tag:theconversation.com,2011:/global/topics/consumer-goods-20872/articles
Consumer goods – The Conversation
2023-09-29T17:00:37Z
tag:theconversation.com,2011:article/212680
2023-09-29T17:00:37Z
2023-09-29T17:00:37Z
Lost in the coffee aisle? Navigating the complex buzzwords behind an ‘ethical’ bag of beans is easier said than done
<figure><img src="https://images.theconversation.com/files/551067/original/file-20230928-21-efm249.jpg?ixlib=rb-1.1.0&rect=19%2C0%2C2121%2C1397&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The text on a single bag of coffee can feel like information overload.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/young-asian-woman-pushing-a-shopping-cart-grocery-royalty-free-image/1469902811?phrase=coffee+aisle&adppopup=true">d3sign/Moment via Getty Images</a></span></figcaption></figure><p>You’re shopping for a bag of coffee beans at the grocery store. After reading about <a href="https://theconversation.com/coffee-60-of-wild-species-are-at-risk-of-extinction-due-to-climate-change-109982">the effects of climate change</a> and how little farmers make – <a href="https://perfectdailygrind.com/2022/09/how-much-of-the-price-of-a-cup-of-coffee-do-farmers-receive/">typically $0.40 per cup</a> – you figure it might be time to change your usual beans and buy something more ethical. Perusing the shelves in the coffee aisle, though, you see too many choices.</p>
<p>First up is the red tub of Folgers “100% Colombian,” a kitchen staple – “lively with a roasted and rich finish.” On the side of the tub, you see <a href="https://luzmedia.co/colombian-coffee">the icon of Juan Valdez</a> with his donkey, Conchita – a fictional mascot representing the Colombian Coffee Growers Federation.</p>
<p>Next might be Starbucks “<a href="https://www.kroger.com/p/starbucks-colombia-medium-roast-ground-coffee/0076211120611">Single-Origin Colombia</a>.” One side of the green bag tells “the story” of the beans, describing “treacherous dirt roads” to “6,500 feet of elevation” that are “worth the journey every time.” The other shows a QR code and promises Starbucks is “Committed to 100% Ethical Coffee Sourcing in partnership with Conservation International.” </p>
<p>Then again, you’ve heard that a “better” choice would be to buy from local cafes. The bag from your local roaster introduces you to La Familia Vieira of Huila, Colombia, who have worked as coffee farmers for four generations at 1,600 meters above sea level – about a mile. But then there’s a flood of unfamiliar lingo: the 88-point anerobic-processed coffee was sourced directly from an importer who has a six-year relationship with the family, paid $3.70 per pound at farmgate, and $6.10 per pound FOB at a time when the C-market price was $1.60 per pound.</p>
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<a href="https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man in a straw hat and pink shirt pours brightly colored berries through an open-air processor." src="https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=369&fit=crop&dpr=1 600w, https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=369&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=369&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=463&fit=crop&dpr=1 754w, https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=463&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/551072/original/file-20230928-21-o96poq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=463&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Coffee farmer Julian Pinilla uses a coffee grinder during an interview with AFP in Valle del Cauca, Colombia.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/coffee-farmer-julian-pinilla-uses-a-coffee-grinder-during-news-photo/1504615725?adppopup=true">Juan Restrepo/AFP via Getty Images</a></span>
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<p>If you’re about ready to toss in the towel, you’re hardly alone. Consumers are often asked to make more responsible choices. Yet when it comes to commodity goods like coffee, the complex production chain can turn an uncomplicated habit into a complicated decision.</p>
<p>As a coffee enthusiast and <a href="https://www.uml.edu/msb/faculty/ross-spencer.aspx">marketing professor who researches marketplace justice</a>, I’ve long been fascinated with how ethics and coffee consumption are intertwined. Before COVID-19, my family <a href="https://www.instagram.com/yukro.cat/">adopted a cat and named him Yukro</a>, after a coffee-producing community in Ethiopia. While we were quarantining at home, I ordered Yukro-originating coffee from as many roasters as I could find to try to understand how consumers were supposed to make an informed choice.</p>
<p>Paradoxically, the more information I gleaned, the less I knew how to make a responsible decision. Indeed, prior research has indicated that <a href="https://doi.org/10.1016/j.jbusres.2019.03.011">information overload increases the paradox of choice</a>; this is no different when factoring in ethical information. Additionally, as with a lot of consumer-facing information, <a href="https://doi.org/10.1177/07439156231202746">it can be difficult to tell what information is relevant or credible</a>. </p>
<p>Marketers attempt to simplify this overload by using buzzwords that sound good but may not get across much nuance. However, you might consider some of these terms when trying to decide between “100% Colombian” and the Vieira family. </p>
<h2>Fair trade</h2>
<p>As a benchmark, the coffee industry typically uses the “C-price”: <a href="https://www.marketwatch.com/investing/future/kc00">the traded price</a> on the New York Intercontinental Exchange for a pound of coffee ready for export. “Fair trade” implies the coffee is fairly traded, often with the goal of paying farmers minimum prices – and fixed premiums – above the C-price. </p>
<p>There are a few different fair trade certifications, such as <a href="https://www.fairtradeamerica.org/">Fairtrade America</a> or <a href="https://www.fairtradecertified.org/">Fair Trade Certified</a>. Each of these has its own, voluntary certification standards linked with the associated organization. Yet <a href="https://cdn.coffeestrategies.com/wp-content/uploads/2009/07/Sustainable-Coffee-Certifications-Comparison-Matrix-2010.pdf">obtaining certification</a> can come at significant additional cost for farms or importers.</p>
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<a href="https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Women spread out coffee beans on a drying rack in an open field with hills in the distance." src="https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/551070/original/file-20230928-25-et44vv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Farmers work on the coffee seed harvest in the Nandi province of Tindiret, Kenya.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/the-farmers-are-on-the-process-of-coffee-seed-harvest-at-news-photo/1650320045?adppopup=true">Gerald Anderson/Anadolu Agency via Getty Images</a></span>
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<p>In contrast, some importers, or even roasters, have established relationships with specific farms, rather than buying beans at auction on the open market. These relationships potentially allow the importers to work directly with farmers over multi-year periods to improve the coffee quality and conditions. Longer-term commitment can provide farmers more certainty in times when the C-price is below their cost of production. </p>
<p>Yet these arrangements can be just as volatile for farmers if the importers they’ve committed to cannot find roasters interested in buying their beans – beans they could have sold at auction themselves.</p>
<h2>100% arabica</h2>
<p>There are several species of coffee, but <a href="https://www.climate.gov/news-features/climate-and/climate-coffee">approximately 70% of the world’s production</a> comes from the arabica species, which grows well at higher altitudes. Like with wine, there are several varieties of arabica, and they tend to be a bit sweeter than other species – making arabica the ideal species for satisfying consumers.</p>
<p>In other words, a label like “100% arabica” is meant to signal deliciousness and prestige – though it’s about as descriptive as calling a bottle of pinot noir “100% red.”</p>
<p>When it comes to the environment, though, arabica isn’t necessarily a win. Many arabica varieties are susceptible to climate change-related conditions such as coffee rust – <a href="https://www.theatlantic.com/science/archive/2020/09/coffee-rust/616358/">a common fungus</a> that spreads easily and can devastate farms – or drought. </p>
<p>Other coffee species such as robusta or <a href="https://intelligence.coffee/2023/03/whatever-happened-eugenioides-coffee/">the less common eugenioides</a> are more climate-change resistant, reducing costs of production for farmers, and are <a href="https://www.statista.com/statistics/675807/average-prices-arabica-and-robusta-coffee-worldwide/">cheaper on commodity markets</a>. However, they have a bit of a <a href="https://sprudge.com/what-is-eugenioides-coffee-181142.html">different taste profile</a> than what folks are normally used to, which could mean lower earnings for farmers who make the switch, but could also provide new opportunities in areas where coffee was not previously farmed or to new markets of consumers’ tastes.</p>
<h2>Single-origin</h2>
<p>If someone labeled a peach as “American,” a consumer would rightly wonder where exactly it came from. Similarly, “single-origin” is a very broad description that could mean the coffee came from “Africa” or “Ethiopia” or “Jimma Zone” – even the zone’s specific town of “Agaro.” “Single-estate” at least gives slightly more farm-level information, though even this information may be tough to come by. </p>
<p>Consumers have tended to want their coffee’s journey from seed to cup to be <a href="https://perfectdailygrind.com/2023/04/do-specialty-coffee-consumers-want-to-connect-with-farmers/">traceable and transparent</a>, which implies that everyone along the production chain is committed to equity – and “single-origin” appears to provide those qualities.</p>
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<a href="https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man in a blue shirt crouches to examine small green fruits along a stem." src="https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/551069/original/file-20230928-17-hi274j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Egyptian farmer Ahmad al-Hijawi’s Yemeni coffee beans are cultivated in the shade of mango trees.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/view-of-egyptian-farmer-ahmad-al-hijawis-yemeni-coffee-news-photo/1673786616?adppopup=true">Mohamed Elshahed/Anadolu Agency via Getty Images</a></span>
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<p>As a result, some coffee marketers invest quite a bit in being able to craft a narrative that emotionally resonates with consumers and makes them feel “connected” to the farm. Others have developed <a href="https://doi.org/10.1016/j.joitmc.2023.100008">blockchain solutions</a> where each step along the coffee’s journey, from bean to retail, is documented in a database that consumers can look at. Since blockchain data are immutable, the information a consumer gets from scanning a QR code on a label of a coffee bag should provide a clear chain of provenance.</p>
<h2>Shade-grown</h2>
<p>Shade-grown labels indicate that farms have adopted a more environmentally sustainable method, using biomatter like dead leaves as natural fertilizer for the coffee shrubs <a href="https://doi.org/10.3389/fsufs.2022.877476">growing beneath a canopy of trees</a>. Unlike other methods, shade-grown coffee doesn’t increase deforestation, and it protects habitats for animals like migratory birds – which is why the Smithsonian’s National Zoo and Conservation Biology Institute, which has developed its own coffee certification program, <a href="https://nationalzoo.si.edu/migratory-birds/bird-friendly">calls it “bird-friendly</a>.”</p>
<p>But as with fair trade, there are costs associated with certification, and those costs are often passed on to consumers. Farmers or importers are left justifying the cost and wondering if the specialized label can attract a large enough market to validate their decision to certify. That said, many farmers who have the ability will do shade-grown regardless, since it’s a better farming practice and <a href="https://news.climate.columbia.edu/2019/03/12/shade-grown-coffee-sustainable/">saves some costs</a> on fertilizer.</p>
<p>In the end, all this information – or lack thereof – is a tool for consumers to use when making their coffee choices. Like any tool, sometimes it’s helpful, and sometimes not. These labels might not make your decision any easier, and might drive you right back to your “usual” bag of beans – but at least your choice can be more nuanced.</p><img src="https://counter.theconversation.com/content/212680/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Spencer M. Ross is a former member of the Specialty Coffee Association (SCA) and has presented seminars twice at SCA events.</span></em></p>
If you’ve decided to look for coffee that’s better for the earth or the people making it, you might need some help translating all the industry lingo.
