Author Archives: support

Transform Your Health and Well-being in Just 15 Minutes a Day

Workplaces constantly adapt to new wellness initiatives such as Corporate Cup events, lunchtime yoga sessions, and ‘walk and talk’ meetings to enhance employee physical activity. Recent research by the University of South Australia has uncovered that merely 15 minutes of targeted activity per day can significantly improve an individual’s health when augmented with gamification elements. This study examined the effectiveness of a gamified wellness programme, the ’15 Minute Challenge’, which involved 11,575 employees across 73 companies in Australia, New Zealand, and the UK. The findings revealed that 95% of participants met or exceeded the recommended exercise guidelines.

Over six weeks, the challenge resulted in an average increase of 12 minutes in daily physical activity, translating to an additional 85 minutes per week. Typically, participants engaged in 45 minutes of exercise daily. Notable improvements were observed: fitness levels rose by 14%, energy by 12%, overall health by 8%, sleep quality by 8%, and mood by 7.1%. These improvements are particularly significant given the World Health Organization’s recommendation that adults aged 18-64 undertake 150–300 minutes of moderate-intensity or 75–150 minutes of vigorous-intensity aerobic physical activity each week.

Dr Ben Singh, the lead researcher from UniSA, highlighted the effectiveness of the ’15 Minute Challenge’ in bolstering workplace health and wellness. He underscored the broad benefits of regular physical activity, which not only assists in managing and preventing chronic diseases such as cardiovascular conditions, diabetes, and cancer but also alleviates symptoms of depression and anxiety. Given that approximately half of the Australian adult population does not meet the recommended levels of physical activity, there is a critical need for workplace wellness programmes like the ’15 Minute Challenge’.

The study’s results underscore the potential of the ’15 Minute Challenge’ to address physical inactivity. The challenge’s unique approach motivates participants to exceed the minimal goals set by the challenge itself, effectively cultivating regular exercise habits. This is particularly beneficial for those who lead sedentary lifestyles. The 15-minute daily target serves as a catalyst, encouraging participants to engage in more extensive physical activity. Many found themselves not only achieving but surpassing national health recommendations, affirming the efficacy of the challenge.

Professor Carol Maher, a co-researcher at UniSA, attributed part of the programme’s success to its gamification elements and the social dynamics promoted through the app. The app encourages team collaboration and accountability via friendly competition, which plays a vital role in motivating participants to remain engaged and connected. Maher stressed that addressing physical inactivity requires a collective effort and that employers who implement effective, enjoyable, and cost-efficient programmes like the ’15 Minute Challenge’ can enjoy dual benefits. These include improved employee health and well-being, as well as enhanced productivity and satisfaction.

Such initiatives not only improve the health and well-being of employees but also enhance their productivity, satisfaction, and stress levels whilst reducing the likelihood of illness. This underscores the importance of sustainable and scalable wellness programmes as essential components of any organisation’s health and wellness strategy, positioning the ’15 Minute Challenge’ as a model for fostering positive change within workplace environments.

More information: Ben Singh et al, Evaluation of the “15 Minute Challenge”: A Workplace Health and Wellbeing Program, Healthcare. DOI: 10.3390/healthcare12131255

Journal information: Healthcare Provided by University of South Australia

Workplace Support Fails to Deter Retaliation Among ‘Stuck’ Employees, Study Finds

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Recent research reveals that employees trapped in undesirable jobs without the possibility of leaving do not experience positive effects from organizational support once they perceive their employer has broken trust. These “stuck” employees, held back due to a lack of alternative jobs, family commitments, or other barriers, constitute more than half of the global workforce. Such individuals are more likely to engage in unproductive behaviours as a form of ‘retaliation’ against perceived organizational injustices, including actions ranging from feigning busyness to damaging equipment and speaking negatively about the company.

Joint studies by The Pennsylvania State University in the USA and the Centre for Responsible Business at the University of Birmingham in the UK have shown that supportive workplace policies do not decrease retaliatory intentions among stuck employees if they feel betrayed by their employer. This research, detailed in the Journal of Business and Psychology, underscores supportive policies’ limitations in changing stuck employees’ behaviour when trust is compromised. Solon Magrizos, Associate Professor of Marketing at Birmingham Business School, notes that while general positive support can reduce retaliation intentions, this effect does not extend to stuck employees when safety is compromised.

