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Recent Research Uncovers Concealed Dangers of Social Capital in Microfinance Amidst Economic Turmoil

A recently published article in the Strategic Management Journal reveals a significant yet often overlooked risk associated with microfinance. While social capital contributes to financial stability under normal conditions, it may lead to higher default rates during economic crises. This research, led by Arzi Adbi, Matthew Lee, and Jasjit Singh, studied the repayment behaviour of nearly two million low-income borrowers following the 2016 demonetisation policy in India. This event inadvertently highlighted the double-edged nature of peer accountability in financial settings.

For over five decades, microfinance has been lauded as a transformative strategy for enhancing financial inclusion, mainly through group lending frameworks. These models capitalise on social bonds and peer pressure to promote loan repayment among low-income borrowers. However, the study indicates that the same factors that facilitate repayment in stable times might accelerate the incidence of default during external shocks.

The research focused on the 2016 demonetisation initiative in India, which invalidated 86% of the nation’s currency overnight. This drastic policy led to a severe liquidity crisis, primarily affecting those dependent on cash transactions. As a result, default rates among microfinance borrowers soared from a mere 2% before the demonetisation to over 40% afterwards. Interestingly, these defaults were not uniformly distributed but were notably concentrated in specific lending centres.

In-depth analysis using data from a leading microfinance institution in India, supplemented by interviews with borrowers and community service officers, helped the researchers understand that the decision to default was influenced by economic hardship and social relationships within the borrowing groups. In several communities, peer influence led to collective defaults, as borrowers, overwhelmed by financial duress, chose to default together rather than individually. This social dynamic exacerbated financial instability rather than mitigating it.

The research underscores a critical vulnerability inherent in community-based business models: the social mechanisms that ensure operational efficiency in stable times can transform into liabilities during crises. To counteract these risks, the authors recommend several strategic interventions: enhanced risk management with crisis-focused scenario planning, context-specific approaches due to varying social and economic dynamics, and fostering more decisive community leadership to stabilise borrower behaviour during economic downturns.

As financial institutions, policymakers, and corporate leaders strive to expand financial access in emerging markets, the insights from this study provide a crucial understanding of the complex interplay between social capital and economic behaviour. Achieving sustainable financial inclusion demands innovative approaches and a profound comprehension of the social dynamics at play. These findings serve as a valuable guide for crafting policies that recognise the strengths and potential pitfalls of leveraging social capital in financial systems.

More information: Arzi Adbi et al, Community influence on microfinance loan defaults under crisis conditions: Evidence from Indian demonetization, Strategic Management Journal. DOI: 10.1002/smj.3558

Journal information: Strategic Management Journal Provided by Strategic Management Society

What Impact Will China’s Updated Standards Strategy Have on Corporate Employment Practices?

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The Chinese government is instituting reforms to many technical standards that have a widespread influence on the products and services consumers use across the globe. Previously, China’s approach to developing its standards system was heavily reliant on the unilateral authority of its government. This traditional method has been predominant, with little input from market-driven mechanisms. However, the new reforms signify a shift towards incorporating principles of market economies into the standards development process. An illuminating study published in the journal Contemporary Economic Policy delves into the ramifications of these reforms on corporate labour employment, offering a comprehensive analysis of their impacts.

The research scrutinises how these reformed standards are designed to interact with various aspects of corporate management and operational efficiency. The study’s findings suggest that the reform of standardisation protocols significantly enhances corporate labour employment. This enhancement comes through several channels: it reduces transaction costs, which often burden companies; it improves operational efficiency, making daily processes more streamlined; and it ameliorates the financing environment, which can usually be a stifling factor for corporate growth. The reforms are paving the way for a more fluid integration of standard practices within businesses, fostering environments conducive to growth and development.

The impact of these reforms is not uniformly distributed across all sectors and types of firms. The study highlights that firms with specific characteristics will likely accrue the most significant benefits. Notably, non-state-owned enterprises, which traditionally have more flexibility and possibly face more competitive pressures, stand to gain significantly. Additionally, highly competitive industries are more likely to see dynamic changes as the reforms encourage firms to innovate and adapt to maintain or enhance their market position. Moreover, regions with lower levels of marketisation, which have perhaps not benefitted as much from previous economic policies, and firms with significant gender disparities, indicating untapped potential in human resources, are also areas where substantial impacts can be expected.

Another critical aspect of the reforms is their influence on firms’ labour investment and management practices. By encouraging and sometimes necessitating improved labour investment efficiency, these reforms help firms optimise their labour structures. This optimisation can involve better allocation of tasks, more fitting job-role matching, and enhanced productivity strategies. Moreover, the reforms push firms to increase labour compensation. This is a matter of raising wages and improving the overall remuneration package, including benefits, bonuses, and other non-monetary incentives. Additionally, there is a strong emphasis on enhancing labour training programs, which are essential for employees’ personal growth and the company’s overall advancement.

