Increasing consumer well-being: Risk as potential driver of happiness

Increasing consumer well-being: Risk as potential driver of happiness. Nawel Ayadi, Corina Paraschiv & Eric Vernette. Applied Economics, Summer 2017, Pages 4321-4335, http://dx.doi.org/10.1080/00036846.2017.1282142

Abstract: This article investigates the relation between risk and individual well-being. We propose a theoretical model of happiness that makes a distinction between ex ante evaluations of happiness and ex post assessments. The main assumptions of the model are tested through three studies based on anchoring vignettes. We show that, even if, ex ante, consumers fear high risk and do not associate it to a high level of happiness, their ex post evaluation of well-being is generally higher when identical consequences result from a high-risk situation than from a low-risk situation. Control over risk-taking reinforces the gap between ex ante and ex post measures of happiness. Thus, our article provides empirical evidence about a positive relation between risk and individual well-being, suggesting that risky experiences have the potential to increase consumer well-being.

Keywords: Well-being, happiness, risk, vignettes
JEL classific'n: D12, D81, I31

How Unequal Perceptions of User Reviews Impact Price Competition

How Unequal Perceptions of User Reviews Impact Price Competition. By Pelin Pekgün, Michael Galbreth & Bikram Ghosh
Decision Sciences, http://onlinelibrary.wiley.com/doi/10.1111/deci.12273/abstract

Abstract: When a consumer cannot fully assess her valuations of competing products prior to purchase, she must make a purchase decision based on imperfect product information. However, with the advent of online channels for widely disseminating individual user reviews, consumers are now able to learn from the experiences of others and update their expectations regarding product valuations. We analyze the interaction of user reviews and experience uncertainty, with a specific focus on the potential for negative and positive reviews to be weighted differently in a consumer's assessment of the valence of the posted reviews. We find that overweighting of negative reviews by consumers can lead to surprising results in terms of pricing and profits in a competitive context. In particular, if consumer awareness is higher for the lower quality product, it can charge higher prices and realize higher profits in equilibrium than its higher quality competitor when consumers are strongly influenced by negative reviews. We also show that a higher weighting on positive reviews by consumers always helps the firm with a lower consumer awareness.

Dispositional Negativity in the Wild: Social Environment Governs Momentary Emotional Experience

Dispositional Negativity in the Wild: Social Environment Governs Momentary Emotional Experience. Alexander Shackman et al. Emotion, https://www.ncbi.nlm.nih.gov/pubmed/28604044

Abstract: Dspositional negativity - the tendency to experience more frequent or intense negative emotions - is a fundamental dimension of temperament and personality. Elevated levels of dispositional negativity have profound consequences for public health and wealth, drawing the attention of researchers, clinicians, and policymakers. Yet, relatively little is known about the factors that govern the momentary expression of dispositional negativity in the real world. Here, we used smart phone-based experience-sampling to demonstrate that the social environment plays a central role in shaping the moment-by-moment emotional experience of 127 young adults selectively recruited to represent a broad spectrum of dispositional negativity. Results indicate that individuals with a more negative disposition derive much larger emotional benefits from the company of close companions - friends, romantic partners, and family members - and that these benefits reflect heightened feelings of social connection and acceptance. These results set the stage for developing improved interventions and provide new insights into the interaction of emotional traits and situations in the real world, close to clinically and practically important end-points.

Relative and Absolute Deprivation’s Relationship With Violent Crime in the US: Testing an Interaction Effect Between Income Inequality & Disadvantage

Relative and Absolute Deprivation’s Relationship With Violent Crime in the United States: Testing an Interaction Effect Between Income Inequality and Disadvantage. By Bert Burraston, James C. McCutcheon, Stephen J. Watts, http://journals.sagepub.com/doi/abs/10.1177/0011128717709246

Abstract: Relative deprivation and absolute deprivation both have effects on crime. Although these two concepts are often treated as separate, some scholarship has suggested that the two may be complementary. The current study assesses whether the effects of relative and absolute deprivation interact statistically in their effect on violent crime by testing an interaction effect between income inequality and disadvantage. Using data from U.S. counties, hierarchical linear modeling (HLM) regression models show that there is a significant interaction between relative and absolute deprivation predicting violent crime rates. The plot of this interaction shows that when absolute deprivation is high, there is less violence in high inequality counties than in counties with medium levels of inequality. The implication of this finding is discussed.