The researchers surveyed 327 working adults in the United States, asking them to rate their desire to leave their current jobs, the ease of leaving, and the perceived organizational support at their workplace. The participants were then presented with one of three scenarios involving employer decisions on COVID-19 safety measures, ranging from decisions that enhance safety by retaining protective measures to those that reduce safety by removing restrictions. The third scenario was a control condition in which the employer complied with continued state mandates.

The study’s findings indicate that general perceived organizational support helps buffer adverse reactions to decisions that decrease safety but does not affect stuck employees, who show stronger retaliatory intentions. Caroline Moraes, Professor of Marketing and Co-Director of the Centre for Responsible Business, explains that stuck employees tend to have a more transactional relationship with their employers, making them feel a more profound violation of the social exchange when trust is breached.

This research suggests that while general organizational support might paradoxically increase retaliation intentions among employees who feel unable to leave, it is still crucial for employers to be supportive. Moraes and Dr. Magrizos stress the importance of employers understanding and supporting the unique perspectives and needs of ‘stuck’ employees. This understanding can mitigate negative feelings and improve overall workplace dynamics. They advocate for clear and honest communication, the promotion of self and career development opportunities, and creating avenues for employees to express concerns, which can enhance the workplace for everyone, especially those who feel ‘stuck ‘.

While supportive policies are generally beneficial, it’s important to acknowledge that they may not always curb the retaliatory behaviours of ‘stuck’ employees if these employees perceive a breach of trust, particularly regarding their safety. However, this should encourage employers to implement and maintain supportive policies. Instead, it should reinforce the need for employers to consider the specific dynamics and feelings of their ‘stuck’ employees when making tough decisions. By fostering an environment where all employees feel valued and heard, employers can reduce potential conflicts and enhance organizational health.

More information: Jean M. Phillips et al, Examining Retaliation Intentions Among Stuck Employees, Journal of Business and Psychology. DOI: 10.1007/s10869-024-09971-6

Journal information: Journal of Business and Psychology Provided by University of Birmingham

Research reveals that the US lacks affordable housing, not a housing shortage

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While it’s a widely held view that the United States is grappling with a housing shortage—a notion even driving national policy under the Biden administration’s efforts to tackle the perceived lack of housing supply—recent findings from the University of Kansas suggest a different scenario. The study, spearheaded by Kirk McClure, professor emeritus of public affairs & administration at KU, alongside Alex Schwartz of The New School, paints a picture not of a shortage in housing numbers but a critical lack of affordable units for lower-income households. Their research, detailed in the journal Housing Policy Debate, utilised U.S. Census Bureau data spanning two decades, from 2000 to 2020, to compare new households with new housing units. The analysis revealed a significant imbalance, with just four of the nation’s 381 metropolitan areas and 19 of the 526 micropolitan areas experiencing a housing shortage within the study period.

The researchers’ examination of household income categories—exceptionally very low income (30% to 60% of area median family income) and meagre income (below 30% of area median family income)—highlighted the growing disparity. Despite a surplus of 3.3 million housing units created from 2000 to 2020, household formation surpassed the number of available homes in the last decade, suggesting a shift in the type of housing demand, primarily driven by affordability issues rather than sheer availability. This surplus in the earlier decade had compensated for the later shortfall.

Their findings indicate that while nearly all metropolitan areas have adequate housing for homeowners, there needs to be more rental units affordable to very low-income earners. The national total vacancy rates, which stood at 9% in 2000, rose to 11.4% by 2010 at the height of the housing bubble and the Great Recession and slightly reduced to 9.7% by the end of 2020, also shed light on housing availability. These rates suggest a considerable number of vacant units, yet availability is more complex, encompassing factors such as habitability and cost, which can restrict accessibility to suitable housing.

The detailed analysis of different housing markets across the country revealed a national surplus of 2.7 million housing units over households in the studied period for metropolitan areas, with micropolitan areas showing a smaller surplus of around 300,000 units. The researchers also delved into housing affordability, noting that shortages only became apparent in data concerning renters, particularly those earning between 30% to 60% of the median family income—a bracket roughly aligning with federal poverty levels and eligibility for rental assistance. The study found that only two metropolitan areas had a deficit of units for very low-income renters, illustrating the selective nature of housing shortages.

McClure and Schwartz argue that enhancing the affordability of existing housing through federal assistance programs and addressing income levels could be more effective and economical than expanding construction in hopes of reducing housing prices. This approach aligns with their findings that the primary barriers to housing affordability in the U.S. stem from high housing costs met by insufficient incomes rather than a straightforward shortage of housing units. Their insights challenge the prevailing narrative and suggest that policy focus should shift towards financial accessibility rather than merely increasing housing stock. This nuanced understanding could guide more targeted and effective interventions to address the complex issue of housing affordability in the United States.

