Tag Archives: financial incentives

From Waste to Worth: Supermarkets Gain by Donating Unsold Food

Around one-third of all food produced globally is lost or wasted each year, representing an estimated US$1 trillion in value, according to the FAO. A substantial portion of this waste occurs at the retail level, where large quantities of edible food are discarded despite remaining safe for consumption. This disconnect highlights a persistent inefficiency in food systems, where surplus products are not effectively redirected before they become waste.

Food waste is not only environmentally unsustainable but also financially burdensome for retailers. When products go unsold, businesses lose potential revenue, and they must also bear the additional costs associated with disposal, including transport and waste handling. These combined pressures make surplus food management an important economic issue, not just a sustainability concern.

A recent analysis from the University of Copenhagen sheds light on how retailers can approach this challenge more strategically. Focusing on Danish supermarkets, the study finds that at least half of all surplus food is currently discarded. Although part of the analysis draws on data from a limited number of retail chains, the overall findings point clearly to more efficient alternatives that can reduce both waste and costs.

The research challenges the common assumption that donating surplus food is primarily a charitable act with little financial return. In reality, once retailers determine that products are unlikely to sell at full price, donation often becomes the more economically rational choice. In many cases, it is simply cheaper to give food away than to throw it out, suggesting that financial and social benefits can align more closely than often assumed.

Timing plays a critical role in maximising value from surplus food. The analysis shows that early price reductions are typically the most profitable strategy. When retailers discount products a few days before their expiry date, they can significantly increase the likelihood of sale. Even modest reductions, such as around 15%, are often enough to convert potential losses into gains, as more items are sold instead of being discarded.

The financial returns from these strategies can be substantial. Across most product categories, discounted sales generate net gains of approximately €0.3 to €0.8 per kilogram, with even higher returns—sometimes exceeding €1.3 per kilogram—for fresh meat, fish, and processed meat products. However, not all items respond equally; liquid dairy products and dry goods are less likely to generate surplus value through price reductions, indicating the need for tailored approaches across product types.

When products are too close to expiry to be sold, donation emerges as the next most cost-effective option. Disposal typically costs retailers between €0.27 and €0.36 per kilogram, while donation costs average €0.14 to €0.23 per kilogram, resulting in meaningful savings. Beyond these direct financial benefits, donation also creates significant social value, with redistributed food contributing an estimated €1 to €5 per kilogram to support vulnerable populations. Overall, the findings demonstrate that reducing food waste and improving profitability are not opposing goals but can, in fact, reinforce one another when managed effectively.

More information: Jørgen Dejgård Jensen, Food Waste Prevention and Economic Incentives to Redistribute Surplus Foods from Food Retailing, Journal of Food Products Marketing. DOI: 10.1080/10454446.2025.2584844

Journal information: Journal of Food Products Marketing Provided by University of Copenhagen

Research sheds light on financial influences within dual-income relationships

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The familiar phrase insists that money cannot buy happiness, yet it often plays a decisive role in the health of a romantic partnership. New research suggests that finances can quietly strengthen—or strain—relationships, particularly in households where both partners earn an income.

Led by University of Cincinnati doctoral researcher Sharmeen Merchant, the study examined how money functions psychologically within dual-income relationships, moving beyond simple salary figures to explore deeper attitudes and values. Recently published in the Journal of Business and Psychology, the research takes a close look at how partners’ perceptions of money influence one another’s sense of professional satisfaction.

The findings reveal a striking pattern. Men’s feelings of fulfilment at work are closely tied to how their partners think about money. When achievement-oriented views of money are shared within a relationship, men are more likely to evaluate their own career success positively. This effect, however, appears far weaker among women, whose work satisfaction was less dependent on their partners’ financial attitudes.

According to Merchant, the issue is not the size of a pay cheque but the meaning attached to it. She explains that money can represent achievement, status, or materialism, and those interpretations matter deeply within a partnership. When couples see money through a similar lens, it creates a shared framework that shapes how success and fulfilment are experienced.

That alignment appears especially important for husbands. When couples agree on what money symbolises, men tend to report greater satisfaction in their professional lives. When those beliefs clash, that sense of fulfilment often erodes, even if income levels remain unchanged.

The study was conducted in collaboration with several scholars, including Scott Dust, a professor at the Carl H. Lindner College of Business and Merchant’s academic adviser. Dust emphasised that the implications extend beyond career choice alone. While the nature of one’s job certainly affects workplace happiness, a partner’s values—and the role money plays within the relationship—can be just as influential.