Sexuality Leads to Boosts in Mood and Meaning in Life With No Evidence for the Reverse Direction

Sexuality Leads to Boosts in Mood and Meaning in Life With No Evidence for the Reverse Direction: A Daily Diary Investigation. Todd Kashdan et al. Emotion, https://www.ncbi.nlm.nih.gov/pubmed/28604041

Abstract: Sex is rarely discussed in theories of well-being and rarely empirically examined using methods other than cross-sectional surveys. In the present study, a daily diary approach was used (for 21 days with 152 adults) to explore the relationship between the presence and quality of sexual episodes and well-being (positive affect, negative affect, meaning in life). Time-lagged analyses demonstrated that sexual activity on 1 day was related to greater well-being the next. As for the quality of episodes, higher reported sexual pleasure and intimacy predicted greater positive affect and lower negative affect the following day. When the reverse direction was tested, well-being did not predict next-day sexual activity, pleasure, or intimacy. These results suggest a unidirectional relationship in which the presence and quality of sexual activity lead to gains in well-being the following day. Contextual moderators (gender, relationship status, relationship closeness, and relationship length) allowed for tests of conditions altering the link between sexuality and well-being. Relationship closeness was the most robust moderator in predicting greater levels of meaning in life and positive affect following sexual episodes. These data provide evidence to support the continual consideration of sex in empirical work and theoretical models of elements that comprise healthy relationships and a good life.

Perceptions of socioeconomic mobility influence academic persistence among low socioeconomic status students

Perceptions of socioeconomic mobility influence academic persistence among low socioeconomic status students. By Alexander Browman et al.
Journal of Experimental Social Psychology, September 2017, Pages 45–52, http://www.sciencedirect.com/science/journal/00221031/72/supp/C?sdc=1

Abstract: Despite facing daunting odds of academic success compared with their more socioeconomically advantaged peers, many students from low socioeconomic status (SES) backgrounds maintain high levels of academic motivation and persist in the face of difficulty. We propose that for these students, academic persistence may hinge on their perceptions of socioeconomic mobility, or their general beliefs regarding whether or not socioeconomic mobility — a powerful academic motivator — can occur in their society. Specifically, low-SES students' desire to persist on a primary path to mobility (i.e., school) should remain strong if they believe that socioeconomic mobility can occur in their society. By contrast, those who believe that socioeconomic mobility generally does not occur should be less motivated to persist academically. One correlational and two experimental studies provide support for this hypothesis among low (but not high) SES high school and university students. Implications for future intervention efforts are discussed.

It’s Too Pretty to Use! When and How Enhanced Product Aesthetics Discourage Usage and Lower Consumption Enjoyment

It’s Too Pretty to Use! When and How Enhanced Product Aesthetics Discourage Usage and Lower Consumption Enjoyment. By Freeman Wu et al.
Journal of Consumer Research, https://academic.oup.com/jcr/article-abstract/doi/10.1093/jcr/ucx057/3096199/It-s-Too-Pretty-to-Use-When-and-How-Enhanced?redirectedFrom=fulltext

Abstract: Marketers invest a lot of resources in product aesthetics and design, but does this strategy always lead to favorable consumer outcomes? While prior research suggests enhanced aesthetics should have a uniformly positive influence on pre-usage evaluations and choice, the present research examines the downstream effects of nondurable product aesthetics on consumption behavior and post-consumption affect. First, we document an inhibiting effect of aesthetics on actual consumption. We find that highly aesthetic products elicit greater perceptions of effort in their creation, and that consumers have an intrinsic appreciation for such effort. Because the consumption process indirectly destroys the effort invested to make the product beautiful, people reduce consumption of such products because usage would entail destroying something they naturally appreciate. Second, we show that in cases where individuals do consume a beautiful product, they exhibit lower consumption enjoyment and increased negative affect. These negative post-consumption outcomes are mediated in parallel by concerns over having actually destroyed the effort that made the product beautiful as well as the decrements in beauty that become visible when aesthetic products are made less attractive through consumption. Across a series of studies, we challenge the common assumption that enhanced aesthetics always lead to positive consumer outcomes.