More information: Kirk McClure et al, Where Is the Housing Shortage? Housing Policy Debate. DOI: 10.1080/10511482.2024.2334011

Journal information: Housing Policy Debate Provided by University of Kansas

A Simple Strategy That Assists Low-Income Households in Overcoming the Poverty Cycle

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Many low-income families aspire to relocate to safer, quieter neighbourhoods with better schools, but they seldom need to make such moves. A high-profile experiment led by MIT economists reveals that with just a modest amount of logistical support, the likelihood of these families moving to areas with better economic opportunities significantly increases. The study, conducted in the Seattle area, found that the number of families using housing vouchers to move jumped from 15 per cent to 53 per cent with the aid of additional information, financial support, and, crucially, the assistance of a “navigator” who helped overcome logistical hurdles.

The research aimed to understand the drivers behind residential segregation, questioning whether it was due to personal preferences or if logistical constraints hindered mobility. “Just pairing people with [navigators] broke down search barriers and created dramatic changes in where they chose to live,” noted Nathaniel Hendren, an MIT economist and co-author of the study. The results were compelling enough for the U.S. Congress to allocate $25 million twice, funding replications of the experiment in eight other U.S. cities.

This experiment builds on insights from the 2018 “Opportunity Atlas” and a 1990s federal initiative, both of which explored the geography of economic mobility but with mixed outcomes. The current study, Creating Moves to Opportunity (CMTO), not only provided housing vouchers but also short-term financial help, more comprehensive information, and navigator support. This comprehensive bundle significantly enhanced the effectiveness of the assistance, demonstrating that the main impact came from the comprehensive support, especially from navigators.

The finalised study, published as “Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice” in the American Economic Review, underscores the importance of tailored support in overcoming diverse familial barriers, from lease terms to school selection. The researchers found that emotional support from navigators was particularly valued, highlighting the significant impact of this study on understanding the stressful nature of moving.

With the success of the Seattle experiment, there is now keen interest in seeing if these outcomes can be generalised to other cities. Funded replications in cities like Cleveland, Los Angeles, and New York City are underway to test the program’s effectiveness across different urban landscapes and societal contexts. This nationwide testing could confirm whether the Seattle model can serve as a blueprint for reducing residential segregation and enhancing economic mobility.

The Seattle study represents a significant step forward in understanding and combating the systemic issues that perpetuate intergenerational poverty and residential segregation. By providing financial assistance, information, and personalised navigational support, the experiment has demonstrated a potential pathway to empowering low-income families to move toward better opportunities, with implications for policy and practice across the United States.

More information: Peter Bergman et al, Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice, American Economic Review. DOI: 10.1257/aer.20200407

Journal information: American Economic Review Provided by Massachusetts Institute of Technology

The Increased Spending Associated with Cashless Transactions

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A study led by researchers from the University of Adelaide reveals that individuals tend to spend more when using cashless payment methods than traditional cash. The study, spearheaded by PhD student Lachlan Schomburgk, unearthed evidence of a “cashless effect” where consumers increase their spending, particularly on status-signalling products like jewellery, while this effect does not extend to donations or tips.

Lachlan Schomburgk, alongside Professor Arvid Hoffmann of the University of Adelaide and Dr Alex Belli from the University of Melbourne, found that contrary to their expectations, cashless payments do not lead to higher donations or tips compared to cash. This discovery highlights the continuing effectiveness of traditional cash-based methods for collecting money, such as tipping jars and spiral wishing wells, which perform on par with modern cashless terminals.

Schomburgk advises consumers to be aware of the payment method chosen, especially during the current cost-of-living crisis, to avoid overspending. He recommends using cash to help manage spending better, as the physical act of counting and handing over money makes the transaction more tangible and real, helping to maintain awareness of expenditures.

The research underscores the significant impact of payment methods on consumer behaviour, especially as society moves towards predominantly cashless transactions. Schomburgk stresses the importance of this research in illuminating aspects of this transition that are often overlooked, empowering consumers to make more informed decisions about their spending habits.

The findings, published in the Journal of Retailing, also have implications for businesses and policymakers. Schomburgk points out that companies must adopt cashless methods to avoid inadvertently harming their revenue potential. Moreover, he suggests that policymakers should help those unfamiliar with cashless payments, like unbanked individuals, understand the risks of overspending associated with such methods.