Spencer M. Ross, Associate Professor of Marketing, UMass Lowell
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/187970
2023-02-14T13:26:35Z
2023-02-14T13:26:35Z
My art uses plastic recovered from beaches around the world to understand how our consumer society is transforming the ocean
<figure><img src="https://images.theconversation.com/files/509865/original/file-20230213-409-u60wff.jpg?ixlib=rb-1.1.0&rect=25%2C15%2C3424%2C2281&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Pam Longobardi amid a giant heap of fishing gear that she and volunteers from the Hawaii Wildlife Fund collected in 2008.</span> <span class="attribution"><span class="source">David Rothstein</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>I am obsessed with plastic objects. I harvest them from the ocean for the stories they hold and to mitigate their ability to harm. Each object has the potential to be a message from the sea – a poem, a cipher, a metaphor, a warning. </p>
<p><a href="https://artdesign.gsu.edu/profile/pamela-longobardi/">My work</a> collecting and photographing ocean plastic and turning it into art began with an epiphany in 2005, on a far-flung beach at the southern tip of the Big Island of Hawaii. At the edge of a black lava beach pounded by surf, I encountered multitudes upon multitudes of plastic objects that the angry ocean was vomiting onto the rocky shore. </p>
<p>I could see that somehow, impossibly, humans had permeated the ocean with plastic waste. Its alien presence was so enormous that it had reached this most isolated point of land in the immense Pacific Ocean. I felt I was witness to an unspeakable crime against nature, and needed to document it and bring back evidence. </p>
<p>I began cleaning the beach, hauling away weathered and misshapen plastic debris – known and unknown objects, hidden parts of a world of things I had never seen before, and enormous whalelike colored entanglements of nets and ropes. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Three large plastic art installations, the central one a cornucopia spilling plastic objects onto the floor." src="https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509862/original/file-20230213-409-crkctu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">‘Bounty Pilfered’ (center), ‘Newer Laocoön’ (left) and ‘Threnody’ (right). All made of ocean plastic from the Atlantic, Pacific and Gulf of Mexico, installed at the Baker Museum in Naples, Fla., 2022.</span>
<span class="attribution"><span class="source">Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>I returned to that site again and again, gathering material evidence to study its volume and how it had been deposited, trying to understand the immensity it represented. In 2006, I formed the <a href="https://driftersproject.net/about/">Drifters Project</a>, a collaborative global entity to highlight these vagrant, translocational plastics and recruit others to investigate and mitigate ocean plastics’ impact. </p>
<p>My new book, “<a href="https://falllinepress.com/products/ocean-gleaning">Ocean Gleaning</a>,” tracks 17 years of my <a href="http://driftersproject.net/wp-content/uploads/2022/02/2021-CV_-LONGOBARDI-Pam-.pdf">art and research</a> around the world through the Drifters Project. It reveals specimens of striking artifacts harvested from the sea – objects that once were utilitarian, but have been changed by their oceanic voyages and come back as messages from the ocean.</p>
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<a href="https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Array of plastic objects, including toys, action figures and fragments of larger objects." src="https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=712&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=712&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=712&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=894&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=894&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509512/original/file-20230210-28-ib15eh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=894&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">‘Drifters Objects,’ a tiny sample of the plastic artifacts Pam Longobardi has collected from beaches worldwide.</span>
<span class="attribution"><span class="source">Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<h2>Living in a plastic age</h2>
<p>I grew up in what some now deem <a href="https://www.smithsonianmag.com/smart-news/are-we-living-plastic-age-180957817/">the age of plastic</a>. Though it’s not the only modern material invention, plastic has had the most unforeseen consequences. </p>
<p>My father was a biochemist at the chemical company <a href="https://www.nytimes.com/1977/01/02/archives/the-men-from-glad.html">Union Carbide</a> when I was a child in New Jersey. He played golf with an actor who portrayed “<a href="https://www.youtube.com/watch?v=mYkm7ts62VM">The Man from Glad</a>,” a Get Smart-styled agent who rescued flustered housewives in TV commercials from inferior brands of plastic wrap that snarled and tangled. My father brought home souvenir pins of Union Carbide’s hexagonal logo, based on the carbon molecule, and figurine pencil holders of “<a href="https://www.pinterest.ch/pin/vintage-union-carbide-dow-chemical-mascot-promo-figurine-tergie-statue--351773420877171292/">TERGIE</a>,” the company’s blobby turquoise mascot. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/cr5m8b28eqA?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">On the 2013 Gyre Expedition, Pam Longobardi traveled with a team of scientists, artists and policymakers to investigate and remove tons of oceanic plastic washing out of great gyres, or currents, in the Pacific Ocean, and make art from it.</span></figcaption>
</figure>
<p>Today I see plastic as a zombie material that haunts the ocean. It is made from petroleum, the decayed and transformed life forms of the past. Drifting at sea, it “lives” again as it gathers a biological slime of algae and protozoa, which become attachment sites for larger organisms. </p>
<p>When <a href="https://theconversation.com/the-oceans-are-full-of-plastic-but-why-do-seabirds-eat-it-68110">seabirds</a>, <a href="https://theconversation.com/bait-and-switch-anchovies-eat-plastic-because-it-smells-like-prey-81607">fish</a> and <a href="https://theconversation.com/newly-hatched-florida-sea-turtles-are-consuming-dangerous-quantities-of-floating-plastic-143785">sea turtles</a> mistake this living encrustation for food and eat it, plastic and all, the chemical load <a href="https://theconversation.com/hundreds-of-fish-species-including-many-that-humans-eat-are-consuming-plastic-154634">lives on in their digestive tracts</a>. Their body tissues <a href="https://doi.org/10.1038/srep03263">absorb chemicals from the plastic</a>, which remain undigested in their stomachs, often ultimately <a href="https://theconversation.com/bait-and-switch-anchovies-eat-plastic-because-it-smells-like-prey-81607">killing them</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two piles of tiny particles of virtually identical sizes." src="https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=514&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=514&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509514/original/file-20230210-16-7dsqrz.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=514&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Plastic ‘nurdles’ (left), tiny pellets that serve as raw materials for manufacturing plastic products, and herring roe, or eggs (right). These visually analogous forms exemplify how fish can mistake plastic for food.</span>
<span class="attribution"><span class="source">Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<h2>The forensics of plastic</h2>
<p>I see plastic objects as the cultural archaeology of our time – <a href="https://www.youtube.com/watch?v=ojZhoPvhraw">relics of global late-capitalist consumer society</a> that mirror our desires, wishes, hubris and ingenuity. They become transformed as they leave the quotidian world and collide with nature. By regurgitating them ashore or jamming them into sea caves, the ocean is communicating with us through materials of our own making. Some seem eerily familiar; others are totally alien.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two views of a degraded arm from a plastic doll, found on Playa Jaco in Costa Rica." src="https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509539/original/file-20230210-19-9tzuuk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A degraded plastic doll arm, from the series ‘Evidence of Crimes.’</span>
<span class="attribution"><span class="source">Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>A person engaging in ocean gleaning acts as a detective and a beacon, hunting for the forensics of this crime against the natural world and shining the light of interrogation on it. By searching for ocean plastic in a state of open receptiveness, a gleaner like me can find symbols of pop culture, religion, war, humor, irony and sorrow. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A rolling landscape covered with thousands of life vests." src="https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509540/original/file-20230210-20-jweta0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">‘Division Line,’ 2016. This photograph shows the ‘life-jacket cemetery’ in Lesvos, Greece. Traumatized asylum-seekers and migrants arriving by boat from Türkey leave the life vests on shore as they stagger inland. Most of the waste is plastic.</span>
<span class="attribution"><span class="source">© Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>In keeping with the drifting journeys of these material artifacts, I prefer using them in a transitive form as installations. All of these works can be dismantled and reconfigured, although plastic materials are nearly impossible to recycle. I display some objects as specimens on steel pins, and wire others together to form large-scale sculptures. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A plastic bottle cap inscribed 'Endless' and a photograph of a beach littered with plastic objects." src="https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509543/original/file-20230210-22-89toay.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">From the series ‘Prophetic Objects,’ a plastic cap from a Greek manufacturer of cleaning products, found on the Greek island of Kefalonia.</span>
<span class="attribution"><span class="source">Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>I am interested in ocean plastic in particular because of what it reveals about us as humans in a global culture, and about the ocean as a cultural space and a giant dynamic engine of life and change. Because ocean plastic visibly shows nature’s attempts to reabsorb and regurgitate it, it has profound stories to tell.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A large sculpted anchor in the center of an art gallery, with ties to life preservers mounted on the ceiling." src="https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509544/original/file-20230210-25-ixc2yr.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">‘Albatross’ and ‘Hope Floats,’ 2017. Recovered ocean plastic, survival rescue blankets, life vest straps and steel.</span>
<span class="attribution"><span class="source">Pam Longobardi</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>I believe humankind is at a crossroads with regards to the future. The ocean is asking us to pay attention. Paying attention is an act of giving, and in the case of plastic pollution, it is also an act of taking – taking plastic out of your daily life; taking plastic out of the environment; and taking, and spreading, the message that the ocean is laying out before our eyes.</p><img src="https://counter.theconversation.com/content/187970/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pam Longobardi has received funding from Georgia State University, the Hudgens Prize, the Ionion Center for Art and Culture in Kefalonia, Greece, the Oceanic Society, and the Georgia chapter of the Surfrider Foundation. She is a member of the Plastic Pollution Coalition and the Oceanic Society.</span></em></p>
Pam Longobardi collects and documents ocean plastic waste and transforms it into public art and photography. Her work makes statements about consumption, globalism and conservation.
Pam Longobardi, Regents' Professor of Art and Design, Georgia State University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/162816
2021-08-25T12:26:33Z
2021-08-25T12:26:33Z
Why people feel guilty about using effort-saving products when taking care of loved ones
<figure><img src="https://images.theconversation.com/files/416552/original/file-20210817-22-1mugdbh.jpg?ixlib=rb-1.1.0&rect=0%2C218%2C4865%2C3248&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Does effort equal love?</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/overhead-view-of-girl-making-valentine-card-on-royalty-free-image/961113652">Cavan Images/Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em></p>
<h2>The big idea</h2>
<p>People who care for friends, children or other loved ones may avoid products and services that make caregiving easier – such as ready-made meals – because they believe that doing so undermines their ability to show that they care, <a href="https://doi.org/10.1093/jcr/ucab039">according to our new research</a>. Psychologically, people equate effort with love, and taking shortcuts can make them feel guilty.</p>
<p>While making caregiving easier might seem like a good thing, people don’t necessarily perceive it that way. As part of our research, we collected <a href="https://instagram.com/p/BhvIL1AgaOG/">Instagram</a> and <a href="https://www.facebook.com/BuzzFeedNews/videos/1285752184779130/">Facebook</a> comments on posts about <a href="https://www.happiestbaby.com/?utm_source=google&utm_campaign=&gclid=EAIaIQobChMImuX26uWp8gIVAeKzCh2T1wXMEAAYASAAEgIkafD_BwE">the SNOO</a>, a smart crib that automatically rocks a fussy baby to sleep. We found that a plurality of the 675 comments we examined – 40% – were negative. Many of the comments called parents who would buy the SNOO “just lazy” or questioned them with such comments as, “If you need that device, you shouldn’t have kids.”</p>
<p>In fact, the more people perceived the SNOO as making bedtime easier, the more harshly they judged parents who used it.</p>
<p>These comments suggest that people have the intuition that proper caregiving should require effort. But does this intuition affect people’s own caregiving decisions? </p>
<p>We conducted nine experiments to answer this question. </p>
<p>Our first four experiments sought to tease out how important perceived effort is when caring for loved ones and whether people believe using an effort-saving product implies they don’t care enough.</p>
<p>For example, in one study, we recruited 251 undergraduate students and asked them to send their grandparents a card to cheer them up, which we mailed for them. We asked half of the students to pick one from a set of several premade cards, while the others made one themselves using markers, stickers and glitter. After they finished choosing or making a card, we asked how they felt. Students who used a premade card reported they felt like less dedicated family members and guiltier than those who sent a handmade one. </p>
<figure class="align-center ">
<img alt="The front of two cards shown side by side, the one on the left is premade, the one on right is handmade with the words 'you're in my thoughts' written in pencil and stickers of two hearts and a star" src="https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=269&fit=crop&dpr=1 600w, https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=269&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=269&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=337&fit=crop&dpr=1 754w, https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=337&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/416561/original/file-20210817-22-zr5mvh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=337&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Which one would you prefer to receive – or send?</span>
<span class="attribution"><span class="source">Ximena Garcia-Rada, Mary Steffel, Elanor F Williams, Michael I Norton</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The next four studies examined when and with whom people felt it is especially important to express their love through effort. </p>
<p>In one study, we found that people making cookies to comfort their partner during the COVID-19 pandemic were over 20% more likely to choose to mix the dough by hand rather than use ready-to-bake frozen dough than those who were baking cookies to comfort themselves. </p>
<p>Overall, making an effort seemed most important when participants were trying to give emotional support or helping someone they were especially close to.</p>
<p>In our final study, we tested how companies offering products that support caregiving can make them more palatable to customers by teaming up with smart crib-maker Happiest Baby on an actual marketing campaign. We crafted advertisements for the company that described the SNOO in two different ways: by acknowledging parents’ efforts (“you give the XOXOs, SNOO gives the ZZZs”) or by emphasizing how the SNOO makes parenting easier (“with SNOO, get ZZZ’s with ease”). </p>
<p>After a two-week social media campaign, twice as many people clicked on the ad acknowledging parents’ efforts compared with the one that emphasized how much it reduced effort. </p>
<figure class="align-center ">
<img alt="Two similar tweets are shown side by side, the one on the left emphasizing how a SNOO smart crib will reduce effort, the one on the right emphasizing the role of the parent" src="https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=550&fit=crop&dpr=1 754w, https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=550&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/416546/original/file-20210817-21-vzou7.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=550&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Twice as many people clicked on the ad on the right.</span>
<span class="attribution"><span class="source">Ximena Garcia-Rada, Mary Steffel, Elanor F Williams, Michael I Norton</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Why it matters</h2>
<p>Caring for one’s family and friends is important and meaningful – but a lot of work.</p>
<p>People in caregiving roles say they experience <a href="https://www.pewresearch.org/social-trends/2013/03/14/modern-parenthood-roles-of-moms-and-dads-converge-as-they-balance-work-and-family">high levels of stress</a> and have very busy schedules. This has been <a href="https://doi.org/10.1073/pnas.2018494118">especially true during the pandemic</a>. </p>
<p>Yet our work suggests that people may not take advantage of ways to make this work easier – and when they do, they feel as if they are doing a worse job. </p>
<h2>What still isn’t known</h2>
<p>We didn’t test whether there are other ways people could be convinced that it’s OK to use effort-saving products to help them care for their family and friends. </p>
<p>Future work could examine exactly how caregivers prioritize showing their love versus getting tasks done when they are juggling multiple responsibilities for the many people in their lives. This could show how caregivers might feel enabled to show their love without spreading themselves too thin.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/162816/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
A series of studies shows people taking care of loved ones equate effort with love, making them feel guilty for using a product that reduces that effort.