Keywords: aesthetics, effort, product usage, consumption enjoyment, predicted vs. experienced utility, implicit self-theories

The Relations Between Parental Socioeconomic Status, Personality, and Life Outcomes

The Relations Between Parental Socioeconomic Status, Personality, and Life Outcomes. By Mona Ayoub et al. Social Psychological and Personality Science, http://journals.sagepub.com/doi/abs/10.1177/1948550617707018?journalCode=sppa

Abstract: Studies have shown that cognitive ability is correlated with parental socioeconomic status (pSES). However, little is known about the correlation between personality and pSES. To better understand this relation, we conducted a meta-analysis of the correlations between pSES and personality traits and temperament dimensions. The correlations were generally very small with the exception of the correlation between pSES and openness to experience. Our results were replicated in a large (N = 2,183,377) data set of self-reported personality scores collected online. Using this data set, we also examined the interaction between pSES and personality on attained education and socioeconomic status. We found evidence for the resource substitution hypothesis, which proposes that personality compensates for background disadvantage.

Seeding the S-Curve? The Role of Early Adopters in Diffusion

Seeding the S-Curve? The Role of Early Adopters in Diffusion. Christian Catalini & Catherine Tucker. MIT Working Paper, August 2016, http://www.imapsource.org/doi/abs/10.4071/2016DPC-TA11

In October 2014, all 4,494 undergraduates at the Massachusetts Institute of Technology were given access to Bitcoin, a decentralized digital currency. As a unique feature of the experiment, students who would generally adopt first were placed in a situation where many of their peers received access to the technology before them, and they then had to decide whether to continue to invest in this digital currency or exit. Our results suggest that when natural early adopters are delayed relative to their peers, they are more likely to reject the technology. We present further evidence that this appears to be driven by identity, in that the effect occurs in situations where natural early adopters' delay relative to others is most visible, and in settings where the natural early adopters would have been somewhat unique in their tech-savvy status. We then show not only that natural early adopters are more likely to reject the technology if they are delayed, but that this rejection generates spillovers on adoption by their peers who are not natural early adopters. This suggests that small changes in the initial availability of a technology have a lasting effect on its potential: Seeding a technology while ignoring early adopters' needs for distinctiveness is counterproductive.

John Roberts, Chief Judge, US Supreme Court. Commencement speech at his son's school

John Roberts, Chief Judge, US Supreme Court. Commencement speech at his son's school. Jun 03, 2017, http://time.com/4845150/chief-justice-john-roberts-commencement-speech-transcript/

Now the commencement speakers will typically also wish you good luck and extend good wishes to you. I will not do that, and I’ll tell you why. From time to time in the years to come, I hope you will be treated unfairly, so that you will come to know the value of justice. I hope that you will suffer betrayal because that will teach you the importance of loyalty. Sorry to say, but I hope you will be lonely from time to time so that you don’t take friends for granted. I wish you bad luck, again, from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either. And when you lose, as you will from time to time, I hope every now and then, your opponent will gloat over your failure. It is a way for you to understand the importance of sportsmanship. I hope you’ll be ignored so you know the importance of listening to others, and I hope you will have just enough pain to learn compassion.

Whether I wish these things or not, they’re going to happen. And whether you benefit from them or not will depend upon your ability to see the message in your misfortunes.

How much compensation is too much? An investigation of the effectiveness of financial overcompensation as a means to enhance customer loyalty

How much compensation is too much? An investigation of the effectiveness of financial overcompensation as a means to enhance customer loyalty. By Tessa Haesevoets et al.
Judgment and Decision Making, March 2017, Pages 183–197
http://journal.sjdm.org/16/16929/jdm16929.pdf

Abstract: The present paper examines the effectiveness of financial overcompensation as a means to enhance customer loyalty after a product failure. Overcompensation implies that customers are entitled to a refund that is larger than the purchase price. It is, however, still unclear whether large overcompensations entail saturation effects, or alternatively, result in an actual drop in customer loyalty. We predicted that the overcompensation-loyalty relationship is generally characterized by an inverted U-shaped function. In line with this prediction, the results of four studies showed that mild overcompensations had, on average, a positive effect on customer loyalty beyond equal compensation, but only up to compensation levels of approximately 150% of the purchase price of faulty products. Beyond this level, the effectiveness of overcompensation diminished, eventually leading to a general drop in customer loyalty. Despite this overall pattern, two studies revealed robust individual differences in how customers react to increasing overcompensation. A majority of customers increased their loyalty when the overcompensation enlarged, but the curve flattened out in the high range. However, there was also a smaller portion of customers who reacted negatively to every form of overcompensation. A practical implication of these findings, therefore, is that companies should not offer compensations that are greater than 150% of the initial price, as these do not contribute to greater loyalty in any category of customers.