Schomburgk also calls for further research into emerging payment technologies, such as buy-now-pay-later services and cryptocurrencies, due to their unique features and the limited current research on their impact on spending behaviours.

The study involved a comprehensive analysis of 71 published and unpublished papers from 17 countries, involving over 11,000 participants. Through this meta-analysis, the researchers identified factors that either strengthen or weaken the cashless effect, providing new insights that had not been fully understood in previous studies. Schomburgk emphasises the value of this extensive review in uncovering often overlooked dynamics in consumer behaviour, paving the way for future investigations into this evolving field.

More information: Lachlan Schomburgk et al, Less cash, more splash? A meta-analysis on the cashless effect, Journal of Retailing. DOI: 10.1016/j.jretai.2024.05.003

Journal information: Journal of Retailing Provided by The University of Adelaide

How Certain Regions Assist Citizens in Evading Expensive Debt During Difficult Periods

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A recent national study offers compelling evidence that generous unemployment insurance benefits during the COVID-19 pandemic significantly reduced reliance on high-cost credit. Conducted by Rachel Dwyer and Stephanie Moulton of Ohio State University and published in Nature Human Behaviour, the research demonstrated that lower-income individuals in states with more generous benefits were much less likely to acquire new credit cards, personal finance loans, payday loans or other alternative financial service offerings. The findings underscore the critical role that unemployment insurance can serve in preventing low-income Americans from falling further into economic hardship. Moulton explained that providing more generous benefits helps avoid types of debt that are costly to individuals and society at large, a crucial insight for policymakers, economists, researchers, and individuals interested in social welfare and economic policies.

The study’s robust methodology included a large sample size of 2.3 million Americans, monitored from late 2019 through the end of 2021 using data from Experian. By analyzing the variability in unemployment insurance benefits across states and the timing of benefit expansions and contractions, the researchers could assess how these factors influenced the avoidance of costly debt. Dwyer emphasized the importance of unemployment insurance as a critical safety net component, affecting many people during the economic downturn induced by the pandemic.

Their analysis showed that enhanced unemployment benefits led to decreased usage of costly credit, particularly among the lowest-income households. For instance, the probability of these consumers taking out new credit cards was 9.7% lower in states where benefits were most generous. This trend was even more pronounced with alternative financial service loans, such as payday loans, often outside traditional banking channels and with high interest rates.

Moulton noted the disparity between income groups during the pandemic, explaining that while higher-income households might have used savings or credit cards to manage temporary unemployment, the lowest-income groups often had no such options. With savings or access to traditional credit, these consumers could turn to expensive credit options as a last resort, indicating a significant reliance on less desirable financial solutions when state support was lacking.

The study also explored other consumer behaviours during the recession, like spending on existing credit cards and applying for loans, regardless of approval status. Dwyer’s team found that lower-income consumers consistently fared better in states with generous benefits, suggesting that state support played a crucial role in economic stability for these individuals. These findings also contribute to the broader debate about the efficacy and return on investment of government programs like unemployment insurance, indicating that such programs not only assist individuals directly but also prevent broader economic repercussions like increased credit costs and potential bankruptcies.

The study underscores the potential societal gains from such government interventions by highlighting the link between state-provided benefits and reduced high-cost borrowing. Moulton concluded that preventing high-interest borrowing not only helps individuals avoid financial pitfalls but also mitigates costs that society might eventually bear, demonstrating the ripple effects of economic policies on the broader financial ecosystem.

More information: Lawrence M. Berger et al, Inequality in high-cost borrowing and unemployment insurance generosity in US states during the COVID-19 pandemic, Nature Human Behaviour. DOI: 10.1038/s41562-024-01922-8

Journal information: Nature Human Behaviour Provided by The Ohio State University

Recent Research Unveils the Financial Implications of Sanctions

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While aimed at curbing undesirable actions by target nations, economic sanctions often present a complex challenge with dual impacts. Primarily, they are designed to diminish the gross domestic product (GDP) and, thus, the prosperity of the nations they target, aligning with their strategic objectives. However, the repercussions for the economies of the imposing countries can also be severe. Nevertheless, these adverse effects can be considerably softened through the strategic selection of participant countries in the sanction measures.

This perspective is the crux of a recent study published in Economic Policy. The research, meticulously conducted by economists Sonali Chowdhry from DIW Berlin, Julian Hinz of Bielefeld University and IfW Kiel, Katrin Kamm from IfW Kiel, and Joschka Wanner from the University of Würzburg and IfW Kiel, delves into the economic sanctions imposed on Iran in 2012 due to its nuclear activities, and on Russia following its forceful annexation of Crimea in 2014.