The study’s authors are firm believers in the positive outcomes of these reforms. They argue that the insights provided by their research are vital for both governmental bodies and corporate entities. For governments, these insights can guide advancing a more robust and efficient standard system that aligns more closely with market dynamics and economic realities. For firms, the findings underscore the importance of improving standardised practices to comply with new regulations and harness the benefits of these changes for better competitiveness and growth.

In summary, the reforms to China’s standard system represent a significant shift towards integrating market economy principles into the regulatory framework that dictates the operation of companies within the country. The effects of these changes, as evidenced by the research, are profound, offering numerous opportunities for corporate entities to enhance their operational capacities, labour management practices, and competitive standing in the global marketplace. The study, therefore, provides essential perspectives that can help shape future policies and business strategies, ensuring that the standard system evolves to support sustainable and inclusive economic growth.

More information: Lianchao Yu et al, The standard system and corporate labor employment: Empirical evidence from China’s comprehensive standardization reform, Contemporary Economic Policy. DOI: 10.1111/coep.12688

Journal information: Contemporary Economic Policy Provided by Wiley

Timing Is Crucial for Effective Push Promotions

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As you exit the office, your phone alerts you with a notification: a nearby shop is offering a discount on a smartwatch, complete with a 20% off coupon displayed on your app. Intrigued, you decide to take advantage of this timely offer.

This scenario is a classic example of a push promotion: a retailer proactively sends a notification through an app to catch your attention. This strategy has been a staple for online giants like Amazon. However, Jason Duan, an associate professor of marketing at Texas McCombs, believes that physical retailers, ranging from small family-run shops to large chains like Target, can also effectively utilise this method to enhance competitiveness.

Jason Duan and Vijay Mahajan, another marketing professor at McCombs, delve into this topic through their latest research. They explore the intricacies of how, when, and what kind of push notifications are most effective in driving customer visits to physical stores. Their study particularly emphasises the potential of location-based notifications, which are sent when a consumer is near a store, as opposed to behaviour-based notifications that rely on a user’s previous shopping habits. While companies like Amazon depend on behaviour-based strategies, physical stores might benefit more from leveraging location-based notifications.

According to Duan, this approach could provide a significant edge as retailers possess vast data reserves that could help optimise location- and behaviour-based notification deployment.

To assess the effectiveness of these two promotional strategies and their potential synergy, Duan and Mahajan collaborated with Zhuping Liu from Baruch College. They developed a model simulating shopper behaviour, incorporating data from a company that sends coupon notifications through a mobile app. This dataset included detailed logs of when notifications were issued, when and where consumers engaged with the app and its coupons, and their subsequent store visits, all with the consent of the participants. The study tracked 5,000 shoppers in a mid-sized American city over 120 days in 2015.

Their findings revealed distinct advantages for each type of notification. The timing was critical for behaviour-based notifications; if sent before a shopping trip, they significantly increased the likelihood of app engagement and store visits by up to 23% compared to those without notifications. On the other hand, location-based notifications proved most effective when the user was already near or within the store, enhancing the probability of opening the app by 27% and clicking on coupons by 22%.

Moreover, integrating both notification types resulted in even more compelling outcomes. For instance, if a user engaged with the app outside a mall, they were 35% more likely to use it again inside the mall.

Duan suggests a strategic approach where a retailer could send a behaviour-based notification when a customer is planning a shopping trip and a location-based notification at a pivotal moment during the store visit. For example, a notification about a shoe sale might be sent as the customer prepares to leave home, followed by a coupon offering additional discounts once they arrive at the mall.

However, Duan cautions against excessive repetition of notifications, which can become irritating for shoppers. Instead, he advocates personalising notifications as much as possible to enhance their impact. With advancements in AI, wearable technology like smartwatches, and real-time location tracking, businesses can tailor each notification to match customer profiles and preferences.

For stores lacking the capability to collect and analyse such data, partnering with external companies specialising in gathering and dispatching push notifications can be an effective solution. This enables smaller retailers to stay competitive with larger online counterparts, like Amazon, in the rapidly evolving retail landscape.

