I tend to agree with this notion…(enjoy!)
Introduction (via Ted)
After hitting on a brilliant new life plan, our first instinct is to tell someone, but Derek Sivers says it’s better to keep goals secret. He presents research stretching as far back as the 1920s to show why people who talk about their ambitions may be less likely to achieve them.
Abstract (via Eminegul Karababa and Guliz Ger)
We examine the sociohistorical formation of the consumer subject during the development of consumer culture in the context of leisure consumption. Specifically, we investigate how an active consumer was forming while a coffeehouse culture was taking shape during early modern Ottoman society. Utilizing multiple historical data sources and analysis techniques, we focus on the discursive negotiations and the practices of the consumers, the marketers, the state, and the religious institution as relevant stakeholders. Our findings demonstrate that multiparty resistance, enacted by consumers and marketers, first challenged the authority of the state and religion and then changed them. Simultaneously and at interplay with various institutional transformations, a public sphere, a coffeehouse culture, and a consumer subject constructing his self-ethics were developed, normalized, and legalized. We discuss the implications of the centrality of transgressive hedonism in this process, as well as the existence of an active consumer in an early modern context.
Click Here To Read: Early Modern Ottoman Coffeehouse Culture and the Formation of the Consumer
Recommended Excerpts (via Jonah Lehrer @ Wired)
The miners have already survived underground longer than anyone else – they broke the 25 day record today – and will mostly like remain underground for at least another few months.
But this post is not about the miners, and their Dantesque plight. Instead, it’s about our reaction to them, and the extraordinary outpouring of emotion that occurs whenever we can latch onto a set of identifiable victims.
Of course, this is a deeply irrational reaction. We are much less interested in helping a victim – we only want to help the victim. (This bias is known as the identifiable victim effect, since it suggests that we react much more strongly when the victim can be specified.) Why do we this? Because human charity is ultimately rooted in our compassionate feelings, and not in some rational, utilitarian calculations. We are not Vulcans.
What’s interesting, though, is that some people are much less vulnerable to the identifiable victim effect than others. (There are Spocks among us!) Consider this new paper led by James Friedrich, at Willamette University, which measured differences in “analytic processing” style among 120 undergraduates. (The test for this is a rather straightforward survey, which includes questions such as “I enjoy intellectual challenges” and “I believe in trusting my hunches”.) Not surprisingly, people who tend toward analysis were also less likely to display the identifiable victim bias:
Click Here To Read: Jonah Lehrer on The Identifiable Victim Bias & Chilean Miners
H/T Leadon Young
Introduction (via Kissmetrics)
For retailers, shopping is the art of persuasion. Though there are many factors that influence how and what consumers buy. However, a great deal is decided by visual cues, the strongest and most persuasive being color. When marketing new products it is crucial to consider that consumers place visual appearance and color above other factors such as sound, smell and texture. To learn more about color psychology and how it influences purchases, see our latest infographic.
*Image via Kissmetrics
The latest via the St.Louis Fed
Abstract (Via James Bullard)
In this paper the author discusses the possibility that the U.S. economy may become enmeshed in a Japanese-style deflationary outcome within the next several years. To frame the discussion, the author relies on an analysis that emphasizes two possible long-run steady states for the economy: one that is consistent with monetary policy as it has typically been implemented in the United States in recent years and one that is consistent with the low nominal interest rate, deflationary regime observed in Japan during the same period. The data considered seem to be quite consistent with the two steady-state possibilities. The author describes and critiques seven stories that are told in monetary policy circles regarding this analysis and emphasizes two main conclusions: (i) The Federal Open Market Committee’s “extended period” language may be increasing the probability of a Japanese-style outcome for the United States and (ii), on balance, the U.S. quantitative easing program offers the best tool to avoid such an outcome.
Additional Excerpts (Via James Bullard):
Seven Faces Of Peril
1. Denial
I think it is fair to say that, for many who have been involved in central banking over the past two or three decades, it is difficult to think of Japan and the United States in the same game, as Figure 1 suggests. For many, the situation in Japan since the 1990s has been a curiosum, an odd outcome that might be chalked up to particularly Byzantine Japanese politics, the lack of an inflation target for the Bank of Japan (BOJ), a certain lack of political independence for the BOJ, or some other factor specific to the Land of the Rising Sun. The idea that U.S. policymakers should worry about the nonlinearity of the Taylor-type rule and its implications is sometimes viewed as an amusing bit of theory without real ramifications.