Ximena Garcia-Rada, Assistant Professor of Marketing, Texas A&M University
Elanor Williams, Associate Professor of Marketing, Washington University in St. Louis
Mary Steffel, Assistant Professor of Marketing, Northeastern University
Michael Norton, Professor of Business Administration, Harvard University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/95965
2018-05-23T20:45:59Z
2018-05-23T20:45:59Z
Why we perceive ourselves as richer than we think we are
<figure><img src="https://images.theconversation.com/files/219721/original/file-20180521-14953-ted3ua.jpg?ixlib=rb-1.1.0&rect=51%2C48%2C1790%2C974&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A man browsing the shoe department in a shopping centre. Can he really afford new shoes, and does he really need them? </span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Shoeshopping.jpg">Alex Buirds/Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>Every day billions of people make countless decisions that have economic implications. Buying new clothes, having dinner at a Japanese restaurant, renting a house: most of our decisions determine how much money we spend or save. Some of our decisions also increase the amount of debt we have accumulated, such as when we buy a book and pay by credit card or when we obtain a loan to buy a new car.</p>
<p>Do people always weigh up pros and cons, use all the available information and commit to their long-term goals when making such decisions? Research in behavioural economics suggests this is not the case.</p>
<p>For example, even though many Americans argue that they should be saving more for retirement, they declare that they frequently <a href="https://scholar.harvard.edu/laibson/publications/hyperbolic-consumption-model-calibration-simulation-and-empirical-evaluation">do not commit to their saving decisions</a>.</p>
<p>In general, psychologists and behavioural scientists have long found that the gaps between people’s intentions and their actual behaviour are often due to cognitive biases – <a href="https://onlinelibrary.wiley.com/doi/pdf/10.1002/9780470939376.ch25">systematic errors in thinking</a> that affect individual decisions and judgements.</p>
<p>Cognitive biases explain why our economic decisions often appear to be flawed by self-control problems, myopic behaviour, changes in preferences over time and other behavioural inconsistencies.</p>
<p>For instance, <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2009.01518.x">scholars</a> have found that people have a cognitive bias that often leads them to underestimate the true cost of debt, thus borrowing more than what they can afford.</p>
<p>As another example, research in economic psychology <a href="https://www.researchgate.net/publication/23547394_Unfixed_Resources_Perceived_Costs_Consumption_and_the_Accessible_Account_Effect">has shown</a> that the perceived cost of an item is lower than the actual cost if people compare it to greater, rather than smaller, financial resources.</p>
<p>For instance, even though a person knows that the objective cost of a T-shirt is 25 euros, that person is more likely to buy the T-shirt if she mentally compares the cost to the money in her bank account (for instance 23,000 euros) rather than the money in her wallet (let’s say 100 euros).</p>
<h2>The bias on wealth perception</h2>
<p>Following this line of research, at the Complexity Lab in Economics (CLE) of Università Cattolica del Sacro Cuore in Milan, <a href="https://www.axa-research.org/en/projects/alberto-cardaci">I have recently started a new project</a>, “Cognitive biases, perceived wealth and macroeconomic instability”, with the help of a postdoctoral scholarship by the AXA Research Fund.</p>
<p>By combining findings from behavioural economics and social cognitive psychology with the techniques of experimental economics, the project essentially tests the hypothesis that some people tend to spend more than they “should” because they have the wrong perception of how wealthy they are.</p>
<p>In other words, our working assumption is that, depending on <a href="https://www.investopedia.com/terms/l/leverage.asp">the value of leverage</a> (that is, the ratio between debt and net worth), people may feel wealthier even when their net worth has not changed, and that this makes them psychologically more prone to increase their spending, as well as their borrowing. We call this the “leverage bias hypothesis”.</p>
<p>At CLE we have run some preliminary laboratory experiments to test the presence of the leverage bias. Our first results (to be published) confirm that around 78% of the participants have a wrong perception of the amount of wealth owned and this perception changes based on <em>how</em> wealth is composed, even when the net value remains constant.</p>
<p>We postulate that this misperception of wealth may play a significant role at explaining individual consumption and borrowing decisions that do not appear rational based on canonical economics.</p>
<p>Indeed, the potential implications of a cognitive bias of this type are substantial. An individual with a distorted perception of wealth may feel financially better off, consume more, borrow a larger amount of loans and overestimate her ability to pay back her debt in the future.</p>
<p>This behaviour would have consequence not only for the borrower, but also for the lender: a borrower’s inability to meet the debt obligations would result in the accumulation of non-performing loans on the balance sheet of financial institutions in the credit market.</p>
<h2>Partial explanations for massive crash</h2>
<p>By extending this reasoning to a greater scale, it is also possible that macroeconomic fluctuations be (at least partially) explained by the excess spending and debt accumulation trigger by the leverage bias. This is the case when a large number of people perceive themselves as richer than they actually are: consumption can rise in the aggregate to the extent that such people possibly increase their debt being inaccurately confident that they will be able to pay it back.</p>
<p>Before the 2007 financial crisis the level of household debt skyrocketed, going <a href="https://www.investopedia.com/updates/usa-national-debt/">beyond 100% of GDP</a>. In those years, the American society easily and quickly moved from debt-led to debt burdened.</p>
<p>While almost certainly not all personal debt accumulated in society could be attributed to behavioural fallacies, it is worth investigating whether distorted perceptions of wealth may have tremendous costs not only at the individual level but also at the macroeconomic one.</p>
<hr>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=121&fit=crop&dpr=1 600w, https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=121&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=121&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=152&fit=crop&dpr=1 754w, https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=152&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/202296/original/file-20180117-53314-hzk3rx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=152&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><em>Created in 2007, the Axa Research Fund supports more than 500 projects around the world conducted by researchers from 51 countries. To learn more about the work of Alberto Cardaci, visit his <a href="https://albertocardaci.wixsite.com/alcardaci">site</a> as well as the <a href="https://www.axa-research.org/en/projects/alberto-cardaci">Axa Research Fund dedicated page</a>.</em></p><img src="https://counter.theconversation.com/content/95965/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alberto Cardaci a reçu des financements du Axa Research Fund. </span></em></p>
Under some circumstances, people may feel wealthier than they actually are and this makes them psychologically more prone to increase their spending, as well as their borrowing.
Alberto Cardaci, Post-doctoral fellow, Complexity Lab in Economics (CLE), Università Cattolica del Sacro Cuore - Catholic University of Milan
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/93454
2018-03-15T16:31:01Z
2018-03-15T16:31:01Z
Why Unilever is right to consolidate its headquarters in Rotterdam
<p>The consumer goods giant Unilever is in the business of what is called “fast moving consumer goods”. And in this business – as the name suggests – speed is the name of the game. But speed requires control. Unilever’s decision to consolidate its corporate structure and move towards <a href="http://www.bbc.co.uk/news/business-43410155">a single HQ in Rotterdam</a> is an attempt to increase control and make faster decisions about its global product portfolio.</p>
<p>Unilever’s decision is not as surprising as some sections of the media have portrayed it. Indeed, one could argue that it is not surprising at all if considered in the wider context of the company’s history. For much of its past, Unilever was a “federation” of highly localised businesses that benefited from high levels of autonomy. This structure was partly due to the merger between Dutch margarine company Uni and the British Lever Brothers. But it was also due to the geo-political uncertainties for cross-border trade created by the Second World War, which <a href="http://changellenge.com/wp-content/uploads/2014/04/CL-Unilever-Organizational-changes-in-INMARKO-ENG.pdf">required the firm to decentralise</a>. </p>
<p>While this allowed Unilever to tap into local markets and be attuned to local taste, it also came at a cost – control. Speedy decision making on the overall portfolio of brands and management across businesses and borders became increasingly challenging. These challenges were not unique to Unilever, they were shared by many businesses – <a href="https://www.amazon.co.uk/Managing-Across-Borders-Transnational-Solution/dp/1578517079">most notably Philips</a>. It took Philips enormous restructuring efforts to strengthen its product divisions, now a famous <a href="https://www.hbs.edu/faculty/Pages/item.aspx?num=38222">case study taught at many business schools</a>. </p>
<p>Unilever’s strategic moves for the last two decades, such as the focus on high growth markets and the <a href="https://www.unilever.co.uk/about/who-we-are/our-history/1990-1999.html">consolidation of its brand portfolio</a>, can be interpreted as an attempt to increase control. So the consolidation of its global headquarters in a single location is yet another step in an ongoing chain of strategic decisions.</p>
<h2>Why Rotterdam makes sense</h2>
<p>Decision making power on the portfolio of brands is centralised in a single entity. The new head office will have larger decision making powers which will enhance Unilever’s ability to act more quickly. In the past, corporate functions were split between the UK and the Netherlands, which required close coordination. The new structure will allow Unilever to act and react in a more agile way, for instance in order to seize acquisition opportunities.</p>
<p>Consolidating its HQ will allow Unilever to sharpen its central functions. A challenge for diversified firms, such as Unilever, is to create a corporate centre that adds value to the business over and above its cost. One of the dangers of a split headquarters is the duplication of functions, increased costs and a lack of focus on how central functions serve the product divisions.</p>
<p>The move towards a single, listed entity improves Unilever’s ability to navigate today’s complex global political landscape. Up to now, Unilever has been run by two legal entities in two different jurisdictions, with two different stock listings. </p>
<p>Unilever denined that the move to Rotterdam is due to Brexit. But being headquartered in the Eurozone still acts as a shelter against the political uncertainties of the UK’s departure from the European Union. </p>
<p>Finally, the consolidation of headquarters also puts stronger managerial attention and focus on the product divisions and its world famous brands rather than manoeuvring a complex and costly corporate structure. This is where the focus should be.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=513&fit=crop&dpr=1 754w, https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=513&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/210646/original/file-20180315-104645-1wp2oqj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=513&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Unilever building in Rotterdam, the Netherlands.</span>
<span class="attribution"><a class="source" href="http://www.epa.eu/economy-business-and-finance-photos/company-information-photos/unilever-says-it-will-move-its-corporate-base-from-britain-to-netherlands-photos-54199419">EPA-EFE/MARCO DE SWART</a></span>
</figcaption>
</figure>
<h2>Agility</h2>
<p>Unilever’s move is symptomatic of how large, well established corporations try to deal with the increasing need for speed – the adoption of leaner corporate structures and more focused product portfolios. For instance, soon after becoming CEO at German technology giant Siemens, <a href="https://www.wsj.com/articles/siemens-ceo-preparing-to-unveil-new-strategy-1399308684">Joe Kaeser decided to scrap</a> the company’s sector structure (a layer of management between product divisions and head office) which was put in place by his predecessor. </p>
<p>Instead he wanted a stronger focus on a smaller number of product divisions. The reasons were inflated cost and increased complexity, which affected Siemens’ ability to move fast. <a href="https://www.cnbc.com/2017/11/13/analysts-pan-ge-restructuring-ceo-needed-to-do-more.html">General Electric’s recent restructuring</a> followed a similar pattern and logic.</p>
<p>Unilever might have created a speedy engine, but can they start it? The challenge for Unilever will be to fill the new structure with life. It’s easy to create new legal entities, move organisational units and redraw reporting lines – on paper. It is quite another matter to rewire the firm’s power base, which has been established for decades. So while Unilever’s decision is the right one, it still needs to make sure it actually gets it right.</p><img src="https://counter.theconversation.com/content/93454/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Martin Friesl does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
It’s not just about Brexit. Unilever’s decision makes good business sense, too.
Martin Friesl, Senior Lecturer in Strategic Management, Lancaster University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/82883
2017-08-28T03:00:52Z
2017-08-28T03:00:52Z
Busting the myth that all food additives are bad: a quick guide for label readers
<figure><img src="https://images.theconversation.com/files/183228/original/file-20170824-6579-7qrzgz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Are you a food label reader too? </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/woman-checking-food-exp-date-supermarket-505056901?src=mCHuDrjDJmnBAgW6XjvueQ-1-88">allensima/shutterstock </a></span></figcaption></figure><p>There’s nothing like the concern of a grandmother to bring attention to food safety. </p>
<blockquote>
<p>Hey Coles - can you PLEASE tell me just what is in your Coles Icecream Sandwiches </p>
</blockquote>
<p><a href="https://www.facebook.com/coles/posts/1547714875292522">wrote Mary Salter</a> on the Coles Facebook page, July 31 2017. </p>
<p>The incredible stability of her thawed ice cream sandwich led people to ask just what awful chemicals must be in the product to have this effect. </p>
<hr>
<p><em><strong>Read more:</strong> <a href="https://theconversation.com/the-science-of-taste-or-why-you-choose-fries-over-broccoli-68168">The science of taste, or why you choose fries over broccoli</a></em> </p>
<hr>
<p>But most of the food additives that are added to ice cream and other edible items to sustain physical shape are derived from natural materials with no known health risks. And other selected additives – for example, some that increase the palatability and stability of food – are also naturally-occuring plant and mineral substances. </p>
<p>Here’s a quick guide to the science behind some of the food additives with a nature-based history you can look for on product labels. </p>
<p><iframe id="8eWVO" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/8eWVO/7/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Bringing together oil and water</h2>
<p>Emulsifiers are compounds that allow oil and water droplets to interact in suspension: the resulting product is called an emulsion. </p>
<p>Everyday food and beverage emulsions include homogenised milk, mayonnaise and salad dressings. The presence of emulsifiers prevents the fat from separating from the rest of the product: in milk, for example, this means the cream does not rise to the top, but instead stays incorporated in the liquid. </p>
<p>Emulsifiers work similarly to detergents, which might make them sound a little bit off putting, but many of the emulsifiers commonly used in foods are sourced from ingredients already occurring in natural products. Examples include lecithin from <a href="http://pubs.acs.org/doi/pdf/10.1021/ie50310a034">egg yolks</a> or <a href="https://link.springer.com/article/10.1007%2FBF02605737?LI=true">soy</a>, mucilage from <a href="http://www.sciencedirect.com/science/article/pii/S0268005X15000363">mustard</a>, and components of fatty acids (<a href="https://link.springer.com/article/10.1007%2FBF02605731?LI=true">made from glycerol and natural fatty acids</a>). </p>
<p>Even manufactured emulsifiers such as DATEM (<a href="http://www.inchem.org/documents/jecfa/jecmono/v48je02.htm">diacetyl tartaric acid ester of mono- and diglycerides</a>), and <a href="https://pubchem.ncbi.nlm.nih.gov/compound/23671849">sodium stearoyl lactylate</a> are <a href="https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?fr=184.1101">generally recognised as safe</a>. </p>
<h2>Smooth yogurt and spreadable jam</h2>
<p><a href="http://au.wiley.com/WileyCDA/WileyTitle/productCd-1405132671.html">Stabilisers and thickeners</a> are <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3551143/">added to foods</a> to increase viscosity (thickness), smooth the texture, give body and help preserve their structure. Food stabilisers, thickeners, and firming agents are added in a relatively small amount and <a href="https://link.springer.com/chapter/10.1007/978-1-4615-7222-0_6">enhance the effect of emulsifiers</a>. </p>
<p>They give a uniform consistency to the product and hold the flavouring <a href="https://www.fda.gov/food/ingredientspackaginglabeling/foodadditivesingredients/ucm094211.htm">compounds in the dispersion</a>. This is used in products like jams, yogurts and jellies to stop the fruit from settling. </p>
<p>They also prevent emulsions from separating. Without stabilisers, your salad dressing and mayonnaise would split – separate into their oil and water-based components – in the fridge. Stabilisers also prevent ice crystals from forming in frozen foods, such as ice cream.</p>
<p>Thickeners and stabilisers are mostly <a href="https://www.chem.wisc.edu/deptfiles/genchem/netorial/modules/biomolecules/modules/carbs/carb6.htm">polysaccharides</a> (complex sugars) isolated from plant sources, including starches (e.g. <a href="http://onlinelibrary.wiley.com/doi/10.1002/app.12438/full">corn starch</a>), vegetable gums (e.g. <a href="https://link.springer.com/article/10.1007/s13197-011-0522-x">guar gum</a>), and <a href="http://www.tandfonline.com/doi/abs/10.1080/10408399709527767">pectin </a>(e.g. from citrus fruits). Some gums are also obtained from microbial fermentation, where bacteria are fed sugars and produce gums (e.g. <a href="http://www.sciencedirect.com/science/article/pii/S0734975000000501">xanthan gum</a>). </p>
<hr>
<p><em><strong>Read more:</strong> <a href="https://theconversation.com/kitchen-science-the-chemistry-behind-amazing-meringue-and-perfect-cappuccino-64670">The chemistry behind amazing meringue and perfect cappucino</a></em> </p>
<hr>
<p>Stabilisers from other natural sources include <a href="http://www.fao.org/docrep/006/y4765e/y4765e06.htm">agar</a> (from algae), <a href="http://www.fao.org/docrep/006/y4765e/y4765e0a.htm">carrageenan</a> (from seaweed) and <a href="http://apps.who.int/food-additives-contaminants-jecfa-database/chemical.aspx?chemID=1462">gelatin </a>(from animal collagen). Use of stabilisers and thickeners is <a href="http://www.ajcn.org/cgi/pmidlookup?view=long&pmid=3300261">not confined to recent food history</a>, and many have been used in food preparation <a href="https://www.britannica.com/topic/food-additive">for centuries</a>. </p>
<p><a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3551143/">Firming agents</a> are often mineral salts such as calcium sulphate, calcium chloride and magnesium sulphate. These <a href="http://www.fao.org/fileadmin/templates/agns/pdf/jecfa/cta/68/Magnesium_Sulfate.pdf">bind water and enhance the activity of the stabilisers</a>. Although the names of the mineral salts sound very “chemical”, they are really no weirder than table salt (otherwise known by its chemical name, sodium chloride). </p>
<p>The mineral salts used for firming agents often contain mineral components needed by the body, such as calcium, and the same salts may be used in supplements. Again, these agents have been used throughout history: calcium sulphate, for example, has been used to <a href="https://link.springer.com/article/10.1007%2FBF02582376?LI=true">make tofu for thousands of years</a>. </p>
<h2>Keeping food safe and stable</h2>
<p>Acids, bases or neutralising agents are added to foods to regulate acidity: this is important for taste and to prevent the growth of microbes such as bacteria. <a href="http://www.eufic.org/en/whats-in-food/article/acidity-regulators-the-multi-task-players">Common acid regulators</a> are sorbic acid, acetic acid and propionic acid. </p>
<p>These may sound frightening (and in concentrated solutions, they might be!) but in small amounts, they are less acidic than our stomach acid and so are nothing to worry about. The human body has its own buffering systems to <a href="http://www.chemistry.wustl.edu/%7Eedudev/LabTutorials/Buffer/Buffer.html">keep our overall pH balance stable</a>. </p>
<p>Antioxidants are a common component in foods touted as “superfoods”. Antioxidants are also important preservatives in the food industry, where they help foods last longer by preventing reactions with oxygen. </p>
<p>Ascorbic acid (vitamin C) and tocopherols (vitamin E) are natural antioxidants which can be added to processed foods. They sound much less nutritious when referred to as 300 and 306, which are their additive numbers. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/kitchen-science-gastrophysics-brings-the-universe-into-your-kitchen-58147">Kitchen Science: gastrophysics brings the universe into your kitchen</a>
</strong>
</em>
</p>
<hr>
<p>Even synthetic antioxidants such propyl gallate and butylated hydroxyanisole (BHA) are generally regarded as safe (they are listed on the <a href="https://www.fda.gov/food/ingredientspackaginglabeling/foodadditivesingredients/ucm091048.htm">USA Food and Drug Administration website</a>). There have been some concerns about adverse results of BHA at high doses in <a href="https://www.fda.gov/food/ingredientspackaginglabeling/gras/scogs/ucm260874.htm">animal tests</a>, but at levels ingested by humans, it appears safe. </p>
<h2>Additive is not always a dirty word</h2>
<p><a href="http://www.who.int/nutrition/topics/5_population_nutrient/en/index4.html">Processed foods are often energy dense and light on nutrients</a>. They also often contain additives with intimidating chemical names, or referred to just by their standardised additive numbers. </p>
<p>But, the additives themselves are not necessarily the problem. Natural additives can make foods act in unexpected ways, which enhance the consumer experience and often prolong shelf life.</p><img src="https://counter.theconversation.com/content/82883/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Emma Beckett receives funding from the NHMRC and the AMP Foundation. She is a member of the Nutrition Society of Australia. </span></em></p>
Processed foods often contain additives with intimidating chemical names or numbers. But many of these are derived from or based on chemicals that are found in nature.