More information: Jason Duan et al, Push and pull: Modeling mobile app promotions and consumer responses, Quantitative Marketing and Economics. DOI: 10.1007/s11129-024-09289-w

Journal information: Quantitative Marketing and Economics Provided by University of Texas at Austin

Strengthening Shareholder Oversight: Insights from Corporate Governance Changes in Japan

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Shareholders play a vital role in corporate governance by casting votes on crucial decisions within the companies they invest in. To enhance transparency and accountability, regulatory entities worldwide, including government bodies and stock exchanges, are progressively enacting guidelines to ensure institutional investors are accountable for their voting actions and fulfil their fiduciary responsibilities effectively.

A significant study published in the ‘Corporate Governance: An International Review’ on 22 January 2025 highlights that even non-binding regulations can spur institutional investors to adopt a more proactive stance, thereby enhancing corporate governance standards. The research, led by Professor Toru Yoshikawa from Waseda University and Associate Professor Daisuke Uchida from Keio University, focused on the responses of institutional investors to the 2017 amendments made to Japan’s Stewardship Code, which now mandates the disclosure of their voting records.

Professor Yoshikawa pointed out that the amendment aimed at disclosing voting records has motivated institutional investors to take a more engaged role in the corporate governance of the companies they invest in. “We were particularly interested in observing how institutional investors, key players in corporate governance, reacted to this amendment, especially analysing the variances between domestic investors, who traditionally played a more passive role, and foreign investors, who are typically more active,” he explained.

The researchers scrutinised the voting on 7,887 proposals involving 5,051 directors across 495 TOPIX 500 companies and the top 500 firms listed on the Tokyo Stock Exchange. Typically, director candidates are endorsed by the company’s board, and traditionally, domestic Japanese institutional investors often supported these candidates to maintain amicable relations with the companies. However, post-amendment, there was a marked increase in shareholder dissent during director elections.

This change was particularly pronounced in companies with substantial domestic institutional ownership. In contrast, firms with a higher proportion of foreign institutional investors exhibited little or no change in their voting patterns. Furthermore, the opposition to board-endorsed directors was most intense when the directors were perceived as underperforming or unqualified. “Previous research indicates that foreign investors often have different goals than domestic investors and place more emphasis on the corporate governance of the firms they invest in. However, our findings reveal that domestic investors responded more strongly to the regulatory change concerning the disclosure of voting records than their foreign counterparts, increasingly casting dissenting votes against director candidates at general shareholders’ meetings,” Professor Yoshikawa noted.

The study elaborates that domestic institutional investors, such as local banks, trust banks, and insurance companies, are more likely to adhere to local regulations owing to their dependence on local regulatory authorities for legitimacy. In contrast, foreign institutional investors generally conform to international standards and are less influenced by domestic laws. “Our theory and findings illustrate that domestic institutional investors tend to diverge from their foreign counterparts in response to regulatory cues due to their varying levels of reliance on the legitimacy granted by regulatory bodies, although they are all classified under the umbrella of institutional investors. This indicates that shareholder preferences are diverse and subject to change over time,” Professor Yoshikawa added.

The enhanced accountability in shareholder voting, precipitated by Japan’s disclosure rule, underscores that regulatory reforms can substantially improve corporate governance. These findings offer a model for other Asian countries transitioning to Western-style corporate governance systems, suggesting that strategic regulatory measures can foster similar improvements.

More information: Toru Yoshikawa et al, The Differential Effect of Regulatory Signals on Shareholder Dissent: The Case of Shareholder Voting in Director Elections, Corporate Governance: An International Review. DOI: 10.1111/corg.12640

Journal information: Corporate Governance: An International Review Provided by Waseda University

Artificial Intelligence in Retail: Enhancing Creativity and Boosting Job Satisfaction

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Artificial intelligence (AI) transforms the workplace by enhancing routine task efficiency and fostering a culture of innovation, especially within the retail sector, where staying ahead requires constant innovation. More than just automating processes, AI aids employee creativity by providing insights that allow staff to focus on more creative tasks. Despite these advancements, there remains a gap in research concerning the impact of AI service quality on retail employees, marking a critical area for further investigation.

A collaborative study conducted by scholars from Florida Atlantic University and Hanyang University in Seoul, South Korea, delved into how retail employees’ perceptions of AI service quality affect their innovation, job alignment, and overall job satisfaction. The research focused on system-centric attributes like reliability and transparency and interaction-centric qualities like responsiveness and empathy. Additionally, the study examined how AI adaptability—its ability to tailor its functions to user requirements—might play a moderating role in enhancing perceived service quality.

Published in the Journal of Retailing and Consumer Services, the findings indicate that retail employees are more inclined to innovate when they perceive tangible benefits from AI interactions. Notably, when AI systems exhibit reliability and empathy, this encourages employees to innovate. The research underscores the significant role of AI in fostering service innovation, mainly how it aids management in making strategic decisions and scaling operations across the retail sector.