Their analysis focused on the economic impacts of these sanctions, particularly in terms of price fluctuations, prosperity levels in the target countries, and changes in trade flows. Joschka Wanner, Junior Professor of Quantitative International and Environmental Economics at Julius-Maximilians-Universität Würzburg, outlined the methodological approach, noting that the initial step was to quantify the changes in these economic parameters as a direct result of the sanctions.

Their findings indicate a tangible reduction in GDP for the targeted nations; Iran saw a decline of 1.9 per cent, while Russia experienced a 1.44 per cent fall due to the 2014 sanctions. Wanner remarked, “Although 1.4 or 1.9 per cent might not seem significant, from an economic standpoint, these figures represent a severe recession.”

Moreover, the study assessed the real-world impacts against the theoretical maximum effect of the sanctions under various scenarios—either by broadening the coalition of sanctioning countries or applying the sanctions more comprehensively across all goods. For instance, the current sanctions coalition against Iran achieves only about 39 per cent of the potential GDP decline that could be realised if all countries participated. For Russia, the effectiveness is slightly better at around 58 per cent.

The disparity becomes even starker when comparing scenarios where the sanctions extend to all goods without exceptions. Here, the coalition’s effectiveness drops to only 47 per cent of Iran’s potential GDP decline and a mere 16 per cent for Russia.

The study also highlights the uneven burden of sanctions across different economies. Larger economies like the USA, Japan, and Germany experience relatively minor impacts, whereas smaller countries like Malta, Estonia, and Latvia face significant economic downturns. Wanner explained that for smaller nations, trading restrictions with an essential neighbour like Russia could lead to disproportionately large economic disturbances compared to larger economies.

The research suggests a strategic reshuffle could significantly amplify the effectiveness of sanctions. For example, if countries like China, Vietnam, Belarus, Turkey, and South Korea were to join the sanctions against Russia, the potential impact could increase from 58 per cent to 71 per cent, with China’s participation being particularly pivotal. This potential for a strategic reshuffle offers hope for the effectiveness of future sanctions.

Recognising the unlikely prospect of China joining a Western-led sanctions coalition against Russia, the study proposes a reassuring solution in the form of financial transfers to balance the economic scales for those nations severely impacted by the sanctions. According to the research, approximately 591 million US dollars would be required for Iran-related sanctions and 4.8 billion US dollars for those related to Russia, enabling coalition members to offset their welfare losses. The United States would be the major contributor to this proposed “compensation fund,” followed by the UK and Canada.

This comprehensive analysis underscores the complexity of international economic sanctions and points towards more effective strategies that could enhance their impact while mitigating adverse effects on the sanctioning countries.

More information: Sonali Chowdhry et al, Brothers in arms: the value of coalitions in sanctions regimes , Economic Policy. DOI: 10.1093/epolic/eiae019

Journal information: Economic Policy Provided by University of Würzburg

What are the best locations for future hydrogen production?

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Researchers at the Paul Scherrer Institute PSI have explored the most cost-effective global regions for hydrogen production. This is a step towards establishing an economy that relies on this clean energy source rather than fossil fuels. Their findings highlight that switching to electricity and hydrogen won’t eliminate greenhouse gas emissions. This research is detailed in a publication released in Nature Communications today.

Switzerland’s goal to achieve climate neutrality by 2050 dictates that starting this year, no additional greenhouse gases should be emitted, aiming to mitigate climate change effects. A significant strategy towards this end involves electrifying transportation, industry, and households and transitioning to renewable energy sources like hydro, wind, and solar power. However, not all energy needs can be met through electricity due to its limited storage capacity for certain applications. Here, hydrogen emerges as a beacon of hope, expected to play a crucial role in significantly lowering climate impacts in sectors such as aviation, agriculture, and steel manufacturing and could be further processed into products like fertiliser and synthetic hydrocarbons.

The team, led by Tom Terlouw and Christian Bauer of PSI’s Laboratory for Energy Systems Analysis, gathered geographical and economic data to model the growth of a hydrogen economy under four scenarios. Their projections suggest hydrogen demand could range from 111 to 614 megatonnes annually by 2050, depending on the scenario. Currently, global production is about 90 megatonnes per year.