In practical terms, the research highlights how deeply intertwined financial beliefs and emotional wellbeing can be in modern dual-income relationships. Success at work is not evaluated in isolation but filtered through the shared values and expectations partners bring to their financial lives together.

More information: Sharmeen Merchant et al, Gender Differences on Dual-Earners’ Money as Achievement Congruence and Needs-Supplies Fit, Journal of Business and Psychology. DOI: 10.1007/s10869-025-10094-9

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

Research Finds Solar and Battery Systems Can Cut Costs and Keep Power On for Most US Households

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A new Stanford University study suggests that most U.S. households could cut electricity costs and survive blackouts by installing rooftop solar panels paired with battery storage, primarily if they act before 31 December, when a key federal tax credit ends. The research, published in Nature Energy, found that 60% of American homes could reduce their electricity bills by an average of 15% with solar-battery systems. Additionally, around 63% could withstand power outages by meeting at least half their typical electricity needs, while either saving money or experiencing no increase in energy costs.

However, the households that stand to benefit least from solar-battery adoption—due to lower sunlight exposure, higher equipment costs, or unfavourable electricity rates—often overlap with those already struggling the most with high utility bills and frequent outages. These disparities highlight the uneven distribution of renewable energy benefits across different regions and income levels. The researchers emphasise that the reliability of power is becoming a growing concern, as extreme weather events, such as heatwaves and hurricanes, are increasing in both frequency and intensity, while much of the U.S. energy infrastructure remains outdated.

One urgent driver of adoption is the residential clean energy tax credit, introduced under the Inflation Reduction Act of 2022. It currently allows homeowners to deduct 30% of the cost of solar and battery installations from their federal taxes. This incentive will lapse at the end of 2025 for direct purchases, though indirect savings may still be available through leasing and power purchase agreements until 2027 for solar and 2033 for batteries. Without this credit, the share of households for whom solar-plus-storage remains financially viable drops from 60% to about 32%, according to the study’s lead author, Tao Sun.

At the same time, declining utility payments for excess solar power are reshaping the economics of battery ownership. In many states, customers are no longer compensated at full retail value for selling electricity back to the grid. As a result, storing power for personal use—especially at night when retail prices peak—has become a more innovative strategy for many households. States adopting these revised compensation structures tend to encourage battery adoption more effectively, though this also varies based on local solar potential and utility pricing.

The study also assessed the geographic variation in benefits across 48 states and Washington, D.C. It found that states with higher risks of blackouts or energy insecurity do not always align with those where solar-battery systems are the most cost-effective. In areas with more frequent outages or lower average income, fewer households can afford systems that offer meaningful backup power. These findings suggest the need for targeted subsidies or community-level energy initiatives to ensure equitable access to clean, resilient energy solutions.

Finally, the researchers caution that this landscape is rapidly changing. As solar and battery prices continue to fall and electricity costs rise, the economic case for these systems will likely grow stronger over time. They recommend further study of mobile or shared energy storage technologies that could supplement household-level systems and offer broader community resilience. Innovations like these, paired with carefully designed policies, could help ensure that the shift to solar benefits all Americans, not just the most financially advantaged.

More information: Tao Sun et al, Solar and battery can reduce energy costs and provide affordable outage backup for US households, Nature Energy. DOI: 10.1038/s41560-025-01821-w

Journal information: Nature Energy Provided by Stanford University

New Study Uncovers How Popular CEO Compensation Tactics Are Hindering Innovation

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According to new research, a compensation model designed to incentivise corporate success may do the opposite. A recent study reveals that one of the most prevalent forms of CEO remuneration — value-based equity grants — can inadvertently dampen executive motivation and curtail innovation by discouraging long-term investment strategies. The study conducted by Virginia Tech researchers Jin Xu and Pengfei Ye analyses executive compensation structures’ influence on corporate decision-making, drawing on data from thousands of U.S. firms between 2006 and 2022. Their findings, published in the Journal of Financial and Quantitative Analysis, suggest that a system meant to align executive interests with shareholder value might, paradoxically, weaken that alignment.

The crux of the issue lies in how value-based equity grants function. Under this model, CEOs are awarded stock compensation tied to a fixed monetary value rather than a fixed number of shares. If a company’s stock price rises, the executive receives fewer shares; conversely, if the stock price falls, they receive more. While this approach offers a stable and predictable compensation framework, it significantly caps the potential upside for executives. As a result, CEOs have less incentive to pursue bold, high-return strategies that could drive long-term shareholder value. “Boards of directors often aim to balance retention with risk management,” explains Xu, an associate professor at Virginia Tech’s Pamplin College of Business, “but our findings show that value-based equity grants can backfire. These grants may unintentionally discourage executives from making bold, long-term investments.”

