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The Enduring Impact of Experiences

Challenging the traditional perspective that views consumption as an isolated and immediate event, Stefania Minardi from HEC Paris and Andrei Savochkin from Bocconi University’s Department of Decision Sciences delve into the idea that experiences can leave lasting mental imprints. They explore how these imprints affect future well-being and influence present decisions about engaging in experiences or purchasing goods and services. Their latest research paper, “Time for Memorable Consumption,” published in the journal Games and Economic Behavior, aims to integrate this concept into the economic decision-making framework. By merging insights from psychology with economic theories, the authors introduce a new quantitative model that illustrates how “memorable consumption” shapes long-term satisfaction and decision-making patterns.

The concept of a “memorable” experience is central to their theory. Savochkin and Minardi define it as an experience that has a durable positive or negative impact on a person’s subjective well-being, extending beyond the initial moment of consumption. Examples include significant events like weddings, notable career achievements, or traumatic incidents. These experiences differ from routine, everyday consumption because they linger in memory and uniquely affect well-being. Memorable experiences are those that individuals mentally revisit, reliving pivotal moments that maintain their influence over time. The researchers incorporated the “peak-end rule” in their model, suggesting that people tend to remember the most intense and final moments of an experience, often overlooking its duration.

Minardi and Savochkin have developed a mathematical model that considers both the immediate utility derived from an experience and the sustained utility gained from its memory to quantify the impact of memorability. This model suggests that the direct material benefits and the memorable effect of specific experiences influence consumption decisions. The model differentiates “moment utility”—the immediate pleasure or discomfort experienced during an event—from “remembered utility”—the satisfaction or regret experienced in recalling the event. The authors stress that memorability is subjective, meaning that what may be memorable for one person might not be for another.

The practical applications of their model are illustrated through two economic scenarios that demonstrate its real-world relevance. First, when individuals face risky decisions, memories of past outcomes—whether positive or negative—influence their willingness to take future risks. This insight is crucial for designing managerial incentives, suggesting that without consideration of past experiences, managers might either avoid moderately risky but profitable projects or engage in hazardous behaviours that could harm the company.

Another application of their model is understanding savings behaviour throughout an individual’s life cycle. The memory of past consumption, such as a memorable vacation, can influence current saving decisions. This explains observed behavioural inconsistencies like “excess sensitivity” to income changes. For instance, recollecting past enjoyment or regret about expenditure may lead someone to save more or less in anticipation of similar future experiences. This insight offers a new perspective on why younger people might spend more and save less, viewing such expenditures as investments in non-financial assets like enriching life experiences.

By incorporating memorable consumption into economic models, Minardi and Savochkin offer a nuanced understanding of how past experiences shape current economic behaviour. This approach expands the boundaries of economic theory by acknowledging the complex interplay between memory, knowledge, and decision-making. It enhances the applicability of economic models and provides a deeper insight into the psychological factors that drive consumption patterns. This innovative framework thus opens new avenues for research and practical economic and behavioural sciences applications.

More information: Stefania Minardi et al, Time for memorable consumption, Games and Economic Behavior. DOI: 10.1016/j.geb.2024.09.010

Journal information: Games and Economic Behavior Provided by Bocconi University

Home is Where the Heart Belongs – Or Does It?

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A study co-authored by Bayes Business School delves into the evolving concept of ‘home’, identifying four distinct types, each with unique psychological benefits, suggesting that individuals may find affinity with more than one setting in today’s mobile world. Traditionally, a home has been perceived as a ‘place’ – a physical structure associated with ownership and pride. However, as the world becomes more interconnected and workforces more mobile, the definition of what constitutes a home is shifting. Today’s globally mobile individuals, including transnational consumers, company expatriates, long-distance transnational families, and digital nomads, often consider multiple locations as their homes, each serving different functions such as domestic activities, dwelling practices, possessions, and relationships.