The study revealed that while reliability is crucial for supporting service innovation, transparency does not hold a significant sway over innovation. This is a surprising revelation, as responsiveness, traditionally viewed as critical for boosting customer engagement and addressing real-time issues, showed no significant impact on service innovation. On the other hand, empathy was found to have a robust positive influence on innovative service behaviours, suggesting that AI systems that can effectively recognize and respond to users’ emotional and psychological needs contribute to a more dynamic work environment.

Dr Sangbeak Ye, a co-author of the study and an associate professor in the Department of Educational Leadership and Research Methodology at FAU, highlighted the role of empathy in AI. He noted that empathetic AI builds trust and deepens connections, motivating employees to engage in innovative behaviours by making them feel supported. In the retail context, empathetic AI improves job fit by aligning employees’ attributes with their roles, enhancing job satisfaction, decreasing turnover, and boosting employee participation. This alignment allows employees to customize tasks to match their skills and aspirations, making them feel more connected to their roles.

Interestingly, the study also found that AI adaptability tends to dilute the impact of system-related attributes like transparency and reliability on service innovation, pointing to intricate interactions between system and interaction-related factors.

Dr. Ye further emphasized the importance of managers fostering innovative work environments by improving AI service quality. He advocated for a focus on reliability to ensure AI’s dependable support in daily operations and enhancing empathy within AI systems to provide more personalized and emotionally engaging experiences. These efforts, he suggested, inspire employees to explore new ideas. Moreover, in environments driven by dynamic AI applications, attributes such as empathy become crucial in enhancing employee engagement and creativity. By strategically integrating AI to support job customization and innovation, organizations can increase job satisfaction and connect employees more deeply with their work, enhancing overall service quality.

For their analysis, the researchers gathered data from 290 retail employees across various sectors, including online retail and e-commerce, grocery and food retail, apparel and fashion retail, health and beauty retail, electronics and appliances retail, and finance retail. The participants included 62.8% management-level employees and 37.2% frontline workers, providing a broad perspective on the AI’s impact across different levels of retail operations.

More information: Sangbeak Ye et al, How AI enhances employee service innovation in retail: Social exchange theory perspectives and the impact of AI adaptability, Journal of Retailing and Consumer Services. DOI: 10.1016/j.jretconser.2024.104207

Journal information: Journal of Retailing and Consumer Services Provided by Florida Atlantic University

Escaping the Mediocrity Trap in the Workplace

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Confidence, persistence, and ingenuity are traditionally viewed as quintessential traits for success in the workplace. Conventional wisdom upholds these qualities as the bedrock of professional achievement. However, new research from Rutgers suggests that less commendable characteristics, such as a tendency to enforce the status quo, also hold value within team settings. According to a study published in the Journal of Occupational Health Psychology by Cong Liu, an expert in organizational behaviour at the Rutgers Graduate School of Applied and Professional Psychology, environments with high levels of envy might lead to the ostracization of the most competent team members. This, in turn, could prompt these high performers to engage in actions that sabotage productivity.

Cong Liu’s research indicates a complex workplace dynamic where positive and negative behaviours contribute to the overall functionality. Over time, evidence has accumulated suggesting that the dichotomy between constructive and destructive workplace behaviours is not as clear-cut as previously thought. Liu’s study sheds light on a phenomenon where high-performing individuals, who typically drive team success, become the targets of exclusion by their peers. This exclusion not only demotivates but also may lead these high performers to underperform, effectively transforming them from assets to liabilities intentionally.

This intricate relationship was explored through a survey involving 630 employees across 131 teams in various industries in China, including healthcare, finance, real estate, and manufacturing. Most of these teams were composed of three or more members, with a predominance of female participants with an average tenure of about six years. While the study was localized to China, the insights are considered universally relevant, particularly in collaborative, team-based work cultures like those prevalent in the American corporate landscape.

The research process involved two surveys conducted a month apart. In the initial study, employees assessed their levels of proactivity, envy, coworker ostracism, negative emotions, and job satisfaction. The follow-up survey asked them to measure their own ‘production deviance’ or the extent of their intentional underperformance. The analysis revealed a significant correlation between high levels of envy and the ostracization of proactive team members, which increased production deviance among those ostracized.

The implications of these findings are profound, especially considering that previous studies have shown that poor management of team dynamics can lead to substantial drops in productivity. Even minor disruptions can have amplified effects in a modern work environment that heavily relies on teamwork and collaboration. Thus, addressing issues such as team-based ostracism and the resultant decline in production is crucial, albeit challenging. Cong Liu emphasizes the importance of recognizing the underlying human emotions that contribute to such dynamics, including jealousy, envy, and pride, as well as the impact of ‘upward comparison’—the feelings of inadequacy that can arise when employees compare themselves to more successful colleagues.