Emma Beckett, Postdoctoral Fellow (Human Molecular Nutrition), School of Medicine and Public Health, University of Newcastle
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/80876
2017-07-23T20:08:55Z
2017-07-23T20:08:55Z
The economics of the money-back guarantee
<p>“Returning the product to Amazon ASAP!” <a href="http://www.amazon.com/gp/review/R26ID4FRKTZPUF?ref_=glimp_1rv_cl">complained one disgruntled</a> Amazon customer as they gave a one-star review for a digital camera on the company’s site. This is despite the same product having an average rating of four-and-a-half stars out of five from 242 other customers.</p>
<p>Companies like Amazon aren’t just ignoring these disgruntled customers and their product-returning ways. In fact, retailers are increasingly offering extra services such as warranty plans, free shipping and guarantees to reassure them. Selling with the “money-back guarantee” is a prime example of this.</p>
<p>This is because the economics of the money-back guarantee can work for retailers. These businesses allow customers to return products that do not meet their expectations — as a result of poor quality or a mismatch in taste — for a full or partial refund. Essentially offering their customers an insurance against the perceived risk of the product. </p>
<p>And <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1937-5956.2012.01394.x/full">research</a> shows these retailers make a profit with this type of guarantee, given specific conditions. <a href="http://psycnet.apa.org/record/1987-12227-001">Other research also shows</a> the money-back guarantee increases customers’ feeling of satisfaction with their purchase experience, making them likely to return to the store. </p>
<p>This type of guarantee is particularly important for retailers who sell products online or through mail-order catalogues. This is because customers can’t enjoy the benefits of the traditional “touch-and-feel” shopping experience, to reassure them they are making the right decision. </p>
<h2>Customers rorting the scheme</h2>
<p>Customer returns cost retailers more than <a href="https://nrf.com/media/press-releases/retailers-estimate-holiday-return-fraud-will-cost-22-billion-2015">US$260 billion</a> (equivalent to 8% of total retail sales) annually in the United States alone. The return rates vary significantly by category, and by channel type. It can reach as high as 35% for high fashion apparel sold in <a href="http://pubsonline.informs.org/doi/abs/10.1287/mnsc.1060.0522">traditional stores</a>, and the rates are higher again for <a href="http://www.iqmetrix.com/blog/how-e-tailers-personalize-outfits-to-customers-taste">internet and catalogue sales</a>. </p>
<p>However, in most cases, the returned products are not defective. Customers <a href="https://www.mprnews.org/story/2013/12/17/retailers-lose-billions-when-shoppers-return-products?refid=0">abuse</a> the money-back guarantee, so much so that buying a product with the intention of returning it has become a trend known as wardrobing or barrowing. In the US, fraud associated with returns costs retailers around <a href="https://nrf.com/media/press-releases/retailers-estimate-holiday-return-fraud-will-cost-22-billion-2015">US$2 billion</a> during the holiday season alone (US$9 billion annually). </p>
<p>Retailers try to get around this by offering partial instead of full money-back guarantees for products. The refund is usually less a “restocking fee” charged for returns. </p>
<p>For example, compare the 30 day money-back guarantees from two Australian furniture retailers, Zanui and Rogerseller. <a href="https://www.zanui.com.au/shipping-returns">Zanui</a> offers a full refund, whereas <a href="http://www.rogerseller.com.au/returns/">Rogerseller</a> charges its customers a 15% restocking fee (it pays back only 85% of the selling price rather than the full amount). </p>
<p>In most cases, restocking fees can range between 10% and 20% of the original purchase price, <a href="https://www.thebalance.com/the-hidden-costs-of-restocking-fees-939836">some even as high as 50%</a>. </p>
<p>A <a href="http://www.solari.net/e-newsletters/documents/accenture-no-trouble-found-returns.pdf">survey</a> by professional services company Accenture reported that in the computer electronics industry, most customers returned their products because they simply “did not meet expectations.” More specifically, for 68% of returns, there was “no trouble found” by the customers; 27% of the products were returned due to “buyer’s remorse”. </p>
<p>And only 5% of the products returned were truly defective. However, regardless of the reason, returned products cannot be sold as “new,” even though the product could be new in the sense that it was never used. </p>
<p>Major consumer electronics retailers such as <a href="http://www.bestbuy.com/site/outlet-refurbished-clearance/open-box-electronics/pcmcat748300666861.c?id=pcmcat748300666861">Best Buy</a> and <a href="https://www.walmart.com/c/kp/open-box-electronics">Walmart</a> restock these returned items and sell them as “open-box items” at discounted prices. Open-box simply means the product is marked as being opened or used previously. A retailer’s ability to sell returned products as open-box creates an opportunity to attract more price conscious consumers. </p>
<p>The downside of such product differentiation is that open-box products can have a negative impact on the demand for the new products in a store. The retailer might also have to incur additional costs for handling returns and repackaging them as open-box. </p>
<h2>Making or losing money on the money-back guarantee</h2>
<p>Balancing the benefits and costs of the money-back guarantee is a delicate task for retailers. <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1937-5956.2012.01394.x/full">In studying the guarantee</a> we worked out how retailers could use it to increase sales and profits. </p>
<p>We looked at product pricing, refunding and inventory stocking decisions in money-back guaranteed sales. We took into account uncertainty in demand, the possibility of a customer’s dissatisfaction with the product after purchase, as well as the lower value customers place on an open-box product, relative to brand new products. </p>
<p>Using this model, we figured out the best prices retailers could use reselling returned products and the restocking fees to encourage or discourage returns, for the highest possible net profit.</p>
<p>Even though reselling returned products meant less stock for the retailer it also reduced inventory-related costs adding to profits. In essence, retailers can claim back at least some of the costs associated with return fraud, with reselling. </p>
<p>In areas of retail with higher risk of returns, the temptation is to tighten returns policies, to limit them. This is especially true for highly innovative products, new technologies, or fashion-driven products (especially high-end ones). </p>
<p>Interestingly, our study shows that reselling returns complements the money-back guarantee. So these type of high-risk products are likely to give retailers the most benefit, when they are resold after being returned. </p>
<p>Retailers also feel the benefit of reselling when there are more price conscious customers who are more inclined to buy a product that is being resold, because it’s at a discount.</p>
<p>So the economics of the money-back guarantee can work for retailers by improving brand value and through reselling via open-box products.</p><img src="https://counter.theconversation.com/content/80876/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
The economics of the money-back guarantee can work in retailers’ favour, in certain circumstances.
Yalcin Akcay, Professor of Operations Management, Melbourne Business School
Tamer Boyaci, Professor of Management Science, Michael Diekmann Chair in Management Science, and Director of Research, ESMT Berlin
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/80796
2017-07-11T06:03:12Z
2017-07-11T06:03:12Z
How worried should you be about lead from Aldi taps?