The research team, comprising Fleura Bardhi, Professor of Marketing at Bayes, Dr Zahra Sharifonnasabi of Queen Mary University London, and Dr Laetitia Mimoun of ESCP Business School, explores what ‘home’ means in an era of widespread nomadism and remote work, phenomena that the recent pandemic has accelerated. Their study challenges traditional views of home as merely a place, proposing it as a ‘space’ for social interaction and a ‘set of practices’ or rituals that imbue a location with the essence of home. The study surveyed 40 globally mobile consumers to understand their conceptions of home and homemaking practices and how these perceptions have influenced their international mobility. The research examined various aspects, such as access to different consumer markets, forming commercial friendships, and the participants’ attachment to owned or rented locations.

The collected data identified four primary home types, each representing different psychological implications and values: 1. The emotional home – where most significant domestic activities occur, alongside strong ownership and social connections. These homes provide a sense of belonging and stability, representing the most ‘traditional’ home form. 2. The home away from home – characterised by strategically placed possessions and selective social relationships. These settings offer routine and a sense of psychological ownership but lack the personal involvement and historical connections typical of an emotional home. 3. The base-of-operation home is primarily used for outsourced domestic and professional tasks, where productivity peaks. Often located within office complexes, these homes cater to career advancement and are typically vacant during weekends and non-working days. 4. The home on the road – defined by occasional social interactions and access-based residences, offering flexibility. Represented by transient commercial spaces like hotels, these homes are crucial for short, temporary engagements such as frequent relocations.

The study also discusses how strategically selecting these different types of dwellings could help consumers address challenges associated with settling in new places, such as loneliness, guilt, and fear of missing out. Understanding the blend of domestic activities, dwelling practices, possessions, and relationships can facilitate the creation of various home types in a mobile world. Professor Bardhi highlighted the study’s implications for multiple sectors. She noted that the traditional concept of home as a single, fixed place in a globally mobile era is outdated.

For instance, nomadic work arrangements necessitate spending significant time in different locations, making them feel at home. This has practical implications for sectors like travel and hospitality, which could reimagine temporary workplace accommodations as homes, providing both commercial and psychological consumer benefits. Marketing practitioners and consumer brands are advised to consider these insights to tailor their approaches to consumers based on the four types of homes identified.

Additionally, human resources professionals and leaders should acknowledge the diverse home environments and the needs of modern mobile workers by offering support and local services that enhance well-being, allow for flexible working arrangements, and show cultural sensitivity to internationally based employees. This comprehensive understanding of home in the context of global mobility is crucial for adapting to and thriving in the changing dynamics of work and personal life.

More information: Zahra Sharifonnasabi et al, Home and psychological well-being in global consumer mobility, Journal of Consumer Psychology. DOI: 10.1002/jcpy.1440

Journal information: Journal of Consumer Psychology Provided by City St George’s, University of London

UN Study Suggests: Investing in Nature Could Reduce the Billion-Dollar Expenses of Droughts

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As droughts, exacerbated by the human-induced degradation of the environment, are projected to affect three-quarters of the global population by 2050, it becomes crucial to invest in sustainable land and water management practices to mitigate their financial impacts, which currently exceed $307 billion annually worldwide. This urgent call for action was highlighted in a new report unveiled today at the Conference of the Parties (COP16) of the United Nations Convention to Combat Desertification (UNCCD).

The report draws upon an extensive range of evidence and case studies from various countries, such as Chile, India, Jordan, Kenya, Spain, and Tunisia. It effectively makes the economic and business case for adopting nature-based solutions (NbS) to combat drought. These solutions focus on restoring ecosystem functions and soil health to improve water flow, storage, and supply, which are vital for human well-being. Such practices include reforestation, controlled grazing, and the restoration and conservation of watersheds.

Authored collaboratively by the United Nations University Institute for Water, Environment and Health (UNU-INWEH), the Economics of Land Degradation Initiative (ELD), and the UNCCD, with financial backing from the German Federal Ministry for Economic Cooperation and Development, the International Drought Resilience Alliance (IDRA), and the European Union, the report is a cornerstone resource for policymakers and stakeholders. Andrea Meza, UNCCD Deputy Executive Secretary, stressed the importance of sustainable land and water management to spur economic growth and bolster resilience against drought, increasingly trapping communities worldwide in destructive cycles. The ongoing discussions at COP aim for a pivotal decision on drought, urging global leaders to acknowledge the significant, yet avoidable, costs of drought and to champion proactive, nature-driven solutions within the limits of our planet.