A vital aspect of the study focused on identifying ideal locations for hydrogen production via electrolysis. The current dominant method of hydrogen production involves steam methane reforming from fossil fuels under high pressure and temperature. More optimistic future scenarios, however, predict a shift towards PEM electrolysers that use electricity and a polymer electrolyte membrane to split water into hydrogen and oxygen. Using renewable energy for this process could dramatically reduce greenhouse gas emissions by up to 90% compared to the traditional method.

The study primarily evaluated economic factors to determine the most cost-effective production locations, considering the availability of renewable energy and land for building necessary facilities. Canada emerged as an ideal region due to its abundant wind and water resources and stable political climate, making it suitable for large-scale hydrogen production. In contrast, Switzerland and other central European countries face limitations due to scarce land for wind turbines and lower solar radiation levels. However, the potential of other regions like the central United States, parts of Australia, the Sahara, northern China, and northwestern Europe, with their renewable energy capabilities and available space, offers a promising outlook for the future of energy production.

Despite these optimistic projections, the study also addressed the ecological drawbacks of a hydrogen-based economy. Residual greenhouse gas emissions will remain challenging, with estimates suggesting nearly one gigatonne of CO2 equivalents annually. Production and distribution of hydrogen contribute to these emissions, including leaks that release hydrogen into the atmosphere, indirectly increasing levels of other potent greenhouse gases like methane and ozone.

The study further discussed the environmental impact of materials used in hydrogen production, such as the rare earth metals in wind turbine magnets and iridium in PEM electrolysis catalysts. The demand for immense land and water resources for hydrogen production poses additional environmental concerns.

The study emphasised the importance of social acceptance for large-scale hydrogen production facilities, particularly in areas where water is scarce and desalination may be required. While this study lays the groundwork for understanding potential strategies for energy transition, further research is needed to evaluate these factors comprehensively. The researchers highlight possible paths for achieving the energy transition, acknowledging that the extent and rigour of these efforts depend on socio-political decisions.

More information: Tom Terlouw et al, Future hydrogen economies imply environmental trade-offs and a supply-demand mismatch, Nature Communications. DOI: 10.1038/s41467-024-51251-7

Journal information: Nature Communications Provided by Paul Scherrer Institute

To Forecast Tax Income, Examine Corporate Profits

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A significant factor in constructing a state budget hinges on the precision of its fiscal predictions: estimating tax revenues intended to finance services for the upcoming year. Since 2001, the accuracy of these forecasts has suffered due to increased volatility in revenue streams, including significant fluctuations in personal income and consumer expenditures. Forecasting errors can lead states to unnecessarily cut spending, increase taxes, postpone essential projects, and implement other changes impacting millions of citizens.

Recent research from Texas McCombs has introduced a method that could significantly enhance the precision of fiscal predictions: tracking the earnings growth of publicly traded, tax-paying corporations. Braden Williams, associate professor at Texas McCombs, co-authored the research with Lillian Mills, dean and professor of accounting at McCombs, and Anthony Welsch from the University of Chicago. They suggest that corporate earnings are a crucial yet underutilized resource for revenue forecasting. Traditionally, states rely on past revenue data and macroeconomic indicators like GDP and unemployment rates, with teams composed chiefly of economists and statisticians but lacking in accounting expertise.

To assess the potential impact of corporate earnings data on revenue forecasting accuracy, the researchers evaluated the combined earnings growth of major industries in the U.S., such as mining, gas, technology, financial services, and healthcare. They correlated this data with the industries’ presence in each state to create a tailored earnings growth metric for each state. They then retrospectively applied this metric to past forecasts to simulate the potential improvements it could have made, finding that including corporate earnings data significantly enhanced forecast accuracy. By including these figures alongside traditional economic metrics, the researchers could explain up to 86% more variation in actual revenue figures.

This approach was efficient in states with diverse industries. States with fewer dominant industries, like Wyoming’s oil sector, already needed more data. However, the earnings growth measure proved particularly useful in states with a balanced mix of industries. Including corporate earnings didn’t just enhance the forecasting of corporate tax revenue but also improved predictions for sales and personal income taxes. Notably, the improvement in individual income tax forecasts was even more significant in monetary terms than corporate taxes.

The study highlighted several ways corporate earnings growth influences other tax revenues: portions of corporate profits are returned to owners as capital gains or dividends, earnings growth can affect wage growth if companies share profits with employees, and business investments and purchases show up in sales taxes. Corporate earnings data can help states avoid mid-year budget cuts by providing a more accurate initial forecast.