<p>If you have bought an Aldi “<a href="http://www.abc.net.au/news/2017-07-10/aldi-spiral-spring-mixer-tap/8695150">The Spiral Spring Mixer Tap</a>” you should <em>not</em> use water from it for drinking or cooking until investigations of <a href="http://www.smh.com.au/business/consumer-affairs/aldi-tap-found-to-be-contaminated-with-lead-being-investigated-with-urgency-20170710-gx83c2.html">reported lead contamination</a> is complete. </p>
<h2>What we know</h2>
<p>The <a href="http://www.news.com.au/finance/business/retail/customers-warned-to-beware-of-cheap-aldi-tap/news-story/9be3c4f8aa5e04e0ef031d08d1aa7443">media reports</a> that water passing through the tap has up to 15 times the <a href="https://www.nhmrc.gov.au/guidelines-publications/eh52">lead levels</a> allowed in Australian drinking water (<a href="https://www.hunterwater.com.au/Water-and-Sewer/Water-Supply/Water-Quality/Guidelines-for-Drinking-Water-Quality.aspx">maximum 0.01 milligrams per litre</a>). <a href="https://www.health.qld.gov.au/qhcss/qhss">Queensland Health’s Forensic and Scientific Services</a> conducted the tests, so the results are credible. </p>
<h2>What we don’t know</h2>
<p>We don’t know how extensive the contamination is. So far, only one tap has been tested and I haven’t seen the actual results. So, we need a larger sample of taps to determine if this was a one-off contamination (unlikely) or represents a wider problem. </p>
<p>Aldi confirmed the taps were tested by a <a href="https://www.nata.com.au/nata/">National Association of Testing Authorities</a> accredited laboratory and passed Australian standards for lead leakage into water before going on sale. But it is not clear why the current tested tap exceeds the Australian standards by so much. </p>
<p>Is it a problem with a particular batch? Or did <a href="http://www.couriermail.com.au/news/queensland/how-aldi-tap-with-dangerous-levels-of-lead-may-have-passed-safety-tests/news-story/b94a7187ae7b4dfa4ccdaf91d58bb372">substitution of high lead components occur after the first samples were tested</a> as some media reports claim? Australia permits <a href="https://www.newscientist.com/article/2100806-lead-in-australias-drinking-water-is-leaching-from-brass-taps/">higher levels of lead in brass used in Australia’s plumbing fittings</a> than the US, for example. However, the reported lead levels seem too high for this to explain the current situation. </p>
<p>Aldi has suspended sales of the tap and is currently having the taps tested at an independent accredited laboratory. Answers to the questions should be available by the end of the month.</p>
<p>Another issue is the report of “up to 15 times the permitted lead level”. We don’t know if the level of lead is declining with each use of the tap, or if this is just simple assay variability. If the levels decline over time the risk to consumers are less (but still concerning). </p>
<h2>What is the risk if I have one of these taps?</h2>
<p>While the levels involved are substantially higher than the Australian guideline, they are still low and not likely to cause acute lead poisoning. One or two glasses will not poison you.</p>
<p>But lead is <a href="http://www.who.int/mediacentre/factsheets/fs379/en/">a cumulative toxin</a>. Continued consumption of low levels of lead (over weeks, months and years) can have adverse effects. </p>
<p>The major concern is in babies, young children and unborn babies. Babies and young children absorb more lead than adults, with significant effects on their developing bodies. Effects include <a href="https://ntp.niehs.nih.gov/pubhealth/hat/noms/lead/index.html">disruption of red blood cell production, kidney damage, behavioural disturbances and other nervous system effects</a>. The behavioural and nervous system effects are of most concern.</p>
<p>Exactly which effects occur will depend on how long and how much water has been consumed (and whether the reported lead levels are typical). For adults, <a href="https://ntp.niehs.nih.gov/pubhealth/hat/noms/lead/index.html">anaemia, high blood pressure, tremor, tiredness, sleeplessness, irritability, headache and joint pain</a> may be signs of long-term exposure to low levels of lead. </p>
<h2>What should I do if I have one of these taps?</h2>
<p>Until it is determined if other taps of this brand are similarly contaminated (again, previous test samples had complied with Australian regulations) people who have bought these taps should <em>not</em> use water from them for drinking or cooking. </p>
<p>Anyone who has any health concerns should consult their doctor.</p>
<hr>
<p><em>Aldi confirmed the taps were undergoing independent testing, which is expected to be completed by 31 July. “If these results present any indication that a health risk exists for our customers, we will take appropriate action,” a company statement said.</em></p>
<p><em>In the meantime the company recommends customers who have bought the taps register their <a href="http://www.productregistration.aldi.com.au/">product</a> to receive updates and the results of the testing.</em></p>
<hr>
<p><em>Updated July 26, 2017: Aldi says independent testing of its Spiral Spring Mixer Tap confirms it is safe to use. The company says the tap passed testing against the AS/NZS 4020:2005 standard, which was conducted at a laboratory accredited by the National Association of Testing Authorities.</em></p><img src="https://counter.theconversation.com/content/80796/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span>Ian Musgrave receives funding from the National Health and Medical Research Council to study adverse reaction to herbal medicines and has previously been funded by the Australian Research Council to study potential natural product treatments for Alzheimer's disease. He has used workshops on lead contamination as a teaching tool for environmental toxicology.</span></em></p>
If you have bought an Aldi “The Spiral Spring Mixer Tap” you should not use water from it for drinking or cooking until investigations of reported lead contamination is complete. What we know The media…
Ian Musgrave, Senior lecturer in Pharmacology, University of Adelaide
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/74031
2017-03-16T10:24:12Z
2017-03-16T10:24:12Z
It’s cool to look sharp, but two eyeware giants are making sure it isn’t cheap
<figure><img src="https://images.theconversation.com/files/159367/original/image-20170304-29002-xmd9a0.jpg?ixlib=rb-1.1.0&rect=0%2C1%2C1196%2C747&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Eyeglasses: Put the market in perspective.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/kjgarbutt/5519001229/in/photolist-9pGjMB-kT3Gg-dqh83q-4DtFz7-8ryrgb-iHTRD-82myY9-5J3R5o-7wLUAs-4DphVZ-dYLw2s-9JcLUM-5DXEYX-bWmXSn-8k1JeD-g7UXGV-7tSVdW-8jfqUR-4jAuEU-67qFyd-7ME8uB-e2QNuD-a116mZ-7vixRp-e89Pwm-2LCYg1-4yZbmN-eh5sh5-hb9QJy-8UrzNt-5f9sDn-a13WJd-4nAQ5y-4seX2r-6NTFhL-8Yw7MW-6teMWw-cXAK1-h7g69s-7v1UPX-6t9qcB-6thou3-nbfpj8-6gGZXZ-9uaMnK-7BWmLD-quZEve-6uBw9-2HFUto-duqR6S">Kurtis Garbutt/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Here’s a little puzzle: an industry dominated by two European conglomerates, one French, the other Italian; a global market worth nearly $100bn; a good needed by two in three people on Earth; once objects of shame these products are now items of fashion; the range is so broad almost no one buys the same thing. One last clue to put you on the right track: even the rockstar Bruce Springsteen wears them. So what are they? Spectacles. Why do they fetch such a high price the world over, particularly in France? A short question, but the answer below is rather more involved.</p>
<h2>Apparent variety that’s an optical illusion</h2>
<p>If you are far or near-sighted you have already been to an optician. You will be familiar with the huge choice of frames, some conventional, others extravagant, made of synthetic tortoise-shell, acetate or titanium, round, oval or butterfly-shaped, with ornate or branded arms. They can be matt black, pastel-coloured or boldly two-toned. Things are a little more straightforward when it comes to the lenses, because the prescription specifies the degree of correction, though of course there are additional options for combating glare, fogging, ultraviolet rays and dirt, among others. Lenses can also be extra-thin and self-tinting. In short, eyeglasses are a highly personalized product with a wide range of choice.</p>
<p>However, if we look a little closer the picture is rather different. First, fashion trends in recent years have prompted consumers to opt for frames that hide half their face. Ideally the frame is black and adorned with a luxury brand.</p>
<p>Above all, the apparent variety conceals just two giant manufacturers. Nearly <a href="http://www.cbsnews.com/news/luxottica-eyewear-why-are-glasses-expensive/">half a billion frames worn worldwide</a> were produced by Luxottica, an Italian family-owned firm that sells about 100 million units annually. Buy a pair of Ray-Ban, Oakley, Persol or indeed Alain Mikli shades and you are actually purchasing Luxottica glasses. The same is true of Prada, Chanel, Burberry and Ralph Lauren, though these brands are produced under licence and not in the firm’s own name.</p>
<p>If you live in the United States you may well have dropped into a retail outlet operated by one of the chains owned by the Italian company, such as Sunglasses Hut or Pearle Vision. You may also have a plan with the country’s second largest managed vision care company, Eyemed, a Luxottica subsidiary. The firm’s powerful position in the US market has come to public attention thanks to a funny, but <a>pointed video</a>.</p>
<h2>Welcome to Luxottica and Essilor</h2>
<p>But Luxottica is no Google, as it holds roughly half of the US market for frames and sunglasses, <a href="http://www.snopes.com/does-luxottica-own-80-of-the-eyeglass-industry/">25% in France and 10% globally</a>.</p>
<p>Launched in 1961 by Leonardo Del Vecchio, who still heads the firm, Luxottica helped turn glasses into fashion accessories. Long-gone the days of “four-eyed” geeks and women who would – it was threatened – never find a husband if they were caught wearing specs. “As much to see as to be seen” in the words of a slogan hatched by a contemporary optician in Saint-Germain-des-Prés, Paris.</p>
<p>Essilor is probably a more familiar name than Luxottica, at least for French readers; its Varilux brand of varifocal lenses, invented nearly half a century ago, perhaps even more so. The French firm primarily manufactures corrective lenses. It has cornered three-quarters of this market in <a href="http://www.lesechos.fr/22/05/2014/LesEchos/21693-099-ECH_optique---malmene--zeiss-se-relance-sur-le-marche-francais.htm">mainland France</a> and just over <a href="https://www.essilor.com/essilor-content/uploads/2016/08/Presentation_2015_Results_Essilor.pdf">40% worldwide</a>. Essilor has achieved this position thanks to its <a href="https://www.essilor.com/fr/medias/communiques-de-presse/le-magazine-forbes-classe-essilor-parmi-les-entreprises-les-plus-innovantes-du-monde-pour-la-6e-annee-consecutive-2/">remarkable capacity for innovation</a> coupled with a policy of steadily taking over other companies.</p>
<p>It has diversified a relatively small proportion of its revenue into frames and sunglasses, so it is only marginally in competition with its Italian cousin. The stock markets frequently buzz with rumours the two European moguls may be merging – a success story sufficiently unusual to be noteworthy.</p>
<p>On January 16 the rumour became reality when the two firms <a href="http://bit.ly/2jnEs27">announced plans to merge</a>.</p>
<h2>More or less choice with stiffer competition?</h2>
<p>Let’s look downstream now, at the distribution of glasses. Competition between retailers – be they independent or part of a chain or franchise – is quite different, because it is by nature local. One marketing ploy is to offer a broad range of frames in each shop, on the assumption that consumers have no prior idea of which spectacles would suit them nor how much they cost. Furthermore they all have different preferences and tastes.</p>
<p>It is in the interests of the optician to stock the largest possible variety of models, thus increasing the likelihood of making a sale when a potential buyer enters the shop. On the other hand showroom and storage space is expensive. If the optician has a monopoly in their home town they can stop increasing the number of variants in stock when the cost of holding an additional model exceeds the expectation of revenue growth it yields.</p>
<p>But how will the optician adjust their range if a competitor opens a shop next door? Three effects will operate in conjunction:</p>
<ul>
<li><p>First, they will lose part of their potential customer base, so they will have to reduce their range of glasses. But why is this the case? Because for each customer no longer entering the shop the likelihood of selling each variant in stock is correspondingly lower, as is the expectation of marginal revenue, whereas there has been no reduction in the marginal cost of floorspace and inventory.</p></li>
<li><p>Second, customers coming into the shop will be more demanding, for only a step away they can see whether the neighbouring competitor has models better suited to their needs. So it is in the interests of the incumbent to increase the number of variants they stock.</p></li>
<li><p>Third, with two shops the area becomes more attractive to shoppers. This concentration effect disadvantages more remote, widely scattered shops. When several opticians are located on the same shopping street consumers can expect a larger aggregate supply of variants and lower prices. The increase in the potential customer base prompts each retail outlet in the area to stock more items.</p></li>
</ul>
<p>The outcome of these effects depends on local conditions. A <a href="https://www.jstor.org/stable/27750705">2009 study</a> from a University of Texas scholar looked at the eyeglasses offered in 40 medium-sized towns in the Midwest. It found that the number of models in eyewear stores increased in line with competition, up to three rivals in the neighborhood, only to decrease beyond this number.</p>
<h2>Is advertising effective?</h2>
<p>In many countries the sale of eyeglasses is regulated. In the United States the situation differs from one state to the next. Such diversity is an opportunity to carry out a form of natural experiment to gauge the effect of various legislative and regulatory frameworks.</p>
<p>In the early 1970s, pioneering research along these lines was carried out to see how restricting advertising affected eyewear prices. Some US states banned publicity completely, others simply stopped any mention of prices, and some made no restrictions. In the first group the average price of spectacles was 25% higher than in the third group, whereas prices in the second group we in-between. Other studies confirmed this result, but also showed that the quality of service was not noticeably worse in states where advertising was allowed, and <a href="https://www.ftc.gov/sites/default/files/documents/public_events/FTC%2090th%20Anniversary%20Symposium/041001kwoka.pdf">prices were consequently lower</a>.</p>
<p>A word of caution: It would be a mistake to conclude that advertising always benefits the consumer, less still that eyewear publicity is always in their interest. In simple terms, advertising may have two contrary effects. On the one hand, by supplying information on goods it fuels competition, which in turn pushes prices down. On the other hand it changes consumer preferences, in particular by accentuating the perceived differentiation of products and brands. So it increases the market power of sellers and, as a result, prices. There is no reason why the outcome should be exactly the same for all consumer goods and at every point in time. We may simply note that from the 1970s to the 1990s, the first effect was more powerful than the second one in the US.</p>
<p>You may well have read this piece on a screen. It might interest you to know that optical engineers are hard at work to protect the users of digital devices from the <a href="https://theconversation.com/can-wearing-orange-tinted-glasses-before-bed-help-you-sleep-only-one-way-to-find-out-40684">blue light</a> they produce. If you’re into the geeky, West Coast style you should rush to get a <a href="http://www.gunnars.com/how-they-work/">pair of Gunnars</a> with amber lenses, online or from selected opticians. They are set to become very fashionable. If on the other hand you are allergic to eyewear brands, marketing and ads, you can always opt for contact lenses or corrective surgery. Oh, what a wonderful world…</p>
<p>———— </p>
<p><em>This article is also available in <a href="https://theconversation.com/voir-clair-cest-chic-mais-pas-donne-70963">French</a>.</em></p><img src="https://counter.theconversation.com/content/74031/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>François Lévêque's laboratory receives receives research assistance from a number of businesses, in particular over the past five years spent at EDF, Microsoft and Philips. François Lévêque is also a Senior Advisor for Deloitte France.</span></em></p>
Why are eyeglasses so expensive? You can thank two massive industry comglomerates, Luxottica and Essilor.