The report points out that urbanisation, deforestation, and the excessive withdrawal of surface and groundwater, compounded by climate change, alter land cover and reduce freshwater availability. Consequently, drought is influenced by scant rainfall and how we manage our terrestrial and aquatic resources. Hence, managing the risks of water shortages and the cyclical nature of droughts and floods can be effectively addressed through appropriate policies, incentives, and investments in our natural assets.

The economic repercussions of droughts and related disasters are vastly underappreciated. Costs often escalate beyond national borders, affecting sectors like energy and health and impacting the broader economy. The implementation costs outlined by countries in their national drought and associated plans are only a fraction of the annual expenses incurred due to drought.

Investing in nature-based solutions reduces the impact of drought and holds substantial economic potential. For instance, an economy that integrates natural systems rather than undermining them could generate up to $10.1 trillion annually in business value and create as many as 395 million jobs by 2030. By tripling investment in these solutions by 2030, an additional 20 million jobs could be created. German Parliamentary Secretary Niels Annen emphasised that every dollar invested in these solutions can yield returns of up to $27, enhancing farmer incomes, bolstering value chain resilience, and reducing long-term economic costs. This underscores the urgent need to revalue land management and restore sustainable practices.

The benefits of nature-based solutions extend beyond drought mitigation; they enhance the income of land and water users and offer co-benefits for climate adaptation, biodiversity conservation, and sustainable development. These benefits are invaluable, regardless of drought occurrences, rendering such solutions a no-regret option.

The report concludes with several recommendations to harness the full potential of sustainable land and water management on a landscape scale. It highlights the importance of integrating nature-based solutions into national drought management strategies, securing land tenure and water rights, and strengthening local governance to facilitate on-the-ground changes.

In conclusion, the economic impact of drought extends beyond immediate agricultural losses, affecting entire supply chains, reducing GDP, impacting livelihoods, and leading to challenges like hunger, unemployment, migration, and long-term human security. Thus, effective management and investment in natural solutions are crucial to mitigate these effects, presenting an invaluable opportunity for both public and private investors to create sustainable livelihoods and economic prosperity in harmony with nature while combating the adverse impacts of droughts and climate change, particularly in developing regions of the Global South.

More information: UNU-INWEH et al, Economics of drought — investing in nature-based solutions for drought resilience, Economics of Drought Report. DOI: 10.53328/INR24CCD001

Journal information: Economics of Drought Report Provided by United Nations University

Prolonged COVID-19 is Financially Burdening Americans

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The tumult of the early 2020s brought on by the COVID-19 pandemic might have subsided. Yet, the SARS-CoV-2 virus continues to impose significant financial strains on some Americans, as a recent study by the University of Georgia revealed.

This study highlights how long COVID-19 is exacerbating difficulties for many individuals in managing their finances, hindering their ability to pay for necessities such as groceries and utility bills. The findings suggest that these financial challenges primarily stem from the loss of employment and reduced working hours, with the adverse economic impacts of the condition cutting across all socioeconomic levels.

Ishtiaque Fazlul, the principal investigator of the study and an assistant professor affiliated with both UGA’s School of Public and International Affairs and UGA’s College of Public Health, stressed the ongoing nature of COVID. He pointed out that long COVID continues to be a significant issue, causing financial hardships for people from diverse backgrounds. Fazlul noted that while the pandemic might seem like a past event, its long-term effects, such as long COVID, are a current problem affecting individuals’ financial situations.

The financial burdens of long COVID are particularly severe for those on lower incomes. The study’s data revealed that individuals in the lowest income brackets who suffer from long COVID are 10 percentage points more likely to experience food insecurity. They also face a higher risk of losing access to crucial utilities due to financial constraints.