The research from Texas McCombs suggests that while traditional economic indicators are valuable, the integration of specific, detailed corporate data can significantly refine fiscal predictions. This not only aids in more accurate budget planning but also plays a crucial role in preventing the socioeconomic disruptions caused by budgetary adjustments during the fiscal year. By providing a more accurate initial forecast, the use of corporate earnings data can help states avoid mid-year budget cuts, thereby ensuring a more stable and predictable financial environment for citizens.

More information: Anthony Welsch et al, Do accounting earnings provide useful information for state tax revenue forecasts? Review of Accounting Studies. DOI: 10.1007/s11142-024-09840-w

Journal information: Review of Accounting Studies Provided by The University of Texas at Austin

Warning to Hackers: Studies Indicate AI’s Role in Enhancing Cybersecurity

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Artificial intelligence (AI) chatbots, such as OpenAI’s ChatGPT and Google’s Bard (now known as Gemini), have demonstrated their ability to pass a standard certified ethical hacking exam, according to a recent study. This research, co-authored by Prasad Calyam from the University of Missouri alongside collaborators from Amrita University in India, suggests that while these AI tools can understand and describe cybersecurity threats effectively, they should not be solely relied upon for comprehensive security. The study involved testing the AI systems with typical questions from a recognized certified ethical hacking test, which measures an individual’s knowledge of attack types, protection strategies, and responses to security incidents.

The examination results revealed distinct strengths in both AI models. Bard generally showed better accuracy in its responses, while ChatGPT was noted for its comprehensive, clear, and concise answers. During the tests, both AI tools explained complex cybersecurity scenarios, such as man-in-the-middle attacks, and recommended appropriate preventative measures. However, the researchers caution that the AIs also produced incorrect answers, underscoring the critical need for accuracy in cybersecurity, where errors can lead to severe consequences. This cautionary note is a reminder of the risks involved in relying solely on AI for comprehensive security.

The study also highlighted an interesting dynamic in AI responses: when prompted with questions like “are you sure?” the AI tools often revised their answers, sometimes correcting mistakes from their initial responses. Additionally, when tasked with providing advice on how to conduct a cyberattack, ChatGPT referenced ethical considerations, whereas Bard stated it was not programmed to assist with such queries. This indicates a level of built-in ethical programming and highlights the limitations in AI’s ability to navigate morally ambiguous requests.

Prasad Calyam, holding the Greg L. Gilliom Professor of Cyber Security title at the University of Missouri, emphasized that these AI models are still being prepared to replace human cybersecurity experts. Humans bring problem-solving skills essential for developing robust cyber defences that AI cannot match. However, Calyam acknowledged that AI could be a valuable resource for providing baseline information beneficial for individuals or small businesses needing quick assistance.

Calyam suggests that these AI tools can also be practical training tools for those involved with information technology or individuals eager to learn about cybersecurity basics. This educational potential, combined with the ongoing improvements in AI technology, offers a promising outlook for their future role in cybersecurity.

While the research demonstrates AI’s potential in ethical hacking, Calyam notes that much work remains to fully harness their capabilities. Ensuring AI’s reliability as ethical hackers could significantly enhance cybersecurity measures, contributing to safer digital environments. This ongoing development, with its promise to refine AI tools further, making them more adept at supporting cyber defence while continuing to evolve within ethical boundaries, offers an optimistic outlook for the future of AI in cybersecurity.

More information: Raghu Raman et al, ChatGPT or Bard: Who is a better Certified Ethical Hacker? Computers & Security. DOI: 10.1016/j.cose.2024.103804

Journal information: Computers & Security Provided by University of Missouri

Recent research assists international MNCs in evaluating the advantages and disadvantages of adopting blockchain technology

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Blockchain technology, often celebrated as a significant innovation, still needs a comprehensive understanding of its implications for multinational corporations (MNCs). A new study in the Global Strategy Journal, led by researchers Tuuli Hakkarainen and Anatoli Colicev from the University of Liverpool and Torben Pedersen from Copenhagen Business School, provides deeper insights into the advantages and limitations of blockchain through its application in three specific areas: financial transactions, collaboration, and data analytics. Their research, titled “A perspective on three trade-offs of blockchain technology for the global strategy of the MNC,” benefits from the authors’ involvement in the MNC industry and governmental projects, focusing on less-explored applications in international business and strategy.