François Lévêque, Professeur d'économie, Mines Paris - PSL
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/68022
2016-11-18T19:03:38Z
2016-11-18T19:03:38Z
Can Black Friday turn green? Outdoor retailers and the paradoxes of eco-friendly shopping
<figure><img src="https://images.theconversation.com/files/146502/original/image-20161118-19383-140aa73.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Treading lightly?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/231111064?src=4FGh2BKs5ffvM8gZyTDAXg-1-3&id=231111064&size=huge_jpg">www.shutterstock.com</a></span></figcaption></figure><p>While shoppers scramble for Black Friday bargains this year, outdoor retailer <a href="https://www.rei.com/">REI</a> is closing its 145 U.S. stores. This is the <a href="http://www.seattletimes.com/business/retail/rei-rebels-against-black-friday/">second consecutive year</a> the Seattle-based company will ignore the frenzy that traditionally marks the start of the holiday shopping season. REI’s nearly 12,000 employees will get a paid holiday and will not process any online orders. Instead, REI exhorts workers and customers to get outside with family and friends. It has even coined a Twitter hash tag, <a href="https://www.rei.com/opt-outside">#OptOutside</a>, to promote the event.</p>
<p>Some observers have praised REI for <a href="http://www.bloomberg.com/news/articles/2015-03-27/rei-s-crunchy-business-model-is-crushing-retail-competitors">mixing business savvy with crunchy acumen</a>. Its #OptOutside campaign is an example: By encouraging customers to reject Black Friday-style excess, the promotion burnishes REI’s reputation as a progressive retailer.</p>
<p>But how did REI and other outdoor companies align themselves with conservation? How do they square selling expensive apparel and promoting carbon-spewing tourism with their customers’ love for the outdoors? And how radical is “Green Friday,” especially if the OptOutsiders are carrying backpacks stuffed with the latest gear made from precious petroleum, rare metals and pricey fibers? </p>
<p>The answer is that shoppers have long expressed their affection for nature in what they buy. Consumption and environmental concerns, past and present, fit together as snugly as a foot in a beloved hiking boot.</p>
<h2>Consuming nature, dividing people</h2>
<p>The paradoxes of modern outdoor retailing have deep roots in the American conservation movement. In the late 19th century, early conservationists such as <a href="https://theconversation.com/how-john-muirs-incessant-study-saved-yosemite-56478">John Muir</a> grew alarmed as they saw wildlife decimated, forests denuded and scenery despoiled. Among the loudest protesters were affluent outdoorsmen, such as <a href="https://theawl.com/there-must-be-something-to-shoot-b2ee22c0fee3#.px9qmjk2n">Theodore Roosevelt</a>, founder of the Boone and Crockett Club, and <a href="http://www.slate.com/articles/arts/culturebox/2013/05/william_temple_hornaday_how_a_taxidermist_helped_save_the_buffalo.html">William Temple Hornaday</a>, first director of the New York Zoological Society. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=719&fit=crop&dpr=1 600w, https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=719&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=719&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=904&fit=crop&dpr=1 754w, https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=904&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/146505/original/image-20161118-19348-1vfjzhk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=904&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">President Theodore Roosevelt and naturalist John Muir on Glacier Point, Yosemite National Park, 1906 (click to zoom).</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/John_Muir#/media/File:Muir_and_Roosevelt_restored.jpg">Library of Congress/Wikipedia</a></span>
</figcaption>
</figure>
<p>By calling to protect nature, these conservationists also protected their own hunting and fishing entitlements. They attacked the rural poor, immigrants and minorities, who Hornaday once called the <a href="https://archive.org/stream/ourvanishingwild00horn#page/52/mode/2up/search/army">“regular army of destruction”</a> because they took fish and game for subsistence or sale. They used their money and power to license hunters and anglers, limit harvests and ban equipment. Some of these measures protected nature (and still do), but they also intentionally <a href="https://grist.org/article/klingle/">reserved nature for those who could consume it properly</a> by the standards of wealthy conservationists.</p>
<p>Class differences pervaded other forms of outdoor recreation too. People with means vacationed at posh resort hotels. Middling Americans took more rustic routes. Outdoor groups such as the <a href="http://www.outdoors.org/about/history.cfm">Appalachian Mountain Club</a>, founded in Boston in 1876, and <a href="https://www.mountaineers.org/about/history">The Mountaineers</a>, founded in Seattle in 1906, taught woodcraft to middle-class urbanites who yearned for authentic escapes. </p>
<p>Others chafed against even these austere types of play, seeing outdoor recreation as an costly privilege. They mobilized leisure as political protest. Seattle’s Co-Operative Campers, launched in 1916 as a cheaper alternative to The Mountaineers, pledged to “make our mountains accessible through co-operative camps” for the city’s blue-collar citizens. Socialist activist <a href="http://www.historylink.org/File/255">Anna Louise Strong</a> was the Co-Op Campers’ first president. She and the Co-Op Campers often clashed with The Mountaineers over politics and camping techniques until the club disbanded during the 1920s Red Scare.</p>
<p>REI took root in this contested consumerist soil. Lloyd Anderson, REI’s founder, conspired with other members of The Mountaineers to promote riskier activities, such as rock climbing. He quickly learned that they did not have the requisite gear. Influenced by other local co-ops, Anderson organized REI in 1939 to pool members’ annual fees so the group could purchase quality equipment from Europe at affordable prices. </p>
<p>As costs for lightweight materials such as aluminum and nylon fell after World War II, REI attracted a burgeoning following locally and nationally. And it continued to trade on its founders’ cooperative and environmental vision. In 1976, a year after opening its first retail store outside of Seattle, it launched <a href="http://reihistory.com/1970/">an environmental grants initiative</a>, and in 1989 the firm cofounded the <a href="http://www.conservationalliance.com/">Conservation Alliance</a>, a group of outdoor businesses dedicated to environmental protection. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=480&fit=crop&dpr=1 600w, https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=480&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=480&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=604&fit=crop&dpr=1 754w, https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=604&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/146506/original/image-20161118-19356-1i2cj4l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=604&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Gunstock Campground and Recreation Area, Guilford, New Hampshire, 1961.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/foresthistory/3662177625">Eric M.Sanford/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Yet REI’s #OptOutside campaign can seem superficial compared to more radical stances. <a href="http://www.patagonia.com/home/">Patagonia</a>, founded in 1973 by Yvon Chouinard as a spin-off from his self-named climbing equipment company, has <a href="http://www.patagonia.com/re-collection.html">promoted recyclable clothing,</a> and applied tough sustainability standards to its <a href="http://www.patagonia.com/footprint.html">global supply chains</a>. In its 2013 <a href="https://newrepublic.com/article/123561/dont-buy-this-jacket">“Don’t Buy This Jacket”</a> campaign, Patagonia even encouraged customers to make do with less. </p>
<p>Critics have accused Patagonia of playing the snob card and promoting chic travel to imperiled and faraway places. Chouinard himself freely accepts these accusations. As he cynically admitted in a <a href="http://www.newyorker.com/magazine/2016/09/19/patagonias-philosopher-king">recent New Yorker profile</a>, “everyone’s just greenwashing,” because “growth is the culprit.” </p>
<p>In this context, REI’s Black Friday campaign can look like an unabashed marketing ploy that ignores the fundamental source of our environmental problems: humans’ overuse of the earth’s resources. Other businesses have deployed similar devices to entice earnest consumers, with mixed results, from <a href="https://ssir.org/articles/entry/the_problem_with_fair_trade_coffee">fair trade coffee</a>, which may not be economically viable, to <a href="http://www.npr.org/2013/02/11/171376509/is-sustainable-labeled-seafood-really-sustainable">sustainably sourced seafood,</a> which may not be that sustainable. </p>
<p>Maybe Chouinard is right: we are all being greenwashed. </p>
<h2>Is green good – or possible?</h2>
<p>But is this a bad thing to admit? Perhaps. To deny the inherent contradictions of Green Friday is to ignore how affection for nature collides with our longing to consume it. By asking customers to think about what they are buying, Patagonia tries to foreground the environmental and social ethics of buying a new fleece jacket. REI, by contrast, asks us to take a one-day shopping holiday to help the planet. At best it is a lighter green vision. </p>
<p>However conservation-friendly they may be, REI and its competitors are businesses, and none of these efforts supersede retailers’ bottom lines. Moreover, enlisting environmental concerns to drive sales or political change is nothing new. Greenwashing is just the latest term for an old phenomenon: <a href="http://environmentalhistory.net/wp-content/uploads/2012/08/7-3_Turner.pdf">tethering consumption to environmental values.</a> In turn, consumers have proclaimed their environmental values through purchasing power since the dawn of the conservation movement. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/146507/original/image-20161118-19352-129yqh1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The L.L. Bean flagship store in Freeport, Maine, open 24 hours a day, 365 days a year.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/201840757?src=xy08sTKTPc0__snuSNAQ_g-1-0&id=201840757&size=medium_jpg">www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>Ultimately, there is no such thing as truly green consumption. Take the alternative to Black Friday: Cyber Monday, just after Thanksgiving, when retailers seek to entice consumers to spend online with early holiday discounts. Is internet shopping better for the environment than driving to the nearby mall? It may keep us off the road, but online shopping does not eliminate <a href="http://www.forbes.com/sites/christopherhelman/2016/06/28/how-much-electricity-does-it-take-to-run-the-internet/#590ca8d2539b">environmental costs</a> – it just diverts them to the data warehouses that power retailers’ mail order divisions, and the planes and trucks that deliver the goods to consumers.</p>
<p>This Thanksgiving, while arguing politics over holiday spreads, take time to remember the late biologist Barry Commoner’s famous aphorism: <a href="https://eganhistory.com/2012/10/06/why-barry-commoner-matters/">There’s no such thing as a free lunch.</a></p><img src="https://counter.theconversation.com/content/68022/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Klingle receives funding from National Endowment for the Humanities. He is affiliated with Environmental Leadership Organization. </span></em></p>
REI’s ‘Opt Outside’ campaign makes a virtue of shunning Black Friday and hiking instead of shopping. But while outdoor retailers preach sustainability, they still fuel our consuming habits.
Matthew Klingle, Associate Professor of History and Environmental Studies and Director, Environmental Studies Program, Bowdoin College
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/67236
2016-10-26T19:10:49Z
2016-10-26T19:10:49Z
Made in China: three ways Chinese business has evolved from imitation to innovation
<p><em>Businesses and governments around the world are watching as China grows, innovates and extends its influence. We explore how the country got to where it is and what might be in store for its future in our series <a href="https://theconversation.com/au/topics/understanding-chinas-influence-32555">Understanding China’s Influence</a>.</em></p>
<hr>
<p>Most of us use products made in China every day and are aware of its growing economic power as a factory to the world. But China intends to become a developed nation by mid-century and integral to this ambition is its intense focus on innovation. </p>
<p>In a very few decades, Chinese companies had evolved from imitators to imaginative and effective innovators. </p>
<p>As <a href="https://mitpress.mit.edu/books/china%E2%80%99s-next-strategic-advantage">part of my research with my colleague George Yip</a> on this issue, we identified three key phases in China’s development:</p>
<ol>
<li>From Copying to Fit for Purpose</li>
<li>From Followers to World Standard</li>
<li>From Seeking New Resources to Seeking New Knowledge</li>
</ol>
<p>Chinese companies now pose a challenge to established multinationals, as they enter the markets of the developed world to become insiders.</p>
<p>Since China’s former leader, Deng Xiaoping, implemented market-oriented economic reforms to China in 1979-80, the driving forces of this transformation have been the customer and the culture. Chinese customers have an insatiable and rapidly growing demand for products, as the large, diverse population seeks better lives. This has stimulated many companies to develop affordable products for those needs. And a culture of entrepreneurship in the business sector has been facilitated by a far-sighted government with a strong drive for independence and economic development. </p>
<p>The Chinese government has fostered an innovation ecosystem across the country, consisting of some 100 science and technology parks, universities and government research institutions, which provide support for new enterprises. The Chinese government and business <a href="https://mitpress.mit.edu/books/china%E2%80%99s-next-strategic-advantage">invested some US$190 billion in research and development in 2013</a>, which is around 40% of the annual R&D investment in the United States. </p>
<p>China’s research and development expenditure represents just over 2% of its GDP, which is slightly <a href="http://stats.oecd.org/Index.aspx?DataSetCode=MSTI_PUB">more as a share of GDP than that of Western Europe</a>. The government’s priority for technological development is matched by the entrepreneurial spirit and drive of Chinese entrepreneurs.</p>
<h2>From copying to fit for purpose</h2>
<p>In the first phase of development, Chinese companies started by copying products and processes from Western firms or producing components for the supply chains of multinational corporations. Chinese suppliers to multinationals were forced by their business partners to <a href="http://fiid.org/wp-content/uploads/2012/11/China%E2%80%99s-Run-of-the-Red-Queen-%E2%80%93-Government-Innovation-Globalization-and-Economic-Growth.pdf">achieve high standards of quality at low cost</a>.</p>
<p>While demand from domestic consumers was initially for very cheap products, Chinese producers quickly learned to develop products that were “good enough”, combining fitness for purpose with low cost. For example, an enterprising start-up created the “Apple Peel”, a component which the customer could combine with an iPod Touch, turning it into a mobile phone, very much like an iPhone.</p>
<p>Contrary to the low level of competition in China’s state-owned sector, private companies operated in sectors that were more open and competitive. Chinese firms’ better understanding of local customers enabled them over time to compete effectively with multinationals in the Chinese market.</p>
<p>Although local firms lacked the research and development capabilities of foreign companies, they were helped to innovate by the extensive technology network and innovation ecosystem developed by the Chinese government. With the experience they gained in satisfying customer demands and dealing with intense competition, Chinese firms were also able to diversify into other markets and more advanced products. </p>
<p>An example of this is Joyoung, a Hangzhou-based domestic appliance company, which began as the inventor of an appliance that makes soy milk, later copied by many others (including foreign firms). Joyoung built on its success with its soy milk appliance to become a large diversified maker of small household appliances. </p>
<p>This competitive experience in the fast-growing markets of China led Chinese firms to the second phase in their evolution. </p>
<h2>From followers to world standard</h2>
<p>In this phase, Chinese firms ambitiously set their sights on achieving global standards, particularly those companies active in export markets, such as the domestic appliance firm Haier. </p>
<p>Haier from the beginning was focused on innovation and is now the biggest company by sale revenue in the appliance sector. A legendary innovation of Haier’s is a washing machine that washes potatoes as well as clothes, which was in response to a need from farmers. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=513&fit=crop&dpr=1 754w, https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=513&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/142995/original/image-20161024-28376-xa4jpq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=513&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Chef Dana Cohen of the popular television show Hell’s Kitchen chooses to use a Haier electric radiant cooktop to prepare a meal.</span>
<span class="attribution"><a class="source" href="http://pictures.reuters.com/archive/TECH-CES--GF20000087107.html">Steve Marcus/Reuters</a></span>
</figcaption>
</figure>
<p>Many of China’s companies have now reached global standards of quality. However, very few have strong brands that are recognised outside China. This is one of the reasons for the third phase in their evolution.</p>
<h2>From seeking new resources to seeking new knowledge</h2>
<p>Building on the capabilities they developed in the domestic market, coupled with the cash generated by their successes, Chinese businesses are now moving outside China. </p>
<p>In contrast to the earlier expansion of Chinese firms investing abroad in petroleum and other natural resources, this third phase is very much about exploiting innovation developed at home and applying it to the consumer and industrial markets of the West. </p>
<p>Chinese businesses are seeking brands, market access and technologies that may be missing from their home-developed portfolios. Their entries into foreign markets are often by acquisition, and European firms (particularly German middle-sized companies) have been popular targets. </p>
<p>Others have set up research and development centres in the United States and Europe, located in centres of innovation such as Silicon Valley. A good example is the telecoms equipment and smartphone maker Huawei.</p>
<p>Over many years of international expansion, Huawei has developed a global network of 16 research and development institutes and 36 joint customer innovation centres. Huawei and the other major Chinese telecoms company ZTE are consistently <a href="http://www.wipo.int/pct/en/activity/">among the top 10 patent filers</a> each year in the international patent system (PCT) application process. </p>
<h2>Chinese lessons in business management</h2>
<p>Chinese firms have also adopted a number of management practices that are less common in the West. Our research identified ten of these, ranging from deep understanding of their customers, rapid decision-making, rapid prototyping and learning from mistakes, to a ready willingness to deploy extensive resources to innovate. </p>
<p>While these are not of themselves particularly new, they are a source of competitive advantage in the Chinese environment, where foreign companies have not applied them consistently. </p>
<p>Foreign companies have much to learn from China, as it is becoming a leading market for the world. They can develop in China capabilities that they may have neglected, including bold experimentation, speedy implementation, new product category creation, focus on “lean value” and developing mixed teams and global leaders. </p>
<p>There is a tidal wave of competition approaching the developed world from China. The best way multinationals can prepare themselves for this is by participating directly in the Chinese innovation ecosystem. </p>
<hr>
<p>_Bruce McKern will be online for an Author Q&A between 3 and 4pm AEDT on Thursday, 27 October, 2016. Post any questions you have in the comments below. _</p><img src="https://counter.theconversation.com/content/67236/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bruce McKern is an Adviser to the Maritime Silk Road Society, Hong Kong.</span></em></p>
There is a tidal wave of competition approaching the developed world from China – and foreign businesses have much to learn how Chinese companies evolved from imitators to innovators.