However, even individuals in higher income groups are not immune to these challenges, as the study found similar financial difficulties across different income levels. The study utilised data from a comprehensive survey by the Centers for Disease Control and Prevention, which included responses from over 270,000 Americans across 40 states. Out of these, approximately 20,000 participants reported suffering from long COVID, with those in lower income groups and without college degrees being disproportionately affected.

Fazlul highlighted that any decrease in income could push low-income Americans into food insecurity and make it difficult for them to manage their bills. He also pointed out that while higher-income individuals might have the option to work from home or rely on savings, those with lower incomes often have fewer resources to fall back on, exacerbating their vulnerability during such health crises.

The study also suggested several policy interventions that could mitigate these challenges. These include providing more flexibility in work hours and telecommuting policies, which could help long-term COVID sufferers maintain their employment and access to health care. Enhancing healthcare services to better manage long-term COVID symptoms could also significantly improve patients’ quality of life.

Moreover, the researchers argued that increasing job security and access to credit could provide a financial safety net for those affected by long COVID. Fazlul concluded by emphasising the importance of addressing the economic impacts of long COVID, advocating for greater attention to this ongoing issue that continues to affect the financial well-being of many Americans.

More information: Ishtiaque Fazlul et al, Long COVID and financial hardship: A disaggregated analysis at income and education levels, Health Services Research. DOI: 10.1111/1475-6773.14413

Journal information: Health Services Research Provided by University of Georgia

Research Indicates That Sympathy for ‘Sad’ Bananas Encourages Shoppers to Minimise Food Waste

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At the University of Bath’s School of Management, recent research highlights an innovative approach retailers can employ to prompt consumers to purchase single, unsold bananas by attributing emotional characteristics to them. By placing a sign next to the bananas that depicted a banana with a downturned mouth accompanied by the message “We are sad singles and want to be bought as well,” researchers found that shoppers were more likely to feel compassion towards these fruits. This emotional connection, fostered by the visual appeal of the bananas depicted as being sad and abandoned, effectively motivated customers to rescue these lonely bananas from being wasted.

Published in the journal Psychology & Marketing, the study explored how emotional cues, precisely signs displaying ‘sad singles’ versus ‘happy singles’, affected the purchase of loose bananas and tomatoes. The findings were clear: signs that evoked sadness were significantly more effective than those showing happiness. This was quantified by a remarkable 58 per cent increase in the sales of single bananas per hour when the ‘sad’ sign was used, compared to a mere 5.4 per cent increase with the ‘happy’ banana signage. This stark contrast underscores the powerful impact of emotional engagement in consumer behaviour, particularly in reducing food waste.

Dr Lisa Eckmann from the Bath Retail Lab explained that this was the first experiment to compare the effects of happy and sad expressions on bananas separated from their bunches to examine sales impact. The experiment took place in a major German supermarket chain, REWE, involving the observation of the purchasing behaviours of 3,810 customers over 192 hours. This particular supermarket had previously labelled bananas as singles wanting to be bought but had not incorporated the emotional element until this study.

In addition to the in-store research, the study was extended online with several experiments involving more than 4,700 participants, replicating the setup for bananas and tomatoes and examining the influence of price discounts on purchasing decisions. Interestingly, while price reductions proved more effective than emotional appeals in some cases, the researchers suggested that anthropomorphism—or attributing human characteristics to non-human entities—remains a valuable, low-cost, and effective strategy for boosting sales and minimising food waste when price cuts are not viable.

This research aligns with broader environmental concerns highlighted by reports from the UN Environment Programme and various research groups, which note that single bananas are significant contributors to food waste and climate impact due to selective consumer behaviour. By identifying single bananas as a primary source of avoidable waste, the study provides practical insights for retailers and policymakers on addressing these challenges through creative marketing techniques.

Furthermore, Dr Eckmann hinted at the potential for a tiered intervention strategy where anthropomorphism could initially be used to increase the appeal of single items, subsequently complemented by price discounts if necessary. She also raised an intriguing point about the long-term effectiveness of such emotional appeals, speculating whether consumers might eventually become desensitised to the sad expressions on bananas.