To contextualise this, the study contrasts value-based grants with share-based grants, where a fixed number of shares is awarded irrespective of market price. In the latter scenario, executives directly benefit when stock prices climb — the higher the value, the greater the personal reward. Proponents argue that this model encourages executives to aim for ambitious performance targets. By contrast, value-based grants disincentivise exceptional performance by scaling down share allocations when prices are high. “Under value-based compensation,” notes Ye, assistant professor at the Pamplin College of Business, “stronger stock performance actually results in fewer shares for executives. That weakens the reward for driving long-term gains.” The research finds a clear correlation: firms employing value-based grants consistently invest less in research and development, a primary engine of innovation and future growth.

The study also interrogates the assumption that robust corporate governance can mitigate the drawbacks of flawed pay structures. Xu and Ye measured governance strength through established firm-level metrics and compared innovation spending across companies with varying levels of board oversight. The results were striking. Value-based pay schemes undermine CEO innovation incentives even in firms with strong governance frameworks. Companies most likely to adopt value-based compensation often have more sophisticated internal controls. Yet, these controls proved insufficient in countering the disincentive effects inherent in the compensation model. “Good governance can prevent many executive pay abuses,” Xu remarked, “but it does not completely fix the disincentives created by value-based equity grants.”

Over the past two decades, value-based compensation has become increasingly prevalent. In 2006, approximately 60 per cent of firms used value-based equity grants; by 2022, that number had risen to 73 per cent. Meanwhile, the proportion of firms using traditional share-based compensation fell from 40 per cent to just 27 per cent. This shift suggests a broader corporate America trend favouring compensation predictability and executive retention over performance-driven incentives. While such an approach can provide short-term stability and protect companies from excessive risk, it may ultimately hinder strategic leadership and long-term growth. “As more firms adopt value-based pay,” Ye warned, “they need to recognise the long-term trade-offs. A growing reliance on this model could mean lower innovation and slower corporate growth.”

At the heart of the debate lies a fundamental tension: the challenge of balancing retention with leadership dynamism. Value-based pay offers stability by reducing executive earnings volatility, making retaining top talent easier. However, as Xu and Ye demonstrate, the trade-off is a diminished appetite for risk and a hesitancy to pursue transformative initiatives. The researchers argue that these outcomes are not merely theoretical concerns but have measurable impacts on company performance and investment patterns. “Retention and strategic incentives should not be at odds with each other,” Xu contends. “Boards need to design compensation models that keep top talent and push them to drive sustained company growth.” One potential solution is adopting hybrid models incorporating both share-based and value-based compensation elements, thus preserving stability while reinvigorating the incentive to innovate.

For investors and board members alike, the study underscores an urgent need for critical reflection on the strategic implications of executive pay. Compensation structures are more than just financial mechanisms — they are levers that shape corporate behaviour and long-term planning. Investors should scrutinise how much CEOs are paid and how they are paid, as this can reveal much about a firm’s future trajectory. Companies relying on value-based grants may prioritise cautious, incremental strategies over bold leadership, potentially compromising their competitive edge. “As executive pay continues to evolve,” Ye concludes, “investors should take a closer look at the structure behind the numbers. Executive compensation isn’t just about figures — it’s about the strategy that underpins them.” This study provides compelling evidence that thoughtful, well-calibrated remuneration frameworks are essential for fostering innovation and sustainable growth.

More information: Jin Xu et al, Value-Based CEO Equity Grants, Journal of Financial and Quantitative Analysis. DOI: 10.1017/S0022109025000018

Journal information: Journal of Financial and Quantitative Analysis Provided by Virginia Tech

Ministers Pressed to Address Inequality in Access to Green Technologies such as Solar Power and Electric Vehicles

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According to a recent study from the University of Sheffield, to achieve its ambitious net-zero emissions goals by 2050, the UK government must do more than offer subsidies for low-carbon technologies (LCTs) like electric vehicles and solar panels. Developed in collaboration with researchers from the universities of Nottingham and Macedonia, the report highlights significant socioeconomic disparities limiting uptake among disadvantaged groups despite overall increasing adoption.

In recent years, the number of UK households using solar panels for electricity generation has more than doubled, from 3 per cent to 6.5 per cent. Similarly, solar heating technology adoption rose from 1.4 per cent to 2.1 per cent, and electric or hybrid vehicle usage increased from under 1 per cent to 2.8 per cent. These trends indicate growing national acceptance of low-carbon technologies, yet socioeconomic inequalities remain a considerable barrier.

