in the Journal of Financial Economics delves into the impact of the 2017 Tax Cuts and Jobs Act (TCJA) on American multinational corporations. This study was conducted by James F. Albertus and Brent Glover from Carnegie Mellon University’s Tepper School of Business, along with Oliver Levine from the University of Wisconsin-Madison’s School of Business. Their research focused on the effects of the TCJA on corporations’ financial strategies, which unlocked nearly $1.7 trillion in previously unavailable international funds.

The TCJA was designed to boost the economy by encouraging firms to repatriate their foreign earnings and invest them within the United States. Despite the substantial influx of cash, which represented a significant liquidity shock—an unexpected alteration in the availability of money—the findings showed that companies did not increase their investments in capital expenditures, employment, research and development, or mergers and acquisitions, even among those that previously faced challenges in accessing funds. Instead, this new liquidity is primarily used for shareholder payouts and retaining cash, posing a challenge to established financial theories and shedding new light on how corporations react to major tax policy adjustments.

The research utilised data from the Bureau of Economic Analysis to monitor how these repatriated funds were utilised. It was observed that companies with substantial amounts of previously ‘trapped’ cash were more inclined to save rather than invest. According to the researchers, “Firms paid out only about one-third of the new liquidity to shareholders and retained half as cash.” This translates to companies allocating $5 to savings for every $3 distributed to shareholders. This behaviour is at odds with the conventional economic theory, which posits that corporations with excess cash typically invest in profitable ventures or distribute them to shareholders. The study concludes, “The high propensity to retain the liquidity shock as cash, even among well-governed firms with limited financial constraints, is hard to align with existing theory.”

These findings raise critical questions regarding the efficacy of tax cuts as a mechanism for stimulating economic growth. The study indicates that other elements, such as future uncertainties or a preference for financial stability, might influence these decisions to accumulate cash. The researchers highlighted, “The high retention [of cash] was not associated with poor governance,” suggesting that even well-managed companies opted to save. This research underlines the need for a more comprehensive understanding of the factors influencing corporate financial decisions and the complex interplay between tax policy and corporate behaviour.

More information: James F. Albertus et al, The real and financial effects of internal liquidity: Evidence from the Tax Cuts and Jobs Act, Journal of Financial Economics. DOI: 10.1016/j.jfineco.2025.104006

Journal information: Journal of Financial Economics Provided by Carnegie Mellon University

Garment Dryers and Economic Impact: Switch to Air Drying to Save Hundreds

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Researchers at the University of Michigan are embarking on a study that could encourage some Americans to rethink their laundry practices. Although clothes dryers offer convenience, they consume a significant amount of energy—an expense that could be avoided entirely by using air drying, which is free. Household dryers in the U.S. account for approximately 3% of the residential energy budget, which is six times more than what washing machines use. This results in an annual cost of over $7 billion and generates emissions equivalent to more than 27 million tons of carbon dioxide.

The prevalence of dryer ownership in the U.S. is the highest globally, with over 80% of homes equipped with one. This starkly contrasts with countries like South Korea, where less than 30% of households own dryers, Germany, with just over 40%, and the UK, where the figure is just under 60%. Prompted by this discrepancy, researchers from the U-M School for Environment and Sustainability (SEAS) began to explore what shifting to air drying might mean for the average American household.

The study’s lead researcher, Zhu Zhu, a former master’s student now pursuing a doctoral degree at Purdue University, notes that clothes dryers are rarely found outside the U.S. Under the guidance of Shelie Miller, SEAS professor and co-director of the U-M Center for Sustainable Systems, Zhu examined the environmental and economic impacts of different drying technologies and behaviours across the U.S. Their research indicates that fully transitioning to line drying could save a household upwards of $2,100 over the lifespan of a dryer and reduce CO2 emissions by more than 3 tons.