Bruce McKern, Honorary Professor, Business School; Recently Visiting Fellow at Hoover Institution, Stanford University and Oxford University, University of Sydney
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/54302
2016-02-24T11:09:34Z
2016-02-24T11:09:34Z
How digital technology spawned retro’s revival
<figure><img src="https://images.theconversation.com/files/112425/original/image-20160222-25894-qv75z3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Since 2009, record sales have soared.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-222981331/stock-photo-vinyl-records-music-background.html?src=lzj0ToqiIEzaa4bB2L0TcA-1-10">'Records' via www.shutterstock.com</a></span></figcaption></figure><p>Remember those big black disks with holes in the middle that used to be played on “turntables?” </p>
<p>They’re not actually ancient history. This past year, worshipers at what novelist Michael Chabon <a href="https://www.washingtonpost.com/entertainment/books/telegraph-avenue-by-michael-chabon-a-tribute-to-vintage-vinyl/2012/09/04/47c284aa-f61a-11e1-8b93-c4f4ab1c8d13_story.html">calls</a> “the Church of Vinyl” bought 9.2 million records. And though vinyl sales make up only two percent of record industry revenues, they’re up <a href="http://www.statista.com/statistics/188822/lp-album-sales-in-the-united-states-since-2009/">by more than 250 percent</a> since 2009.</p>
<p>Meanwhile, <a href="http://www.bookweb.org/news/60-aba-member-stores-open-2015-16-sold-new-owners">the slew of new independent bookstores</a> is a testament to how print books have proved remarkably resilient in the face of competition from e-books: Purchases of paper books are rising, while sales figures for digital next-generation formats <a href="http://www.publishersweekly.com/pw/by-topic/digital/retailing/article/68618-declining-e-book-sales-hit-home.html">are leveling off</a>. </p>
<p>And once shunned in favor of timepieces powered by quartz crystals, mechanical watches have <a href="http://www.fhs.ch/scripts/getstat.php?file=histo_elec_mec_160101_a.pdf">made a remarkable comeback</a>. Despite the need for winding, the prospect of expensive repairs and even a slightly less accurate assessment of the time, mechanical timepieces have attracted a new generation of buyers, many of whom never previously owned a watch dependent on a mainspring.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/112426/original/image-20160222-25898-1zj68e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Mechanical watches are now being valued over their newer – and more precise – quartz counterparts.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-278015486/stock-vector-clock-s-seamless-pattern-color-texture-of-time.html?src=pp-same_artist-213901924-RQcWwGQ6tYAkOOtW_k1GRQ-4">'Timepieces' via www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>Even old-fashioned board games and role-playing games are experiencing a renaissance. Everyone thought video games would curb interest in paper cards, dice and fold-out boards. Instead, not only have older games like Dungeons & Dragons maintained their popularity, but artists working for companies like <a href="https://www.fantasyflightgames.com/en/index/">Fantasy Flight Games</a> are also designing remarkably innovative new forms, with blockbuster hits like <a href="https://boardgamegeek.com/boardgame/161936/pandemic-legacy-season-1">Pandemic Legacy</a>, <a href="https://boardgamegeek.com/boardgame/170216/blood-rage">Blood Rage</a> and <a href="https://boardgamegeek.com/boardgame/39856/dixit">Dixit</a>. </p>
<p>But it would be wrong to completely characterize the rebirth of the old as a rejection of the new. In fact, without recent advances in digital technology, this retro revival might not even be happening in the first place.</p>
<h2>The mechanical strikes back</h2>
<p>While the complex gears of mechanical watches might be an engineering retort to the bling of the bejeweled bezel, there are a number of additional explanations for the retro revival that’s taking place. </p>
<p>In part, it’s a component of a larger design trend that includes retro-inspired <a href="https://books.google.com/books?id=BXvACAAAQBAJ&printsec=frontcover&dq=retro+interior+design&hl=en&sa=X&ved=0ahUKEwju15yewY7LAhXKOz4KHWz1AOoQ6AEIOjAB#v=onepage&q=retro%20interior%20design&f=false">interior decoration</a>, <a href="http://www.sfgate.com/cars/article/The-resurgence-of-retro-cars-5003006.php">cars</a> and <a href="http://search.informit.com.au/documentSummary;dn=056834692753241;res=IELHSS">wine labels</a>. There’s even retro erotica, with the works of legendary pin-up girl artists <a href="http://www.gilelvgren.com/GE/">Gil Elvgren</a> and <a href="https://en.wikipedia.org/wiki/Alberto_Vargas">Alberto Vargas</a> inspiring <a href="http://www.thepinupfiles.com">a new generation</a> of models and artists. </p>
<p>As consumers look for ways to highlight their connoisseurship and distinguish themselves from mainstream products, many have turned to buying retro products made by simple manufacturing. This rejection of mass production echoes the <a href="https://books.google.com/books?id=KtRYPwAACAAJ&dq=arts+and+crafts+movement&hl=en&sa=X&ved=0ahUKEwje0OTSw47LAhUFdD4KHc7wDOg4ChDoAQggMAE">craft revival of the late-19th century</a>. For example, in response to the rise of industrial book presses, artists printed volumes in limited numbers using a letter press, handcrafted binding and traditional inks and paper.</p>
<p>But we shouldn’t completely separate the return of retro from the new.</p>
<p>In a way, the two are not substitutes, but complements. For instance, many new board games are funded through the Internet-based crowd-sourcing venture Kickstarter, which links designers with small investors. The web has allowed the board game community’s innovative designs to be realized as board, paper and dice. And you can be sure that digital design tools and Internet marketing are key components of the game designers’ business models. </p>
<p>The same goes for books. Sure, paper books have been challenged by the rise of e-books. But book production has also adapted, becoming more efficient with indexing software, digital production platforms for editing texts and new forms of mass printing. </p>
<p>Consider <a href="http://www.restlessbooks.com/">Restless Books</a>. The Brooklyn-based (where else?) publishing start-up seeks to bring translations of new and classic works from other languages to English-speaking audiences. In the beginning, Restless Books exclusively published e-books, but sales stagnated. When it switched to old-fashioned paper and ink, its business soared. While it couldn’t function without digital production methods, its customers clearly wanted analog output.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/112427/original/image-20160222-25879-v925k9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">There’s nothing like cracking open a good old fashioned book.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-353470835/stock-photo-old-books-pattern-for-background.html?src=X7DXaxn-f3bvdaY1HQk-Yw-1-19">'Books' via www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>Most people probably think of digital technology as a radically transformative phenomenon that has swept away the past, in the same way <a href="http://www.nytimes.com/2010/01/10/business/10digi.html">the automobile destroyed the buggy-whip industry</a>, or the printing press superseded the illuminated manuscript.</p>
<p>But the “enabling” aspects of digital technologies are equally worth celebrating. To be sure, computers and the rise of the Internet have decimated many old products and ways of doing business. </p>
<p>At the same time, they’ve facilitated the quirky and old-fashioned, allowing for the development of niche markets in specialized products. As in the world of architecture, a layered landscape with the new rubbing shoulders with the old is far more appealing than one where innovation has wiped away any semblance of the past. </p>
<p>And it’s comforting to know that while your new board game will ultimately wear out, it won’t monitor your pulse, track your whereabouts or take your phone calls.</p><img src="https://counter.theconversation.com/content/54302/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
While technological advances have rendered some products obsolete, they’ve also spurred the growth of niche markets that cater to people looking to reject mass-produced goods.
Steven Wilf, Professor of Law, University of Connecticut
Peter Siegelman, Professor of Law, University of Connecticut
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/49014
2015-10-13T10:12:55Z
2015-10-13T10:12:55Z
How data empowered the economic individual and gained a Nobel for Angus Deaton
<p>On Monday in the staff common rooms of economics departments throughout the world, I doubt anyone was complaining about the award of this year’s <a href="http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2015/press.html">Nobel prize for economics to Angus Deaton</a>. </p>
<p>It is a choice perhaps with a view to addressing criticism that the discipline of economics can sometimes seem like ideology rather than science. It also appears to favour the micro over the macro; the experience of individuals rather than the grand plans of policy makers.</p>
<p>The first area of research mentioned in the Nobel Committee’s citation of Deaton’s work was his development of the <a href="https://www.aeaweb.org/aer/top20/70.3.312-326.pdf">Almost Ideal Demand (AID) System</a> with John Muellbauer of Oxford in the early 1980s. This system of equations allows policy makers to estimate not only how the price of a good affects its own demand but also how the price of other goods affect the demand for that good. So, if for example, VAT is increased on cigarettes, economists can estimate the likely effects on alcohol consumption. </p>
<p>The initial attempts to estimate these demand equations were unsatisfactory due to the way that the equations were written down rather than due to statistical or computational difficulties. It turned out that these equations were not flexible enough to allow certain key predictions of consumer theory to be tested. For example, will raising the price of diesel affect demand for petrol with the same magnitude as the affect of a change in the price of petrol on the demand for diesel? The contribution of Deaton and Muellbauer’s system of equations was that the key predictions of consumer theory could be tested rather than just assumed. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/98199/original/image-20151013-31138-1oe9cog.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Price sensitivity.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/helldorado666/4748890417/in/photolist-8eDiEZ-shRzU-8VHRV2-bn1cd7-ooLjQ6-4Hb916-8Zo7wV-5RAdLh-67rRe3-8369Jd-9EmhxY-8Uwt9o-4JPDg1-dKTZng-dY99M6-8k78rR-5bzdV-dJxR1L-jWE3fn-dQ5AWj-9EmvfG-qKoZzC-4kCdRX-74p3sr-dTXrk-8RSRus-iNpH9k-4JKpjR-7w6cnb-83zxqq-ydHnV-k6wQnV-81JzLb-81EsMc-4JKphX-7rwdK9-81JAH3-6spzDG-w8TJV5-PXvDF-hyYNr-iL1YcL-jW5nt-avwPzr-aE8LKd-a4p9sG-acDKMn-qDmXiy-BJkyy-4MMso9">Hell Dorado</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Questioning theories</h2>
<p>Deaton then turned his focus to theories about income, savings and consumption. Macroeconomists up until the early 1990s felt that their <a href="http://www.ifs.org.uk/wps/wp0401.pdf">Permanent Income Hypothesis (PIH)</a> explained the real world pattern that aggregate consumption changes less than aggregate income. It was a case of theorists wanting to see their theory come true in the real world data. Deaton realised that when you fully think through the implications of PIH, then income should be smoother than consumption. This is because sometimes unexpected increases in income are, to some extent, permanent and not always completely random blips that disappear. </p>
<p>However, this wrinkle was not borne out by the Permanent Income Hypothesis and it was a finding that led to a whole reassessment of a key plank of macroeconomic theory. Deaton’s work resulted in the use of individual level longitudinal data to supplement the existing use of aggregate data. Again, his work was about inserting people and their experiences into economic theory. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/98201/original/image-20151013-31126-19uzy6q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The sharp end of the household survey industry.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dany13/4642471820/in/photolist-85eT8A-c99mWN-dCFaqg-c99mFb-mS4dKB-mS63Zx-mSTr9Q-mS4VZx-nQStLM-8qc8fV-4Th5YG-qFF6Vm-irRE1v-ciDBwU-65PudD-9nhVg5-ugQkhA-7etbG4-7eiNET-nxb8WV-ttguYM-98GBgF-8yV35L-tGWSft-bvDgEL-nxaJJ5-8fxfEB-unMuAy-azKNR6-jwV15T-fL5qUt-ttgpbz-5zG6tg-9MwL8F-ffrEEZ-6oaj2i-nXrJfH-4ze6Jp-qJKHZQ-nXuatK-ogK5ci-oerzMX-qJLQMh-oeLUqm-q5xFfi-4NC7qN-4NxTnp-faBuqf-zU5ww-9MwLza">dany13</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Development of data for policy</h2>
<p>Then, in the 1990s, Deaton’s work focused on the study of poverty in developing countries. Up until that point, development economics had many theories but less than convincing empirical evidence to back up those theories. Deaton was instrumental in the design and collection of household survey data in many parts of the developing world, particularly India. </p>
<p>Survey design and data collection can sometimes be a less than exciting area of research. However good quality data are vital to testing theory and too many economists don’t take responsibility for the quality of the data that they use. Deaton’s work in this area led him and others to research important topics such as measuring poverty, calorie consumption and how assets are divided within a household in the developing world. </p>
<h2>Optimist</h2>
<p>To get an accessible version Deaton’s work, I would recommend his 2013 book: <a href="http://www.amazon.co.uk/The-Great-Escape-Origins-Inequality/dp/0691165629">The Great Escape: Health, Wealth and the Origins of Inequality</a> published by Princeton University Press. The book is pitched at a popular level but is based on extremely rigorous interrogation of data. Using a series of deceptively simple graphs, Deaton charts the very long-term trends in health and economic circumstances. It is a book that discuses history, medical science, industrial policy, development economics and political economy. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/98202/original/image-20151013-31129-nzkvbx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The challenge of old age.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/justcallmemo/8727658387/in/photolist-eiewLK-gzXJ45-rdVCTe-vjcei4-e8yymB-cBsaHG-b4Lgt6-7SvGMF-iGcHu1-62PcAj-dYmNhD-4q34S7-eaG5Zn-71cyhh-kR95g6-nc2FFR-86m1C6-66gLRM-sYjutV-68YS99-8uLewq-7nqhWo-9jFsWg-58vVdb-5C85kp-x7MWoe-9Q3n6L-niM3wp-nug5Fp-nQrALa-yqn6Wh-nCFC4-5UU8K9-2yLJjo-5ySYmm-3MqxzF-mKJPB-aCLzRL-68uPJ2-j62JSn-3ZhLT-AEFS-6WSEY-54Q2ek-ozpKTa-3KtyX-bESypn-8gnQ3H-5qs4dR-4YfoFh">Just Call Me Mo</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>He argues that improvements in our scientific understanding of disease and the role of public health measures, such as clean water supplies, had the major role in the improvements in our health. He shows how the Western world has largely escaped from the ravages of contagious diseases and that now the challenge is from the chronic diseases of old age. Reading the book, one is struck by his optimistic view of the world. He really has faith in science’s ability to improve the well-being of mankind. And yes, that does include economics.</p>
<p>However, he also keenly aware of our continuing problems. He discusses how perverse incentives in the pharmaceutical industry have needlessly allowed communicable diseases to continue to claim lives in parts of the developing world. Later in the book, he convincingly argues, that long-term aid to countries does more a lot more harm than good because despotic regimes, with an external source of income, have less of a need to collect taxes and so become even less accountable to their own people.</p>
<h2>Debate on the future of economics</h2>
<p>The later point, hints that Deaton is not afraid to say controversial things. A few years ago Deaton asked some big questions about the <a href="https://www.aeaweb.org/articles.php?doi=10.1257/jel.48.2.424">future of empirical economics</a>. The recent trend in applied microeconomics, especially in development economics has been a move away from traditional theory towards the use of experiments. For example, randomising participation in education programmes to reduce sexually transmitted diseases in developing countries, and then evaluating the effect of the programme. Deaton argued that this approach to economics has limited external validity – that an HIV prevention program aimed at teenage girls in Kenya may not have the same effect as a chlamydia prevention program aimed at working women in South Africa. </p>
<p>Deaton called for the applied microeconomists not to abandon economic theory in favour of experiments but instead to think more deeply about the consequences of economic theories and how they can be tested using real-world data. This is the approach he has followed throughout his career and what has led to him win a Nobel Prize.</p><img src="https://counter.theconversation.com/content/49014/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Vincent O'Sullivan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
The annual economics award recognises the value of micro analysis and good, old-fashioned legwork.