The study identifies age, education, occupation, ethnicity, and gender as significant influences individuals’ ability to invest in these technologies. Dr Andrew Burlinson from the University of Sheffield’s School of Economics highlighted that current policies inadequately support disadvantaged groups, exacerbating existing inequalities and limiting their resilience to fluctuating energy prices.

The UK government currently subsidises some electric vehicles at purchase, but these subsidies are rarely linked to socioeconomic status, and support for domestic solar installations ended in 2019. The researchers argue that targeted financial and educational incentives must be reintroduced, primarily aimed at lower-income communities, to ensure equitable access and help achieve national decarbonisation targets.

Professor Monica Giulietti from the University of Nottingham advocates for broader, community-level initiatives beyond individual households, particularly in private, rented, and social housing sectors. Community-based solar installations could substantially reduce individual financial burdens, improving accessibility for those without direct control over their housing or transport.

Dr Jayne Carrick from the South Yorkshire Sustainability Centre reinforced the necessity for comprehensive policy reforms, highlighting survey findings that nearly half of residents are reluctant to adopt solar panels, and 57 per cent hesitate regarding heat pump technologies. Dr Burlinson concluded that targeted policies addressing socioeconomic inequalities are essential for fairness and enhancing household energy efficiency and resilience during the transition to a sustainable future.

More information: Andrew Burlinson et al, Socioeconomic inequality in low-carbon technology adoption, Energy Economics. DOI: 10.1016/j.eneco.2025.108244

Journal information: Energy Economics Provided by University of Sheffield

Oversized Corporations Hinder Economic Progress

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Recent studies indicate that the U.S. economy has been underperforming for the last two decades, with corporations investing a smaller portion of their profits into production expansion. This trend has resulted in an average annual GDP growth of 2.2% over the past 20 years, a decline from the previous rate of 3.2%. Economists attribute this slowdown to a lack of substantial investment opportunities.

However, research by two assistant finance professors from Texas McCombs suggests an alternative cause: the increasing size of companies. According to researchers Michael Sockin and Daniel Neuhann, industries have become more concentrated, leading to fewer, larger firms. This concentration has discouraged these companies from reinvesting their capital, particularly in sectors like U.S. banking, where the four largest banks control 53% of total assets.

The researchers argue that such concentration leads to capital misallocation, with firms underinvesting in areas like R&D and equipment, reducing overall productivity and economic welfare. This scenario is further compounded by the reluctance of large corporations to borrow, influenced by higher interest rates imposed by lenders on substantial loans.

This dynamic was particularly evident following the Great Recession of 2007-2009 when the U.S. economy recovered slowly despite low interest rates set by the Federal Reserve to spur borrowing and investment. Instead of leveraging these conditions, companies like Apple accumulated cash, choosing to save on interest costs rather than expand their operations.

Sockin and Neuhann’s model, which utilized economic data from 2002, accurately predicted various economic outcomes 14 years post-recession, highlighting persistent underinvestment despite lower borrowing costs. The contrast with the rapid economic recovery post-COVID-19, driven by substantial government stimulus, underscores their argument that market concentration can significantly hinder economic growth, particularly in challenging times when government intervention becomes crucial to ensure proper market functioning.

More information: Daniel Neuhann et al, Financial market concentration and misallocation, Journal of Financial Economics. DOI: 10.1016/j.jfineco.2024.103875

Journal information: Journal of Financial Economics Provided by University of Texas at Austin

WVU Study Discovers CEO Innovation Linked to Compensation Structures and Analyst Advice

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Research from West Virginia University suggests that the dynamics of the stock market significantly influence the innovative commitments of chief executive officers through mechanisms such as CEO compensation packages and input from financial analysts.

Associate Professor of Marketing at WVU’s John Chambers College of Business and Economics, Xinchun Wang, notes that financial analysts’ feedback, like earnings forecasts, is often perceived as a barrier to innovation due to the pressure it exerts on CEOs. However, Wang clarifies that not all types of feedback hinder innovation. In contrast, stock recommendations encourage exploration and investment in areas such as research and development, which, although risky, may yield positive long-term returns.

In their study published in the Journal of the Academy of Marketing Science, Wang and a colleague explored how feedback from financial analysts affects CEOs’ strategic decisions. They discovered that analysts’ stock recommendations have a two-fold influence on management decisions: indirectly by affecting investor sentiment and stock prices and directly during meetings where analysts interact with management, posing questions or seeking clarifications on company strategies.