US cities must unlock the value of the land they sit on

US cities must unlock the value of the land they sit on, by Matthew Klein
There is an answer to local governments’ pension obligations and under-investment
Financial Times, July 21, 2017
https://www.ft.com/content/e20bd8d4-6de5-11e7-bfeb-33fe0c5b7eaa

Boston’s Logan International Airport was built in the wrong place. Instead of occupying undesirable plots on the outskirts of the city, it sits on almost 1,000 hectares of easily accessible waterfront property close to the urban core. The land should be home to condos and office towers, not take-offs and landings.

The question is whether it’s worth paying the high cost to move the airport for benefits that will not be realised for decades. Nobody knows. Today’s politicians will be long gone by then and have no incentive to explore whether the move would make the city better off in the long run.

The financial system provides a way round this problem: wise cities can use the market as a time machine to reap rewards today for good decisions about future investments. This would require cities to adopt the accounting and governance standards sought by activist investors in hoteliers, retailers and chain restaurants. In particular, cities should separate their real estate assets from the services they provide to their residents.

The potential rewards would be enormous. Excluding public parks, local governments own about a fifth of all the land within many US cities’ limits. It is worth at least $25tn, according to Dag Detter and Stefan Fölster in The Public Wealth of Cities. That figure dwarfs the $3.8tn in municipal bond debt and $7.5tn in accumulated pension obligations collectively owed by the US’s states and localities. Capturing this value and boosting yields by even a tiny amount could generate more than enough income to pay benefits to retired workers, invest in maintenance and develop additional infrastructure to accommodate growing populations.

Governments could start by figuring out the real value of what they own. Weirdly, the Governmental Accounting Standards Board thinks doing this for physical assets is too hard and “may negatively affect timeliness of financial reporting”. The result is that municipalities publish balance sheets with implausibly low estimates of their net worth. The Massachusetts Port Authority, which owns Logan airport, claims its landholdings are worth just $226.5m and that its total capital assets net of depreciation are worth about $3.1bn. A rough estimate suggests the value of the land under the airport alone could easily be worth tens of billions if dollars.

The next step would be transferring ownership of these assets to what Detter and Fölster call an “urban wealth fund”. Ideally, all publicly owned assets in a given city would be placed in the fund, regardless of whether they technically belong to the county, the city, the school system, the state or some other entity. The local governments would each have shares in the fund proportionate to the value of the assets they contributed. These shares would be reported as assets on the municipal balance sheets.

Independent managers with experience in real estate and finance would be charged with maximising the value of the portfolio. Cities would receive dividends from their stakes in these commercial properties and have the option to borrow against or sell their shares if desperate for cash.

Public officials would then have to decide whether it makes sense to pay fair market rents to stay in their properties. Moving offices might be inconvenient for government workers but the potential gains for taxpayers and citizens who depend on government services would be far greater. Leasing space in subway stations to shops might detract from the “historic” character of the US’s barbarous public transit systems, but the revenues could fund needed improvements, such as ventilation, without the need for debt or higher passenger fares.

The urban wealth fund wouldn’t have to be run purely for profit. Segments within the portfolio could have separate goals as long as they are simple and quantifiable. Public housing, for example, could be boosted by increasing density on existing plots and funding improvements by developing some of the freed-up land to sell at higher prices, as Andrew Adonis, head of the UK’s National Infrastructure Commission, has suggested.