In a competitive corporate culture where performance metrics are publicly acknowledged and competition is fostered, these feelings can intensify, making it even more essential for managers to intervene effectively. For example, in sales environments where team members might collectively benefit from one member exceeding sales targets, management might still perceive those who underperform as less effective. This perception can lead to a culture where being a ‘middle performer’ might seem like the safest bet, discouraging employees from striving for excellence. To mitigate these negative dynamics, Liu suggests that employers and managers recognize and evaluate each employee on their merits rather than in comparison to top performers. Encouraging proactive behaviours while ensuring that performance evaluations are based on the required outputs and not just about the highest achievers is crucial. Managers can foster a more inclusive and supportive workplace environment by treating each team member as an individual and valuing their unique contributions. This approach is not only about effective management but is also a strategic advantage that can drive long-term success in today’s collaborative and innovative business climate.

More information: Cong Liu et al, Proactive employees perceive coworker ostracism: The moderating effect of team envy and the behavioral outcome of production deviance, Journal of Occupational Health Psychology. DOI: 10.1037/ocp0000389

Journal information: Journal of Occupational Health Psychology Provided by Rutgers University

How AI Prejudice Influences Aspects from Recruitment to Medical Care

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Generative AI tools such as ChatGPT, DeepSeek, Google’s Gemini, and Microsoft’s Copilot are revolutionising industries quickly. Yet, as these expansive language models become more affordable and prevalent in pivotal decision-making roles, their inherent biases might skew results and diminish public confidence. Naveen Kumar, an associate professor at the University of Oklahoma’s Price College of Business, has co-authored research highlighting the critical need to address bias by developing and implementing ethical, comprehensible AI. This involves strategies and guidelines that promote equity and transparency while reducing stereotypes and discrimination in large language model (LLM) applications.

Kumar highlighted a significant trend in the AI market: “As major entities like DeepSeek and Alibaba unveil platforms that are either free or significantly cheaper, a worldwide AI pricing competition emerges,” he explained. “With cost becoming a predominant concern, questions arise about whether ethical considerations and bias regulations will maintain their importance. Alternatively, with international firms involved, might there be a swift move towards stringent regulations? We are hopeful for the latter, but it remains to be seen.”

The study Kumar contributed to pointed out that nearly one-third of survey respondents felt they had missed out on financial or employment opportunities due to biased AI algorithms. Kumar notes that while AI systems have been designed to eliminate explicit biases, subtle, implicit biases persist. As LLMs grow more intelligent, identifying these hidden biases becomes increasingly complex, underscoring the imperative for ethical governance.

Kumar stressed the importance of aligning these models with human ethical standards, especially in finance, marketing, human resources, and healthcare sectors, to prevent biased decisions and outcomes. “Healthcare models biased against certain demographics could worsen patient treatment disparities; recruitment algorithms might unfairly prefer certain genders or races; advertising models could continue to perpetuate harmful stereotypes,” he noted. These concerns underscore the vital need for models that uphold fairness and avoid perpetuating inequality.

While frameworks for explainable AI and ethical guidelines are being established, Kumar and his team urge scholars to forge ahead with proactive technical and organisational measures to monitor and mitigate bias in LLMs. They advocate for a balanced approach to ensure that AI applications remain effective, equitable, and transparent. “The pace at which this industry evolves generates significant tension among stakeholders, each with diverging aims. It is crucial to reconcile the concerns of developers, business leaders, ethicists, and regulators to adequately confront bias in these LLM models,” he concluded. “Striking an optimal balance across various business sectors and regional regulations is essential for achieving success.”

More information: Naveen Kumar et al, Addressing bias in generative AI: Challenges and research opportunities in information management, Information & Management. DOI: 10.1016/j.im.2025.104103

Journal information: Information & Management Provided by University of Oklahoma

Revolutionary Report Advocates Transition from Economic Expansion to Wellbeing Within Ecological Boundaries

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A detailed new review by leading experts in sustainability science, recently published in The Lancet Planetary Health, challenges the traditional view that economic growth is indispensable for societal advancement. Spearheaded by the Institute of Environmental Science and Technology of the Universitat Autònoma de Barcelona (ICTA-UAB) and titled “Post-growth: the science of wellbeing within planetary boundaries,” the review delves into the burgeoning field of post-growth research. It presents a strong case for shifting focus from perpetual economic expansion to prioritising human well-being and ecological sustainability. The research team included contributors from a range of prestigious institutions across the globe, including the University of Barcelona, the University of Leeds, the University of Oxford, York University, Boston College, the University of Lausanne, and the Central European University.