Wang highlights the attention management pays to stock recommendations, using the example of Goldman Sachs analysts advising the sale of Imax stock, which has prompted Imax’s CEO to focus on transforming the company’s business model to improve its rating. This emphasis on innovation over traditional models highlights the importance of feedback from financial analysts, who act as intermediaries between firms and investors, providing critical insights into current performance and potential future returns.

Unlike earnings forecasts focusing on short-term financial outcomes, stock recommendations are based on analysts’ long-term evaluations of a firm’s potential future cash flows, necessitating strategic rather than superficial, short-term CEO responses. Wang stresses that such long-term investment in innovation is crucial for a company’s success, exemplified by Adobe under CEO Shantanu Narayen. Despite initial revenue declines following its shift from license sales to a subscription-based model in 2013, Adobe’s revenues had soared by almost 500% by 2022, affirming the value of steadfast commitment to long-term strategic goals.

However, not all CEOs adhere to such long-term perspectives, often influenced by compensation structures that incentivise returns. In another study published in the Journal of Product Innovation Management, Wang examined the link between CEOs’ strategic myopia and their compensation methods, finding that CEOs nearing the exercise of stock options might reduce spending on innovation to boost stock prices temporarily and maximise gains—a practice Wang terms as myopic.

Wang also notes that CEOs who hold significant power, such as board positions, face less pressure to innovate and are more likely to engage in opportunistic strategies to serve their agendas. He cites a survey where a vast majority of corporate executives admitted they would slash spending on research and development, advertising, and maintenance to meet earnings targets, highlighting the adverse effects of compensation plans that reward short-term achievements and excessive executive power.

Nevertheless, Wang believes that a firm’s historical commitment to innovation and its cultural ethos can place its demands on a CEO’s strategies. He argues that boards of directors must alleviate performance pressures by reinforcing the importance of long-term innovative investments to their CEOs. Furthermore, stakeholders should vigilantly monitor a CEO’s actions, especially as they approach the period for stock options exercises, advocating for clear guidelines on the timing and methods of such exercises to curb myopic behaviour. This comprehensive oversight is essential to ensure that CEOs do not sacrifice the future sustainability of their companies for immediate financial gains.

More information: Xinchun Wang et al, The impact of analyst stock recommendations on firms’ relative exploration orientation, Journal of the Academy of Marketing Science. DOI: 10.1007/s11747-024-01070-5

Journal information: Journal of the Academy of Marketing Science Provided by West Virginia University

Enhanced Methodology Empowers AI in Detecting Human Deception

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A team of researchers has introduced a novel training tool designed to enhance artificial intelligence (AI) ‘s capabilities in recognising when humans provide deceptive information, particularly in scenarios involving economic incentives. The tool addresses a critical issue where individuals may falsify personal data, such as when applying for mortgages or seeking to lower insurance premiums.

As Mehmet Caner, co-author of the study and Thurman-Raytheon Distinguished Professor of Economics at North Carolina State University’s Poole College of Management, points out, AI systems are extensively used in business applications, such as assessing mortgage affordability and determining insurance premiums. These systems, which traditionally rely on statistical algorithms for predictive modelling, inadvertently create a space for individuals to manipulate information to their advantage, leading to the need for the development of more sophisticated AI tools.

The research aimed to adjust AI algorithms to better accommodate these economic incentives for deception. By developing a new framework of training parameters, the researchers enabled AI to adapt its learning process to identify situations where users may have motives to lie. This enhancement focuses on improving AI’s ability to anticipate and account for human behaviour influenced by economic incentives.

In simulated trials, the modified AI demonstrated improved accuracy in detecting inaccuracies in user-provided data. “This effectively reduces the incentive for users to provide misleading information,” Caner explains. Nevertheless, the study acknowledges the challenge of distinguishing between minor falsehoods and more significant deceptions, prompting further investigation into establishing clear thresholds.

The team is now making these cutting-edge training parameters available to the public, with a strong call to AI developers worldwide to embrace and refine their applications. Caner underscores that this advancement is a significant stride towards curbing the economic motivations for dishonesty in AI-interpreted contexts. The ultimate aim is to elevate AI systems to a level where they can potentially eliminate such incentives, thereby fostering greater trust and reliability in automated decision-making processes.

More information: Mehmet Caner et al, Should Humans Lie to Machines? The Incentive Compatibility of Lasso and GLM Structured Sparsity Estimators, Journal of Business and Economic Statistics. DOI: 10.1080/07350015.2024.2316102

Journal information: Journal of Business and Economic Statistics Provided by North Carolina State University