As this research suggests, the emotional portrayal of produce not only taps into fundamental human motivations, such as the need for belonging but also presents a novel method for retailers to engage with consumers in a way that promotes sustainability. As indicated by the team, future research might explore under which conditions emotional expressions could be less effective, such as when the produce is deformed or slightly damaged. Thus, the journey of the ‘sad’ bananas offers a poignant reflection on our consumption patterns and the potential for empathy-driven marketing to influence them significantly.

More information: Svenja Gerecht et al, Anthropomorphic Sad Expressions Reduce Waste of “Single” Imperfect Food, Psychology & Marketing. DOI: 10.1002/mar.22145

Journal information: Psychology & Marketing Provided by University of Bath

Presence of Military Directors on Boards Enhances CEO Accountability for Subpar Firm Performance

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Principles derived from military service can substantially influence corporate governance, particularly executive accountability. A study published in the Strategic Management Journal underscored this, revealing that the inclusion of board members with military backgrounds could heighten the likelihood of CEO dismissals under circumstances of poor corporate performance.

The research, conducted by Stevo Pavićević from the Frankfurt School of Finance and Management in Germany and Thomas Keil from the University of Zurich, is part of a broader investigation into how directors’ backgrounds affect board decisions, specifically concerning the dismissal of CEOs. A detailed examination of director profiles highlighted a significant presence of individuals with military experience. While expecting to find military directors primarily in defence-related industries, the researchers were intrigued to discover their widespread presence across various sectors, prompting further investigation into the potential implications for board decision-making.

Pavićević and Keil posited that boards featuring military directors might be more prone to dismiss CEOs following subpar firm performance due to a different approach to executive accountability. To substantiate their hypothesis, they conducted a comprehensive quantitative study analysing director profiles and CEO dismissals across 865 public companies in the U.S. from 2010 to 2020. The study was complemented by interviews with military directors serving on these boards.

The findings from the data analysis and the interviews indicate that military directors are likely to attribute poor performance directly to the CEO and are more assertive in advocating for stringent CEO accountability, often leading to dismissals. Notably, the impact of military directors on CEO dismissal decisions was more significant when these directors were part of the board’s nominating committee. The researchers also discovered that military directors could influence the removal of even powerful CEOs, such as those who are major shareholders or have long tenures.

Through their interactions with military directors, Pavićević and Keil observed that the ingrained values of accountability not only shaped the directors’ decision-making processes but also encouraged other board members to adopt a stricter stance on CEO accountability, particularly in scenarios typically challenging for many boards.

However, the study also identified that the influence of military directors is somewhat diminished when the CEO also holds the position of board chair. This scenario, referred to as CEO duality, limits the effect military directors can have on CEO dismissals.

Pavićević highlighted a critical insight from their research: boards that aim to bolster CEO accountability might need to look beyond the individual backgrounds of directors and consider the overall board composition and structure. While appointing directors with military experience can enhance accountability measures, the effectiveness of such appointments is affected by factors like CEO duality. It is more pronounced when these directors are part of the nominating committee. This nuanced understanding of board dynamics and director backgrounds offers a strategic lens through which companies can better structure their leadership oversight and enhance governance efficacy.

More information: Stevo Pavićević et al, The role of military directors in holding the CEO accountable for poor firm performance, Strategic Management Journal. DOI: 10.1002/smj.3675

Journal information: Strategic Management Journal Provided by Strategic Management Society

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Deciding Between Human and Algorithmic Decision-Makers

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

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

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

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

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

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

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

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

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

Journal information: PNAS Nexus

Job Satisfaction and Salaries Decline for Individuals Who Stutter

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

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

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

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

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

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

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

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

Enhanced Environmental Practices Increase Profits and Reduce Expenses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Embracing AI Necessitates a New Communication Skill Set for Sales Managers

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

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

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

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

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

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

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

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

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

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

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

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

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

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