This groundbreaking review synthesises the most recent insights across various disciplines, such as ecological economics, wellbeing economics, and degrowth. The authors contend that pursuing continuous economic growth in affluent nations is not only ecologically unsustainable but may also lack social benefits and financial viability. They highlight the close link between GDP growth and environmental degradation, diminishing returns of income on well-being, and the perils associated with economic downturns as critical factors driving the post-growth agenda.

The review revisits significant findings, such as the Limits to Growth. It reexamines the conclusions of the 1972 report “Limits to Growth,” noting that current trends align with the “Double Resources” scenario predicted in the report, where societal collapse is precipitated by pollution rather than scarcity of resources. This scenario is particularly relevant regarding ongoing climate change and biodiversity loss concerns.

Another critical finding discussed is the concept of decoupling. Although it’s common to see a relative decoupling of GDP from resource use, the review finds no evidence of a sustained, absolute, and sufficient decoupling. Projections suggest that achieving such decoupling is unlikely, even with optimistic assumptions about technological advancements. Furthermore, the review identifies social limits to growth, indicating that further economic growth fails to enhance human wellbeing beyond a certain income level, and the adverse effects of growth—such as pollution and social unrest—may outweigh its advantages. As GDP increases, there are diminishing returns for social outcomes like health, education, and poverty alleviation.

The review promotes the development of ecological macroeconomic models that explore policies for thriving without growth. It discusses various policies to reduce growth dependency and enhance well-being, including universal essential services, reduced working hours, job guarantees, and the imposition of carbon and wealth taxes. It also emphasises that high levels of well-being are achievable with lower resource consumption, advocating for focusing on public services, income equality, and democratic quality to meet human needs sustainably.

Finally, the review addresses the unequal exchanges between the Global North and the Global South, where wealthier nations exploit resources and labour from poorer countries. Adopting post-growth strategies in high-income countries could benefit low-income nations by mitigating this exploitation. However, it also warns that post-growth could adversely impact low-income countries reliant on exports to wealthier nations unless these countries adopt policies that promote monetary sovereignty, industrial policy, and effective disengagement from high-income economies. Despite acknowledging the existing knowledge gaps, particularly concerning the politics of transition and the relationships between the Global North and South, the review calls for further research into the geopolitical implications of post-growth scenarios and the factors that can decouple social outcomes from GDP. This comprehensive review marks a significant paradigm shift in our understanding of progress. It outlines a roadmap for crafting societies prioritising human and planetary health above economic growth, offering valuable insights for policymakers, researchers, and the general public.

More information: Giorgos Kallis et al, Post-growth: the science of wellbeing within planetary boundaries, The Lancet Planetary Health. DOI: 10.1016/S2542-5196(24)00310-3

Journal information: The Lancet Planetary Health Provided by Universitat Autonoma de Barcelona

UTEP Study Reveals Dust Storms and Wind Erosion Result in $154 Billion Annual Damages

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While the annoyance of a dusty, windy day might only seem to extend to spoiling your car wash and leaving dirt scattered throughout your home, a new study published in the journal Nature Sustainability by researchers from The University of Texas at El Paso (UTEP), George Mason University, and the U.S. Department of Agriculture suggests far more severe implications. According to their findings, the societal costs of wind erosion and blowing dust are astronomical, estimated at approximately $154 billion annually across the United States, transcending mere inconvenience to pose a significant economic burden.

Dr. Thomas Gill, a professor of earth, environmental, and resource sciences at UTEP and co-author of the study, emphasized the surprising impact of such seemingly minor natural phenomena. “The figures might be startling,” he remarked, “but they underscore the extensive societal and economic damages inflicted by dust. It’s a clear signal that we cannot ignore the broader implications of dust storms.” This study positions the economic impacts of dust events on equal footing with major natural disasters like hurricanes, underscoring the critical need for effective dust mitigation strategies.

Despite wind erosion being a natural process, Gill pointed out that human activities, land use changes, ongoing droughts, and diminishing water resources have intensified its effects, making the U.S. increasingly vulnerable to dust-related issues. The study meticulously calculated the economic toll of wind erosion across various sectors, including healthcare, transportation, agriculture, renewable energy, and residential areas, concluding that the $154 billion figure might even be an underestimation.

Irene Feng, the study’s lead author and a doctoral student from George Mason University, explained that the 2017 data provided a reliable baseline for their analysis, which accounted for inflation and offered a timely overview of the economic impacts. “Our findings not only highlight the severe financial consequences but also offer a pivotal foundation for enhancing data collection and understanding the full scope of wind erosion’s effects,” Feng stated.