The study emphasizes the importance of cryptocurrencies in payment options and intelligent contracts for collaborating across borders, alongside the potential of blockchain data to provide real-time insights into consumer preferences worldwide, thus offering a competitive edge. The chosen focus areas—financial transactions, collaboration, and data analytics—are highlighted as promising, feasible, yet under-researched aspects of blockchain for MNCs. Through their investigation, which included analysis of industry and company reports, third-party materials, case studies, and social media, the researchers aimed to shed light on the practical applications and benefits of these blockchain components within the sector.

The study’s findings present a nuanced understanding of the trade-offs associated with blockchain technology. It points out that while cryptocurrencies offer lower transaction fees, enhanced security, and faster transactions, they require substantial infrastructure and often suffer from negative public perceptions. Smart contracts facilitate smoother transactions and collaborations but lack flexibility, a necessary trait for global firms dealing with diverse partners and suppliers. Moreover, although innovative, the use of blockchain for data analytics raises concerns about consumer privacy and data security.

Colicev strongly believes in the staying power and transformative potential of blockchain, which can revolutionize various aspects of business operations and consumer interactions. He cites several examples where blockchain has proven beneficial, particularly in simplifying complex operations for firms active in international markets. The authors encourage cautious optimism, suggesting companies consider limiting potential risks by piloting blockchain initiatives in controlled environments or specific segments before broader implementation.

While blockchain technology promises significant advancements and operational efficiencies for MNCs, the study advises a measured approach to its adoption. The authors recommend that firms experiment with blockchain in smaller, manageable projects or with specific partners to understand its implications better and integrate it effectively into their global strategies. This strategic approach ensures that while firms can leverage blockchain’s benefits, they also mitigate potential risks associated with its broader deployment in their business models.

More information: Tuuli Hakkarainen et al, A perspective on three trade-offs of blockchain technology for the global strategy of the MNC, Global Strategy Journal. DOI: 10.1002/gsj.1509

Journal information: Global Strategy Journal Provided by Strategic Management Society

An innovative approach to applying prospect theory utility in stock market investment decisions

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Prospect theory, introduced by Kahneman and Tversky in 1979, is a pivotal framework for understanding decision-making when investors exhibit cognitive biases under uncertainty. This theory is particularly notable for its insights into how investors weigh gains and losses: they demonstrate a heightened sensitivity to losses compared to equivalent gains, a phenomenon known as loss aversion. Consequently, investor behaviour varies with risk—typically risk-averse when considering potential gains and risk-seeking when facing potential losses, a trait attributed to diminishing sensitivity. A 2016 investigation by Barberis and colleagues highlighted how investors employ past return distributions as a heuristic for determining prospect theory values for stocks anchored on prospective utility. This approach to decision-making utilises past performance as a proxy for future expectations, embedding representativeness in their calculations.

Building on this foundation, a recent empirical study led by Professor Cheoljun Eom from the School of Business at Pusan National University, Korea, delved into whether values derived from prospect theory, based on past 12-month return distributions, can predict the persistence of stock performance across different stocks in subsequent periods. To enhance the applicability of these findings, the research team developed a novel metric, the Cross-Sectional Prospect Theory Value (CSPTV). This new metric facilitates comparisons across different stocks, unlike the traditional Prospect Theory Value (PTV) confined to individual stocks. The findings were published online on 15 February 2024 and later in the May 2024 issue of the International Review of Financial Analysis.

Professor Eom notes, “Our findings compellingly demonstrate that CSPTV surpasses traditional PTV in forecasting the persistence of stock performance.” The implications of this research are multifaceted. Primarily, it corroborates the predictive utility of CSPTVs derived from past 12-month return distributions for future performance periods. The introduction of CSPTV marks a significant expansion in the application of prospect theory to cross-sectional stock returns, providing a broader analytical lens compared to the previous 12-month focus. Additionally, this metric offers a more nuanced understanding of how investors’ tendencies to juxtapose gains and losses influence stock evaluations, enhancing the predictive capacity of prospect theory across different stocks.

The study also reaffirms that these theoretical values can elucidate both momentum and disposition effects observed within the same timeframe, thereby underscoring prospect theory-based portfolios’ unique and valuable insights. In conclusion, Professor Eom expresses optimism about the broader implications of their CSPTV framework, stating, “This enhancement not only broadens the application of existing prospect theory analyses to encompass cross-sectional returns but also significantly boosts their predictive efficacy.”

More information: Cheoljun Eom et al, Intermediate cross-sectional prospect theory value in stock markets: A novel method, International Review of Financial Analysis. DOI: 10.1016/j.irfa.2024.103120

Journal information: International Review of Financial Analysis Provided by Pusan National University