The findings, published in Resources, Conservation, and Recycling, highlight that line drying and occasional dryer use is the second most economical and environmentally friendly approach. This strategy even surpasses the benefits of upgrading to more efficient dryers. In some instances, households investing in energy-efficient dryers found that they did not save money in the long run.

When tackling climate change, Miller emphasizes the significance of behavioural changes over technological improvements. She argues for a dual approach that considers both cultural and technical solutions. The study also pointed out the significant regional variations in emissions from drying clothes in the U.S., influenced heavily by the local energy sources. For example, switching from a gas to an electric dryer can reduce emissions by over 90% or increase them by more than 220%, depending on the regional energy mix.

For those not ready to completely abandon their dryers, the study suggests minor behavioural changes, like using dryers during off-peak hours to cut emissions by 8%. Zhu and Miller understand that some may have reservations about line drying, as it can stiffen fabrics, but a short spin in the dryer can alleviate this issue. Zhu, who experienced line drying in his small college apartment, encourages exploring beyond traditional laundry methods, emphasizing that effective air drying can be achieved even in constrained spaces. The research urges individuals to consider whether their consumption habits meaningfully enhance their lives, advocating for the least carbon-intensive options as the most advantageous.

More information: Zhu Zhu et al, The relative benefits of electrification, energy efficiency, and line drying clothes in the United States, Resources Conservation and Recycling. DOI: 10.1016/j.resconrec.2025.108212

Journal information: Resources Conservation and Recycling Provided by University of Michigan

Actuarially Sound Endowment Funds Facilitate Fair Risk Distribution Among Extensive Groups

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A recent study in Risk Sciences introduces a pioneering framework for endowment contingency funds, focusing on adopting actuarially fair contributions to guarantee equitable compensation among participants. This innovative framework introduces a mutual fund structure that amalgamates contributions from individuals at risk of specific adverse events—such as critical illness, mortality, or longevity. This strategic design facilitates a systematic allocation of resources across the fund.

The framework’s operational model is straightforward yet effective. Participants agree to contribute fixed amounts to the fund, which are then aggregated into a collective pool. Should any adverse event transpire, the amassed contributions are evenly distributed among the affected claimants. This method ensures that the compensation is fair and consistent, alleviating the typical associated with conventional insurance models.

One of the standout features of this model is the reduced volatility of payouts, which diminishes as the participant pool expands. The principle of large numbers plays a crucial role here, stabilising benefits across the board. Advanced mathematical modelling further demonstrates that as the pool size grows indefinitely, the distribution of payouts aligns more closely with those provided by traditional insurance methods, thus satisfying the conditions for actuarial fairness.

Michel Denuit, the corresponding author, commented on the practical benefits of the proposed endowment contingency funds. He highlighted their cost-effectiveness, pointing out that these funds bypass the hefty administrative costs and profit margins typical of conventional insurance while still adequately meeting participants’ protection needs. Denuit also noted that the model’s adherence to the principles of mutuality boosts its attractiveness as a sustainable option for community-based risk-sharing.

Further explorations by the researchers shed light on the broader implications of this model within the realms of mutual aid and survivor funds, drawing analytical parallels with Takaful insurance schemes. These comparisons help in understanding the model’s effectiveness in the broader context.

Christian Robert, a co-author of the study, shared insights on the theoretical significance of this risk-sharing mechanism. He emphasised how the model offers a practical demonstration of fair risk pooling and contributes valuable theoretical insights into its principles. The framework’s foundation encourages a collective approach to managing uncertainty and underscores the social responsibility that comes with communal financial strategies. This approach provides a financial safety net and reinforces the sense of community and mutual support among participants.

More information: Michel Denuit et al, Equal compensations under actuarially fair contributions in endowment contingency funds, Risk Sciences. DOI: 10.1016/j.risk.2024.100005

Journal information: Risk Sciences Provided by Keai Communications Co., Ltd.