The study detailed how dust storms contribute to serious health issues in the healthcare sector by dispersing ultra-fine particles that can exacerbate respiratory conditions like asthma and bronchitis. Focusing specifically on Valley Fever, a fungal infection prevalent in the U.S. Southwest, the study estimated its annual medical costs at about $2.7 billion, not accounting for additional economic losses such as reduced productivity due to illness.

The transportation industry also suffers considerably, with dust storms causing visibility issues that lead to accidents and fatalities. In 2017 alone, these incidents had a financial impact of at least $250 million. The agricultural sector faces losses exceeding $10 billion due to reduced soil quality affecting crop yields. In contrast, the renewable energy sector loses efficiency in solar and wind operations due to dust accumulation, costing about $4 billion annually.

Residential impacts are also significant, with $40 billion in damages reported in 2017 due to dust infiltrating homes and affecting landscaping. Given the increasing frequency and intensity of dust storms since the 1990s, this figure is expected to rise.

The researchers advocate for robust dust mitigation measures, such as adopting conservation agricultural practices like reduced or no-till farming. These techniques stabilize the soil, retain nutrients, and prevent erosion, potentially offering substantial economic benefits. Dr. Gill drew parallels to the 1930s Dust Bowl, a catastrophic event driven by poor land management and severe drought, as a historical warning of the potential consequences of inadequate responses to environmental challenges.

This study quantifies the extensive financial repercussions of dust storms and wind erosion and highlights the importance of strategic interventions to mitigate these impacts. As dust-related challenges grow in scale and severity, the urgency for comprehensive and sustainable solutions becomes ever more apparent, underscoring the need for immediate action to safeguard both the environment and the economy.

More information: Irene Feng et al, Economic costs of wind erosion in the United States, Nature Sustainability. DOI: 10.1038/s41893-024-01506-4

Journal information: Nature Sustainability Provided by University of Texas at El Paso

Proposals to Amend Food VAT for Promoting Healthier and More Sustainable Eating Habits

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A recent study spearheaded by researchers from UCL suggests that reforming Value Added Tax (VAT) rates based on health and environmental considerations could significantly encourage healthier and more sustainable diets. Published in Nature Food, the research involved a comprehensive analysis of VAT rates applicable to various food items within the UK and the European Union (EU). By integrating economic, environmental, and health assessments, the researchers estimated the potential impacts of modifying these tax rates.

Professor Marco Springmann, the lead author from the UCL Institute for Global Health and the University of Oxford, highlighted the inadequacy of current tax systems in the EU and the UK in addressing the pressing health and environmental challenges posed by the food system. He advocated for a modernised tax framework that could function as a no-loss policy while offering benefits for public health, environmental conservation, and government revenue streams.

In the existing tax structure of the UK, staple foodstuffs such as raw meats, fish, vegetables, fruits, cereals, nuts, and pulses are exempt from VAT (rated at 0%). The study proposes maintaining this zero rating for fruits and vegetables but suggests increasing VAT on meat and dairy products to the full rate of 20%. Such a change is expected to reduce these products’ consumption, promoting healthier eating habits. Specifically, the study projects reduced meat and dairy consumption by one serving per week in EU countries and by two servings per week in the UK.

The implications of reduced meat and dairy intake are significant, with potential reductions in diet-related diseases such as heart disease, stroke, cancer, and diabetes. The researchers estimate that these dietary changes could prevent approximately 170,000 deaths across the UK and EU combined, with over 2,000 deaths averted in the UK alone due to decreased meat and dairy consumption.

Moreover, the environmental benefits of such dietary shifts are notable. Decreased demand and production of beef and milk would lead to substantial reductions in climate-warming gases—equivalent to the combined emissions of Scotland and Northern Ireland. In the UK alone, the emission reductions would be comparable to half of London’s emissions. The study also anticipates a significant decrease in the demand for agricultural land, equivalent to the area between the Republic of Ireland and Scotland, including a freeing up of land the size of Wales within the UK and a reduction in water pollution by ten per cent.

From an economic perspective, the researchers found that the proposed changes would preserve affordability for consumers—who are likely to substitute higher-priced meats and dairy with more cost-effective fruits and vegetables—and generate increased government revenues. They estimate that the tax shift could yield an additional £36 billion in tax receipts, corresponding to 0.2% of GDP, with a 0.6% increase in GDP contributions from the UK.

Professor Springmann emphasised the implications of setting VAT rates with health and environmental considerations. Such a strategy could significantly impact public health and ecological sustainability and bolster economic growth by generating additional government revenue. This points to a need for a thoughtful reassessment of food tax policies in the UK and across Europe, suggesting that well-considered fiscal measures can lead to substantial societal benefits.