Vincent O'Sullivan, Lecturer in Economics, Lancaster University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/47719
2015-09-30T05:25:25Z
2015-09-30T05:25:25Z
Should we help companies tailor prices to your wage packet?
<figure><img src="https://images.theconversation.com/files/96097/original/image-20150924-17074-1ka1o6b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Discretionary pricing... for scientists and surveyors</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/hiddensciencemap/5758212889/in/photolist-9LQm5z-doh5Kc-8P7GPY-2ji1G3-6bYbcP-mPhZ8N-5ENKhW-8x5acX-cxBEdC-5JvopZ-9QVQs2-cST7bG-8xw2a2-9FUKfq-6J1Kxx-6pgRiN-mPhUuu-nMQsE-mPijAW-asJeYx-Wjj6p-7od5dN-5HYiv1-2jd9BX-vrFdZg-gRjQRy-3DHzUL-doh5nB-r2RcvU-6nTcbn-7oT3PG-kQmMKG-3ccJs2-c711TY-iL6zYV-rRomc2-5hpi8C-nAyXHC-5LX6v6-91ECST-a7H8eU-fsv8RA-94zr2p-bCANkD-aFJtNa-2Q8jcg-avBKS1-eKUs5S-6BzZFn-5ENK8u">Hidden Science Map</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>There is a <a href="http://www.pewresearch.org/fact-tank/2013/11/15/the-global-consensus-inequality-is-a-major-problem/">broad consensus</a> that income inequality (within developed countries) <a href="http://www.imf.org/external/np/fad/inequality/">has increased</a> and that <a href="http://inequalitybriefing.org/brief/reducing-the-gap-between-rich-and-poor-would-be-more-popular-than-cutting-i">governments should act</a> to reduce this. </p>
<p>However, the conventional policy remedies – such as more progressive income taxes – <a href="https://yougov.co.uk/news/2014/04/30/equality-more-important-wealth/">remain divisive</a> and politicians are seeking <a href="http://www.nytimes.com/2014/11/05/business/economy/seeking-new-tools-to-address-income-inequality.html?_r=1">alternatives</a>. One tool has been overlooked: governments can enable price-discrimination by income and effectively reduce costs for poorer households.</p>
<p>Price discrimination is a simple concept. Where individuals have a different willingness to pay, firms can benefit by finding ways to charge some consumers more than others. Companies spend <a href="http://www.forbes.com/sites/gilpress/2014/12/11/6-predictions-for-the-125-billion-big-data-analytics-market-in-2015/">vast sums</a> hiring <a href="https://theconversation.com/explainer-what-is-big-data-13780">“big data”</a> consultants to find the best way to divide consumers into segments. They can then <a href="https://theconversation.com/big-data-and-personalised-pricing-consider-yourself-gamed-25076">charge them different prices</a> through targeted discounts or coupons, store-specific pricing, or internet cookies which can gauge your preferences and ability to pay. To maximise profit, firms want to identify the most you would be willing to pay – and then charge you that price.</p>
<p>Of course, a firm typically doesn’t know exactly what you would be willing to pay for its goods or services. <a href="http://www.econlib.org/library/NPDBooks/Pigou/pgEW28.html#Part%20II,%20Chapter%2017">Second-degree price discrimination</a> is where a company presents multiple products, trying to induce the higher-value consumers to choose the pricier options. They may offer both an <a href="http://www.economist.com/blogs/gulliver/2014/05/flying-first-class">excessively-luxurious</a> product and a discount version <a href="http://www.victorianweb.org/technology/railways/p1.html">designed to be inferior</a>, or that requires clipping a coupon, queuing or <a href="http://www.economist.com/news/britain/21635047-new-earlier-discount-frenzy-grips-christmas-shoppers-long-weekend">waking up early</a>. These practices bring highly-visible waste and inefficiency.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96204/original/image-20150925-17699-v1k903.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Income support. Expanding discounting to the masses.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/laurie_pink/2972173885/in/photolist-5wDaKk-owbLG4-ow7vyx-oy9pLX-oeU3fm-oeTCTJ-owovZp-owbsHY-oeU8bJ-owbozh-oeTZci-owbCCC-oumTkY-bka852-bka7Bc-bka7gB-bka7Ri-bka78M-owmFR9-bka87z-bka86K-owmJoU-bka7TP-oy9jJ2-7kER44-bka8oX-9Rm9ga-bka8j6-b3PhWv-ixj2HW-9dgKk6-fK8tS2-9dgKfK-9djRyu-9djRCW-oeXAC3-9dgKjR-9dgKfx-bjUdEJ-9yduyM-6fNEBM-7my4E2-7nHRKm-qc2SzH-pUAu8P-qbYwjL-qbRF7D-pfgXfe-pUtQhS-pfgYfa">Laurie Pink</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
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<p>Then you can get <a href="http://www.econlib.org/library/NPDBooks/Pigou/pgEW28.html#Part%20II,%20Chapter%2017">third-degree price discrimination</a> which occurs where a firm charges different prices for the same products to observably different groups. They may offer special discounts to <a href="http://www.productsandservices.bt.com/products/studentspage">students</a> or <a href="http://www.theguardian.com/money/2013/feb/15/special-offers-for-over-60s">pensioners</a>, who tend to put lower valuations on products and services.</p>
<h2>The ability to pay</h2>
<p>The <a href="http://www.amazon.co.uk/Microeconomics-Behavior-Robert-H-Frank/dp/0070166749">conventional textbook</a> wisdom is that income is among the strongest determinants of willingness to pay. <a href="http://www.researchgate.net/profile/Aviv_Nevo/publication/4898718_Measuring_Market_Power_in_the_Ready-to-Eat_Cereal_Industry/links/09e415124dd54b09b3000000.pdf">Empirical work</a> typically finds that price sensitivity decreases as income rises. </p>
<p>If firms knew everyone’s income they would offer higher prices to the rich than to the poor. They would do this to profit, not to play Robin Hood. Why then, do low-income consumers not face lower prices? </p>
<p>The key is that third-degree price discrimination requires identification. While students and pensioners have university and government-issued IDs, firms cannot easily identify low-income consumers.</p>
<p>However, governments do compel people to report their income (and wealth, family status and the rest) to administer taxes and benefits and could, therefore, offer consumers a card which declares their income, or perhaps a more complex assessment of their well-being which combines a selection of data. We can call this an “OpportunityCard”. Japan recently <a href="http://www.cas.go.jp/jp/seisaku/bangoseido/english-faq.html">introduced a digital-ID</a> that encapsulated this information, but strictly limited its use mainly to the administration of taxes and benefits. </p>
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<a href="https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=489&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=489&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96206/original/image-20150925-17729-pizr90.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=489&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Price discrimination. Something for everyone?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/_sk/7184280111/in/photolist-bWRjbt-EqMYq-7gCKLb-4z5BbR-4z9Nv5-4z9Kkf-Go23f-w1FBn-47KB3a-RCMBx-4z5xYa-5Td3A2-727g8N-8EESRi-78SPji-DVvqB-RDYb4-DVoCx-7daNhC-5Yo5pg-4z9NVY-4z5zKV-4z5AY2-cVzDa-UDJ4M-4z9NjU-4z9Qsd-4z9Q9d-4z9QQG-4z5xaM-8Qgkp2-bEKdHx-4z9LEf-4z9SCb-b47brz-EoJVr-cedFGf-4KcWpW-ma1wPf-4z5ymX-edLav9-4z5BRP-4z5Bhr-4z9Kzm-4z5uFp-5mEBMu-4z5B84-bWRjdK-hmE7E-8yv52G">Stéphanie Kilgast</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
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<p>Consumers could present this OpportunityCard to merchants, who would typically profit from charging a high base price and offering greater discounts to consumers whose cards reveal lower incomes. Discounts for lower-income OpportunityCard holders would increase their purchasing power, while the reverse is likely to hold for wealthier consumers. This will act to reduce inequality, at least in terms of consumption.</p>
<h2>Value judgements</h2>
<p><a href="http://www.labour.org.uk/index.php/leadership/detail/jeremy-corbyn">Left-of-centre politicians</a> see income inequality as a serious social ill. Centre-right politicians such as David Cameron praise the power of open markets and <a href="http://www.newstatesman.com/uk-politics/2012/01/economy-capitalism-market">criticise the “top-down, interventionist state.”</a> The OpportunityCard can make both sides happy – reducing inequality through market forces, strengthening rather than hindering the “invisible hand” of markets.</p>
<p>Naturally, price discrimination brings winners and losers. In general, groups who value a service or product more will be charged more, but not every individual within each group will have the same valuation. Because of the differential pricing, the <a href="https://docs.google.com/document/d/1m649j3eCPhGfNTLZLT9Ozay3RU3zhI4_LPoMbVAYTqc/pub">“wrong person”</a> might be drawn to part with their cash. Simply put, a purchase is made by someone who gets less out of it than another potential consumer who decides to hold fire. For the card to increase efficiency in spite of this, it must substantially increase overall output. Those net results, however, <a href="https://docs.google.com/document/d/16jos_PT9w1wGpyD5A8ZiWJ9HW6kaLOJH6EWc_AYWnkk/pub">can go in either direction</a>.</p>
<h2>Is it workable?</h2>
<p>It is also worth questioning whether people would use this – or whether it would become some stigmatised evidence suggesting (economic) underachievement? Well, for a start, we cannot predict how widely the OpportunityCard would be accepted. However, it could be made mainstream and available across a range of incomes (“the 99%”) and even the comfortably-off middle-class could get some discounts. It may be used discreetly, like supermarket loyalty cards. There is precedent: more than <a href="http://www.theguardian.com/money/2014/apr/17/food-stamps-snap-coordinators-challenges">40m low-income Americans</a> regularly use Food Stamp cards – and across the UK people claim subsidised council housing.</p>
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<a href="https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=264&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=264&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=264&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=331&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=331&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96209/original/image-20150925-17736-134crwb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=331&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Old stamping ground. US citizens get help with groceries.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/chrstphre/5489717927/in/photolist-9n7eT6-ctyMho-feS18W-ctyMKm-ctyNdC-ctyLyy-ctySgN-ctyKZj-ctyJZ1-ctzBVm-ctyRBY-ctzcHb-ctzL2f-ctFrWL-ctzLMh-ctzN6u-dMQEWR-ctzymL-ctzMrE-ctzWsA-ctzyL7-or1dyj-qtQpVZ-r94mxE-yeu3hg-yeuob4-ybtCJY-ydN6A4-ydNfeM-xWcgB5-xWieD6-ybu9sW-xWbi4Y-ycTNmq-yeujR8-9HbHSR-c9Lmnj-dQuN5i-dQAobJ-qtCftC-rqwytA-rquZ1V-qtCeJw-rqBQra-823Zwz-aHARkZ-dQPvM3-o7Bu6B-nVBKAj-od7grX">chrstphre ㋛ campbell</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>You might also wonder if the wealthy would simply hire those on lower incomes to purchase goods on their behalf? We think sellers would anticipate this, and offer discounts only where they don’t expect this “arbitrage” to occur. However, for many products – such as bus passes with photo-IDs and airline tickets – arbitrage is difficult or impossible. For small-ticket items it simply isn’t worth the bother: we don’t see crowds standing outside of supermarkets trading multi-buy tissue boxes, and nor do we see people (<a href="http://www.ebay.co.uk/itm/One-Minature-Bottle-Of-Heinz-mayonnaise-/252083088950?hash=item3ab152ae36">at least, not many</a>) reselling jars of mayonnaise on eBay.</p>
<p>As we have seen, companies do try to do this in an ad hoc way with discounts and targeted branding, but they can’t go the whole hog into discretionary pricing unless government enables it through something like the OpportunityCard. The <a href="https://www.coleurope.eu/system/files_force/research-paper/gclc_wp_07-05.pdf">rules and regulations</a> for price discrimination are often <a href="http://lawreview.law.ucdavis.edu/issues/43/4/articles/43-4_Gifford-Kudrle.pdf">complicated</a> and <a href="http://knowledge.wharton.upenn.edu/article/what-consumers-and-retailers-should-know-about-dynamic-pricing/">misunderstood</a>. Verifying income is certainly cumbersome for small transactions. That is why a centralised card could solve this problem.</p>
<h2>Gaining experience</h2>
<p>While an OpportunityCard is likely to help the poor and boost profits, we don’t know whether it will be an efficient way to do this. The costs and benefits for the production and allocation of goods is uncertain. Furthermore, as with means-tested benefits, there will be an impact on the labour market. So, the traditional way for governments to play Robin Hood – taxes and benefits – may be less or more efficient. We simply do not know. We also don’t know whether issues such as stigma, fraud and arbitrage will prove serious impediments. </p>
<p>We can only learn by experience, testing and measurement. <a href="https://www.gov.uk/government/publications/test-learn-adapt-developing-public-policy-with-randomised-controlled-trials">Controlled field experiments and policy trials</a> can be run, measuring impacts on prices, demand, and output. The OpportunityCard could be gradually introduced to a random selection of consumers, regions, or industries. Distinct administration and marketing techniques should be tested, and focus-groups and surveys could gauge attitudes. Economists and policymakers could use the evidence to infer where, how and whether to introduce the card more widely. If we don’t test, of course, we risk missing out on a valuable tool for improving both equity and efficiency.</p><img src="https://counter.theconversation.com/content/47719/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Reinstein does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
If the government wants to tackle wealth inequality, then it has the tools at its disposal to help people pay a fair amount for everyday goods.
David Reinstein, Lecturer in Economics, University of Essex
Licensed as Creative Commons – attribution, no derivatives.