New Study Confirms Violent Crime as a Primary Driver of Migration

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Three years ago, when Nayib Bukele, the President of El Salvador, initiated a contentious crime suppression programme, it inadvertently shed light on a pressing question central to U.S. immigration policy: to what extent do crime and violence drive emigration from Central America to the United States? The answer, as revealed by a recent study from the Bush School’s Mosbacher Institute for Trade, Economics, and Public Policy, is quite substantial. The study showed that Bukele’s measures, which significantly lowered the murder rate in El Salvador, correspondingly decreased the number of apprehensions and expulsions at the U.S. border by 45% to 67%. The research posits that a nation experiencing less violent crime tends to produce fewer migrants. This significant finding was published in the Journal of Development Economics, a leading publication in the field.

The Mosbacher Institute has also released a related article in The Takeaway, a series aimed at making their research accessible to the broader public. This piece complements their more detailed academic research, offering insights into the broader implications of their findings. Previous studies have indicated that safety concerns are a significant factor driving people from Central America to emigrate. However, definitive conclusions were elusive as safety issues were often intertwined with economic factors, such as the search for better job opportunities and material well-being. Bukele’s drastic measure to detain suspected gang members simplified this complex issue by leaving economic conditions unchanged and isolating the decrease in crime as the sole variable affecting migration, according to the findings of this study.

The study’s authors carefully note that they do not endorse such heavy-handed approaches to crime control. Bukele’s actions have been widely criticised internationally for allegedly violating civil liberties, including accusations of jailing individuals indiscriminately without due process. The study emphasises the importance of addressing organised crime but advocates that such actions should be carried out with respect for human rights. Raymond Robertson, one of the study’s authors and the director of the Mosbacher Institute, highlighted the necessity for regional cooperation to tackle migration and organised crime, suggesting that revisions to restrictive U.S. trade agreements with the region might be beneficial.

The issue of immigration is deeply embedded in the social and political fabric of the United States. It remains a pivotal issue domestically and in other industrialised nations grappling with questions of identity, opportunity, justice, and security. According to the study, there were more than 280 million international migrants in 2020, including significant populations in Europe and the United States. The U.S. Customs and Border Protection reported more than 2 million border encounters annually from 2021 to 2023, mainly along the southwestern U.S. border, underlining the ongoing challenges of managing large-scale human movement.

The study terms the migration issue as a ‘border crisis’, pushing the topic to the forefront of U.S. policy debates, notably influencing the 2024 election and prompting a search for understanding the ‘root causes’ of migration. Although violent crime has been suspected to play a role in driving migration, previous research provided limited evidence. By examining the period following Bukele’s declaration of a ‘state of exception’ in March 2022, the Mosbacher study offers a more transparent, broader view by utilising this ‘natural experiment’ where other variables were constant.

Before the 2022 crackdown, Bukele had already implemented a violence-reduction strategy that included bolstering security forces and prison sanctions alongside social programs aimed at curbing gang recruitment by supporting vulnerable populations. This was followed by a drastic spike in violence in March 2022, which resulted in 87 deaths over three days. In response, security forces detained nearly all those suspected of gang affiliations or organised crime activities, with the study documenting an arrest tally of 75,163 individuals. Following these measures, the homicide rate in El Salvador plummeted from 18 per 100,000 people in 2021 to 2.4 per 100,000 in 2023, marking one of the lowest levels in recent history. This dramatic reduction in homicides directly correlated with a decline in migration to the U.S. border, illustrating the impact of improved security on emigration patterns. On the policy front, U.S. administrations have adopted varying strategies to address immigration challenges. The Biden administration focused on enhancing economic conditions in Central American nations to reduce migration by providing better job opportunities and improving living standards, thereby hoping to deter people from undertaking dangerous journeys to the U.S.

Conversely, the Trump administration concentrated on punitive measures against Latin American drug cartels and increased deportations. Furthermore, it was reported that the Trump administration negotiated a deal with El Salvador to accommodate migrants and incarcerated U.S. citizens. The researchers from the Mosbacher Institute advocate for a balanced policy approach to Central American migration, which integrates security measures with economic and social reforms designed to bolster community resilience. Although El Salvador has seen a reduction in both violent crime and emigration, the study’s authors caution against other nations adopting Bukele’s heavy-handed tactics, underscoring that their analysis does not extend to the broader human rights concerns and legal and ethical issues raised by such measures.