Boston can afford to leave money on the table because the local economy has been booming and the city’s general obligation bonds have the country’s highest credit ratings. Other cities, such as Chicago, are being forced to cut services and raise taxes because of financial stress. Yet they, too, have enormous stocks of untapped wealth. With better governance, professional asset management and a little financial engineering, they could raise the money they need and invest.

matt.klein@ft.com
@M_C_Klein

The Perils of Proclaiming an Authentic Organizational Identity

The Perils of Proclaiming an Authentic Organizational Identity. By Balázs Kovács, Glenn Carroll & David Lehman. Sociological Science, January 2017, https://www.gsb.stanford.edu/faculty-research/publications/perils-proclaiming-authentic-organizational-identity

Abstract: An emerging body of research consistently demonstrates that individuals in developed consumer markets value authenticity. But how individuals respond to organizations that tout their identities as authentic is not so well understood. We argue that organizational attempts at explicitly proclaiming their own identity as authentic will generally be regarded by individuals with skepticism and devaluation. Across two studies with different research designs, we find consistent empirical evidence that individuals devalue organizations making identity self-claims of authenticity. The first study analyzed authenticity claims made in the texts of menus from 1,393 restaurants in Los Angeles and their corresponding 450,492 online consumer reviews recorded from 2009 to 2016. The second study used a controlled, minimalistic experimental setting with fictitious restaurant menus that examined reactions to generic authenticity self-claims. The findings illuminate how individuals respond to organizational identity claims about authenticity and raise interesting questions about other types of identity claims.

Distress tolerance and physiological reactivity to stress predict women’s problematic alcohol use

Distress tolerance and physiological reactivity to stress predict women’s problematic alcohol use. By Holzhauer, Cathryn Glanton; Wemm, Stephanie; Wulfert, Edelgard
Experimental and Clinical Psychopharmacology, Vol 25(3), Jun 2017, 156-165. http://dx.doi.org/10.1037/pha0000116

Abstract: Research has shown that measures of reactivity to distress—including distress tolerance and physiological reactivity to stress—are dysregulated in women who misuse alcohol. These variables may interact and create a risk profile for young adult women, reflecting patterns of stress reactivity that confer a risk for alcohol misuse. The current study tested this hypothesis by examining the independent and interactive associations of subjective distress tolerance, behavioral distress tolerance, and physiological stress reactivity with women’s alcohol misuse. The study was conducted with a sample of 91 college women recruited on a large northeastern university campus. Results showed that subjective levels of distress tolerance and physiological reactivity to stress (skin conductance reactivity, SCR), but not behavioral distress tolerance, were independently associated with alcohol misuse. In addition, subjective distress tolerance moderated the relationship between SCR and negative alcohol-related consequences. Specifically, women with low physiological reactivity (SCR) to a stressful task and greater urge to quickly rid themselves of distress (low subjective distress tolerance) endorsed a significantly greater number of adverse consequences from their alcohol use. These results extend prior findings by showing that, even among a nonclinical sample of women, lower stress reactivity in combination with low subjective distress tolerance is associated with increased risk for various drinking-related negative consequences.

Cognitive functioning, aging, and work: A review and recommendations for research and practice

Cognitive functioning, aging, and work: A review and recommendations for research and practice. By Fisher, Gwenith G.; Chaffee, Dorey S.; Tetrick, Lois E.; Davalos, Deana B.; Potter, Guy G.
Journal of Occupational Health Psychology, Vol 22(3), Jul 2017, 314-336. http://dx.doi.org/10.1037/ocp0000086

Abstract: There is a larger proportion and number of older adults in the labor force than ever before. Furthermore, older adults in the workforce are working until later ages. Although a great deal of research has examined physical health and well-being of working older adults, less research has focused on cognitive functioning. The purpose of this article is to provide a broad contemporary and multidisciplinary review of the intersection between cognitive functioning, aging, and work as a follow-up to a paper previously written by Fisher et al. (2014). We begin by providing definitions and background about cognitive functioning and how it changes over the life span. Next we discuss theories relevant to the intersection of cognitive functioning and work, including the use-it-or-lose-it hypothesis, the cognitive reserve hypothesis, hypotheses regarding environmental influences on intellectual functioning, and the job-demands-resources model. Then we summarize recent research about the effects of work on cognitive functioning, as well as ways that cognitive functioning may influence work motivation, learning, development, training, and safety. We conclude by emphasizing the importance of person-environment fit, suggesting avenues for future research, and discussing practical implications for the field of occupational health psychology.