2. Stability
There is another version of the denial view that is somewhat less extreme but nevertheless still a form of denial in the end. It is a view that I have been associated with in my own research. In this view, one accepts the zero bound on nominal interest rates and the other details of the analysis by Benhabib, Schmitt-Grohé, and Uribe. One accepts that there are two steady states. How – ever, the steady states have stability properties associated with them in a fully dynamic analysis, and the argument is that the targeted steady state is the stable one, while the unintended, low nominal interest rate steady state is unstable. Therefore, according to this argument, one should expect to observe the economy in the neighborhood of the targeted steady state and need not worry about the unintended, low nominal interest rate steady state.
3. The FOMC in 2003
In Figure 1, a set of data points is circled. These data are labeled “2003-2004” and are associated with a policy rate at 1.0 percent and the inflation rate between 1.0 and 1.5 percent. This episode was the last time the FOMC worried about a possible bout of deflation. While core inflation did move to a low level during this period—not quite as low as the current level—inflation moved higher later and interest rates were increased. This episode surely provides comfort for those who think the Japanese-style outcome is unlikely. It suggests that the economy will ultimately return to the neighborhood of the targeted steady state, perhaps even indicating that the stability story is the right one after all. The 2003 experience did not involve a near-zero policy rate, however.
4. Discontinuity
If the problem is the existence of a second, unintended steady state—and this is partly caused
by the choice of a policy rule that is controlled by policymakers—why not just choose a different policy rule? This can, in fact, be done and was discussed by Benhabib, Schmitt-Grohé, and Uribe in their original paper. Furthermore, some parts of the current policy discussion have exactly this flavor.….Of course, this policy looks unusual and perhaps few would advocate it, but again we are trying to avoid all those circles down there in the southwest portion of the diagram. The discontinuouspolicy has the great advantage that it is a very simple way to ensure that the unintended, low nominal interest rate steady state no longer exists. The only point in the diagram where the Fisher relation and the policy rule can be in harmony is the targeted equilibrium. This would remove the unintended steady state as a focal point for the economy.
5. Traditional Policy
According to the Bank of England,15 for 314 years the policy rate was never allowed to fall below 2.0 percent. During more than three centuries the economy was subject to large shocks, wars, financial crises, and the Great Depression— yet 2.0 percent was the policy rate floor until very recently. A version of this policy is displayed in Figure 5. This policy rule does not eliminate the unintended steady state; it simply moves it to be associated with a higher level of inflation. In the figure, this point occurs at an interest rate of 2.0 percent and an inflation rate of 1.5 percent (the center arrow in the figure). This policy seems very reasonable in some ways. To the extent that one of the main purposes of the interest rate policy is to keep inflation low and stable, this policy creates two steady states, but the policymaker may be more or less indifferent between the two outcomes. Then one has to worry much less about the possibility of becoming permanently trapped in an unintended, deflationary steady state. This policy prevents the onset of interest rates that are “too low.”
6. Fiscal Intervention Given the Situation in Europe
In the academic literature following the 2001 publication of the perils paper, some attempt was made to provide policy advice on how to avoid the unintended steady state of Figure 1.17 This advice was given in the context of trying to preserve the desirable qualities of the Taylor-type interest rate rule in the neighborhood of the targeted steady state. That is, even though interest rate rules are the problem here, the advice is given in the context of those rules—as opposed to simply abandoning them altogether.7. Quantitative Easing
The quantitative easing policy undertaken by the FOMC in 2009 has generally been regarded as successful in the sense that longer-term interest rates fell following the announcement and implementation of the program.20 Similar assessments apply to the Bank of England’s quantitative easing policy. For the United Kingdom in particular, both expected inflation and actual inflation have remained higher to date, and for that reason the United Kingdom seems less threatened by a deflationary trap. The U.K. quantitative easing program has a more state-contingent character for rates to bottom out at a level somewhat higher than zero, as the traditional policy rule does. Of course, a policy rule like the one depicted in Figure 5 does not allow as much policy accommodation in the face of shocks to the economy at the margin. But is it worth risking a “lost decade” to get the extra bit of accommodation?