More information: Raymond Robertson et al, Is crime a “root cause” of Central American emigration? Evidence from El Salvador, Journal of Development Economics. DOI: 10.1016/j.jdeveco.2025.103456

Journal information: Journal of Development Economics Provided by Texas A&M University

Study Reveals Chinese Contractors Encounter Increased Challenges in Democratic Nations under Belt and Road Initiative

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Chinese construction and engineering contractors engaged in the Belt and Road Initiative (BRI) are confronting substantial challenges in democratic countries, as revealed by recent research. These difficulties are compounded by close ties with the United States and the presence of institutions that enable public opposition, which hinder the activities of Chinese contractors in less authoritarian states. The research, led by Andrea Ghiselli from the University of Exeter and Pippa Morgan from Duke Kunshan University, underscores the significance of these companies in constructing the infrastructure central to the BRI, which is President Xi Jinping’s flagship foreign policy endeavour.

The challenges increase notably when a host country formalises its participation in the BRI by signing a Memorandum of Understanding (MoU). Such events are significant and highly visible, drawing attention from various quarters, including the public, elites, and international actors like the United States, who are sceptical of Chinese involvement. The study, published in International Studies Quarterly, also found that Chinese contractors tend to win more contracts in resource-rich nations that have larger populations, stronger trade ties with China, more excellent political stability, and receive more financial aid from China.

Conversely, the findings indicate that Chinese infrastructure contractors are less successful in countries that are geographically distant from China, have differing voting alignments at the UN, or borrow heavily from the World Bank. Additionally, a negative association was noted between NATO membership and the value of contracts secured by these contractors, suggesting geopolitical alignments also play a critical role.

No evidence was found to suggest that the BRI helps to mitigate the challenges faced by Chinese contractors in democratic countries. Dr Ghiselli noted the conflicting goals of the BRI in such settings. While the initiative aims to enhance China’s diplomatic influence and expand its corporate footprint overseas, these objectives often clash when the partner country operates under a democratic system. This tends to favour Chinese contractors’ success in non-democratic countries, increasing the Chinese government’s stake in those nations’ stability by expanding the presence of Chinese citizens and investments.

Dr Morgan highlighted the detrimental relationship between the host state’s democratic institutions and Chinese firms’ success in securing overseas infrastructure contracts. Democratic institutions enable domestic and international forces to restrict business opportunities for Chinese contractors. Commenting on the adverse effects of signing a BRI MoU, Dr Morgan pointed out that such actions trigger significant backlash within democratic nations, pressuring governments to limit Chinese economic participation and leading to unintended negative consequences for Chinese contractors.

The study presents a significant negative correlation between democratic institutions in host countries and the contract values awarded to Chinese engineering and construction companies. This interaction between liberal democracy and the BRI is markedly negative and statistically significant, suggesting that the more pronounced the democratic institutions, the more adverse the impact on contract volumes associated with BRI participation.

For countries with minimal levels of democracy, the relationship between MoUs and infrastructure contracts is positive. However, for more democratic states, this relationship turns negative. The research concludes that the BRI’s high visibility and significance may ironically contribute to its challenges in democratic countries. The analysis suggests that China might need to adopt a lower-key approach in its BRI diplomacy if it wants its companies to succeed in democratic environments. This could have broader implications for economic development and financial aid in democratically governed but economically disadvantaged countries, potentially delaying their growth or increasing development costs.

More information: Andrea Ghiselli et al, Blowback: When China’s Belt and Road Initiative Meets Democratic Institutions, International Studies Quarterly. DOI: 10.1093/isq/sqaf014

Journal information: International Studies Quarterly Provided by University of Exeter