More information: Marco Springmann et al, A reform of value-added taxes on foods can have health, environmental and economic benefits in Europe, Nature Food. DOI: 10.1038/s43016-024-01097-5

Journal information: Nature Food Provided by University College London

Perceptions of Neighbourhoods and Their Impact on Rental Prices: An Innovative Analytical Method

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Rental prices are typically influenced by tangible factors such as the age of the building, available amenities, and location. However, not all properties with similar physical attributes command the same rent. The subjective perceptions of a neighbourhood also play a crucial role.

A team from Osaka Metropolitan University has honed a technique that accounts for these perceptual variables, achieving nearly 75% accuracy in predicting housing prices within Osaka City.

Xiaorui Wang, a student at the Graduate School of Human Life and Ecology, and Professor Daisuke Matsushita spearheaded this initiative. They leveraged existing property datasets from Osaka City, enhancing them with additional data concerning physical aspects of street-level images (such as the sky, vegetation, and architecture). Furthermore, they assessed the streetscape based on various impressions — safety, beauty, depression, liveliness, wealth, and boredom — using machine learning techniques.

Their methodology successfully predicted rental prices with an accuracy of 73.92%. Notably, the perceptions of the neighbourhood emerged as a significant factor, ranking just below the building’s age, its floor area, and its proximity to the central business district in terms of influence on rental pricing.

More information: Xiaorui Wang et al, Explaining housing rents: A neural network approach to landscape image perceptions, Habitat International. DOI: 10.1016/j.habitatint.2024.103250

Journal information: Habitat International Provided by Osaka Metropolitan University

Research Reveals Consumer Acceptance of Smoke-Tainted Wines, Unveiling Potential Market Prospects

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A recent study has revealed that specific consumer segments are receptive to wines affected by smoke, presenting potential market opportunities for winemakers grappling with the ongoing challenge of wildfire smoke’s impact on grapes. In collaboration with counterparts in New Zealand, researchers from Oregon State University discovered that consumers who enjoy smoky flavours in their food and drinks are more likely to appreciate wines influenced by smoke. The study also highlighted the significant role that labelling can play in modulating consumer acceptance of these wines.

Elizabeth Tomasino, a professor of enology at Oregon State University, emphasised the importance of these findings for the wine industry. She pointed out that for a niche group of wine consumers, there exists a viable market for wines that have been impacted by smoke. This insight is crucial for winemakers increasingly facing the repercussions of more enormous and more frequent wildfires around the globe. For instance, the economic toll of the wildfires on the West Coast of the United States in 2020 was estimated to be as high as $3.7 billion.

In response to the escalating impact of wildfires, a team of scientists from Oregon State was awarded a $7.65 million grant from the U.S. Department of Agriculture further to investigate the effects of smoke on wine quality. This team has since identified specific compounds that contribute to the smoky characteristics in grapes and has developed innovative spray-on coatings for grapes that help prevent undesirable flavours in wines caused by wildfire smoke.

The latest findings from this research were published in the journal Food Research International, which delved into consumer attitudes towards smoke-impacted wines. This subject has not been extensively explored previously. Tomasino and doctoral student Jenna Fryer shipped smoke-impacted and standard wines made from Oregon pinot noir grapes to New Zealand to conduct this study. There, they collaborated with Amanda Dupas de Matos and Joanne Hort at Massey University to study the reactions of 197 participants who were not accustomed to wines affected by wildfire smoke.

This New Zealand study revealed two distinct consumer groups: one that appreciated the smoke-impacted wine (110 participants) and another that did not favour it (87 participants). Introducing specific labels that referred to the wildfires increased the acceptance of smoke-impacted wines among those who initially disliked them, enhancing their average liking scores significantly.

The researchers concluded that winemakers have several strategies to market smoke-impacted wines effectively. These include blending smoke-affected wines with unaffected varieties to mitigate the smoky flavour and employing targeted marketing strategies to appeal to consumers inclined towards smoky notes. Tomasino noted that the study’s findings suggest winemakers might be underestimating consumer tolerance for smoky wines, indicating more flexibility in marketing and production strategies than previously considered. This groundbreaking research opens up new avenues for winemakers to adapt to the evolving challenges posed by climate change and wildfires, potentially transforming a crisis into an opportunity for innovation and market expansion.

More information: Jenna Fryer et al, Consumer responses to smoke-impacted pinot noir wine and the influence of label concepts on perception, Food Research International. DOI: 10.1016/j.foodres.2025.115881

Journal information: Food Research International Provided by Oregon State University