Click Here To Read: Japan in the US? Seven Faces of “The Peril”
A really awesome collection of Richard Feynman videos…via the BBC
A big H/T To Dan Colman @ Open Culture (please visit open culture and thank them for the find)
Richard Feynman: Fun to Imagine
Back in 1983, the BBC aired Fun to Imagine, a television series hosted by Richard Feynman that used physics to explain how the everyday world works – “why rubber bands are stretchy, why tennis balls can’t bounce forever, and what you’re really seeing when you look in the mirror.” In case you’re not familiar with him, Feynman was a Nobel prize-winning physicist who had a gift for many things, including popularizing science and particularly physics
Click Here To Watch Original Richard Feynman Hosts – Fun to Imagine (Incredible TV Series)
Awesome…check out the conclusion
Abstract (via Tanel Mehine)
The purpose of this article is to find out the relationship between yellow price tags and consumer reference prices. A laboratory study was conducted among 150 respondents, who were put in an experimental purchase situation and their initial internal reference prices were compared affected reference prices. The results revealed that consumers perceive yellow price tags as presenters of discounts. A comparison of the mean values showed that yellow price tags influence the reference price and, moreover, a yellow price tag increased the reference price. As a practical outcome, the results of the study indicated that companies have the opportunity to increase the consumer’s reference price and thereby to raise revenues by changing the colour of the price tag without offering an actual discount.
Excerpted Implications (via Tanel Mehine)
From a practical perspective, the positive effect of yellow price tags on the reference price means that a company can increase the consumer’s reference price in quickly and easily. As was also mentioned in the earlier sections, a higher reference price means that the consumer is more likely to accept expensive prices. For example, this would mean that a consumer has a fixed internal reference price of 10 EEK for a certain product and the prices in the store also offer 10 EEK as the average price, but the price tag on one of the products is yellow. The consumer now interprets the price marked on the yellow price tag as a discount and calculates the average price of the product by adding a value to the yellow price tag (the amount of the assumed discount). The next time s/he goes to the store, however, the price of the product, which seemed too expensive during the last visit, does not necessarily seem so expensive anymore as a result of the increase in the average price of the store and a positive buying decision is more likely. The result is particularly important in the case of brand loyal consumers, where using a yellow price tag and thereby increasing the price helps to gain additional revenues. In addition, what is also important is that the consumer him/herself regards the new higher price as being entirely justified. From the perspective of the business operator, an increase in the consumer’s assessment would mean additional revenues as well; at the same time, it is possible to hide a price increase because the limit of the change perceived by the consumer has risen. Thus, since the Estonian legislation does not set any restrictions on such price tags, the business operator can show the consumer a discount and thereby increase sales quantities without actually lowering any prices and by simply altering the colour of the price tag. So the yellow price tag is a good promotional tool but, at the same time, also an unethical trading method.
Click Here To Read: Do yellow price tags matter to consumers?
Bakadesuyo reports…
“the folks who heard a warm two sentence thank you from a boss made an average of about 50% more calls during the subsequent week.”
Abstract (via David de Meza, Bernd Irlenbusch, Diane Reyniers @ IZA)
This high-stakes experiment investigates the effect on buyers of mandatory disclosures concerning an insurance policy’s value for money (the claims ratio) and the seller’s commission. These information disclosures have virtually no effect despite most buyers claiming to value such information. Instead, our data reveal that whether the subject is generally trusting plays an important role. Trust is clearly associated with greater willingness to pay for insurance. Unlike in previous work, trust in our setting is not about obligations being fulfilled. The contract is complete, simple and the possibility of breach is negligible. However, as for much B2C insurance marketing, face-to-face selling plays a crucial role in our experimental design. Trusting buyers are more suggestible, so take advice more readily and buy more insurance, although they are no more risk averse than the uninsured. Moreover, trusting buyers feel less pressured by sellers, and are more confident in their decisions which suggests that they are easier to persuade. Therefore, in markets where persuasion is important, public policy designed to increase consumer information is likely to be ineffective.
Favorite Bit
In our experiment, seller persuasion, not just intrinsic risk preference, is a major influence on insurance decisions. Whether an individual is insured depends on which seller they are matched with. Some sellers are particularly effective and trusting buyers are especially susceptible to seller influence.
Click Here To Read: Disclosure, Trust and Persuasion in Insurance Markets
H/T Harvard Law
Abstract (via Kim V, Li, Zhang @ SSRN)
Using a large sample of U.S. firms for the period 1995-2008, we provide strong and robust evidence that corporate tax avoidance is positively associated with firm-specific stock price crash risk. This finding is consistent with the following view: Tax avoidance facilitates managerial rent extraction and bad news hoarding activities for extended periods by providing tools, masks, and justifications for these opportunistic behaviors. The hoarding and accumulation of bad news for extended periods lead to stock price crashes when the accumulated hidden bad news crosses a tipping point, and thus comes out all at once. Moreover, we show that the positive relation between tax avoidance and crash risk is attenuated when firms have strong external monitoring mechanisms such as high institutional ownership, high analyst coverage, and greater takeover threat from corporate control markets.
Click Here To Read: Corporate Tax Avoidance and Stock Price Crash Risk
