Q6 Fall 2009

What are you thinking?

Online Features

Economists have begun to use research into happiness to explore questions in economics, policy, and management. Betsey Stevenson of the Wharton School of the University of Pennsylvania surveys the work in this emerging field.

Read article

NEW CAPITAL

Were you born a short-seller?

James Chanos
Noted short-seller James Chanos, founder and president of the hedge fund Kynikos Associates, discusses the strategy, politics, and practice of going short.

Read article

Qn magazine highlights our most popular pieces from 2009.

Read article

GLOBALIZATION

How do you market a global brand?

John Hayes
John Hayes, chief marketing officer at American Express, discusses creating relationships with a global customer base that ranges from individuals to multinational corporations.

Read article

The question has always been critical to marketers. However, with rapid innovations in technology — social networks and mobile devices — and the following shifts in behavior, it might be harder to answer than ever. Rishad Tobaccowala, the CEO of Denuo, gives his take on the pulse of marketing today.

Read article

James Choi describes his research into one simple way to raise participation rates in 401k plans: change the default.

Read article

Mary Houghton is the president and co-founder of the ShoreBank Corporation, the largest and oldest community development bank in the country. She talks with Qn about how banking can be a powerful for-profit social venture.

Read article

We learn in kindergarten to look on the bright side. But is optimism good for us? And do we adjust our sunny expectations based on our experiences? Cade Massey, an assistant professor of organizational behavior at Yale SOM, discusses his work.

Read article

The global nature of environmental issues demands collaboration across borders and across sectors. Mark Tercek became the President and CEO of the Nature Conservancy in 2008 after 24 years at Goldman Sachs. He discusses how finding business solutions to environmental problems is essential.

Read article

Dialogs

What are you thinking?

Robert J. Shiller
Decades of economic research have assumed people pursue their goals in a rational manner, discounting the effects of emotion, bias, error, and other irrational forces. Robert Shiller argues that economists need to take a closer look at how people make decisions.

Read article

What is behavioral?

Nicholas C. Barberis, Ulrike M. Malmendier, Shane Frederick, and Andrew J. Redleaf
A host of studies and academic theories that apply psychological insights to economic behavior have been grouped under the label "behavioral." Is this growing field changing how the economy is studied — and how it functions?

Read article

Do you need a nudge?

Richard H.Thaler
Richard Thaler outlines how principles from behavioral economics can help policymakers — and managers — achieve better outcomes.

Read article

Economics has long been used to evaluate the law. But what happens when economics gets things wrong? Law professor Christine Jolls describes the role behavioral economics can play.

Read article

Are we good at making choices?

Judith A. Chevalier, M. Keith Chen, and James Choi
Do the choices we make as consumers serve our economic interests? Do they even reflect our real preferences? Three Yale scholars discuss research — their own and others' — that sheds light on these questions.

Read article

You encounter it every day. You might count it or spend it or wish you had more of it. But can just thinking about money affect your behavior?

Read article

Is risk rational?

Andrew W. Lo
Misunderstanding of risk was a major factor in the subprime crisis and ensuing recession. Andrew Lo argues that one has to look at both logical and emotional parts of the brain to grasp how people respond to financial risk.

Read article

Vignettes

Polaroid went from ubiquity to obsolescence as digital photography replaced the print. But as early as the 1960s, Polaroid had been doing research into digital imaging. Did mistaken assumptions keep the company from making the transition to the digital world?

Read article

A number of economists, psychologists, and neuroscientists are using imaging studies to peek at the brain in action — trying to better understand why we make some of the choices we do.

Read article

 

Noteworthy

Amidst a slew of ideas for jump starting the economy in his State of the Union address, President Barak Obama proposed designating $30 billion from the bailout money repaid by big banks to be used by community banks in loans to small businesses. Qn discussed community banking with Mary Houghton, president and a co-founder of ShoreBank Corporation, the oldest and largest of the country's 71 certified community development banks.


Follow the magazine on Twitter

 

Recent comments from the Q6 community

Comment from What are you thinking?

I wonder if Prof Shiller has read "Eelgrass and Depressions," Chapt. 11 in Wyman Richardson's book, "The House on Nauset Marsh."
[The author is of the Boston Richardson family that produced Atty. Gen. Elliott R., (his cousin), hero of Nixon's Saturday night massacre.]

If not, I'll try to paste an abbreviated version in here; failing that, I think he would be well pleased with the insights it may provide along his current line of thought.

Here goes:
"You mean to say that economic booms and depressions are due to emotional factors?" My younger colleague was horrified. Unlike most medical men, he had a firm grasp of the theory of economics and financial problems in general. In addition, he held what might be called quite radical views concerning our social setup. He had been talking very interestingly about national and international finance--the gold standard, debtor & creditor nations, and so forth--and obviously was much upset at my remark. But in spite of a somewhat malicious desire to mix my friend up, I did indeed have a definite feeling that he was making rules and drawing conclusions from an uncertain source--uncertain, because it depended on mass emotion.

To me...

Posted by Deke Ulian Y'50
Read What are you thinking?

Comment from Were you born a short-seller?

For more on James Chanos, see Thomas Friedman's column in the New York Times.

Posted by Qn Editorial Staff
Read Were you born a short-seller?

Comment from What is behavioral?

For more on this topic, PBS's Nightly Business Report has a rich set of resources from their year-long project looking at behavioral research.

Posted by Qn Editorial Staff
Read What is behavioral?

Comment from Do you need a nudge?

PBS's Nightly Business Report has additional interviews with Richard Thaler as well as a rich set of resources from their year-long project looking at behavioral research.

Posted by Qn Editorial Staff
Read Do you need a nudge?

Comment from How do you market a global brand?

I found Mr. Hayes's points toward the end of the interview regarding "Authority" in marketing especially insightful. However, I believe it's not so much that authority is holding less sway, it's that consumers are now privy to the idea that authority can be bought and thus they give it less weight.

"Authenticity" is replacing authority in the marketing models I see and measure. Many brands are working to figure out how to buy authenticity and some creative shops are getting it but more are not. When you have a great brand like American Express (which in full disclosure I've been a happy customer of for many years), authenticity can come easy. Mr. Hayes appears to have the confidence in his brand (as he should) to allow the public conversation to happen and even encourage it. The best authenticity is the true authenticity. The fact that a brand is willing to accept this and join the community it created will bring authority back into the game.

Chris Clegg

Sr. Marketing Analyst/ Principal
Portland Marketing + Analytics
http://www.portlandmarketinganalytics.com

Posted by Chris Clegg
Read How do you market a global brand?

Comment from Can a bank serve its community?

This is quite a business model here. An excellent combination of the way banks work and the way microfinance institutions operate. The trick lies in controlling greed, i do not think such a bank would be able to provide the kind of bonuses wall street does but then, it would not require a tax payer hurting bailout too.

The only chink in this armor seems to be the PE backing, one which will definitely lead to more profit mongering sooner or later. Think the greed will have to be controlled at multiple levels.

Posted by Vishesh S
Read Can a bank serve its community?

Comment from Do you need a nudge?

I have just finished reading Thaler interview and am impressed with how he can make it
so understandable for the everyday economist like me.

I have an interest in savings and investment and after reading the answer he gave to giving an example of how nudges work. I recognized myself when he said many people
just go with the flow and take whatever the default is.

I love the answer to politicians when he said If we don't like the way government is doing it then throw the bums out and elect who will do a better job.

Posted by James Hall
Read Do you need a nudge?

Comment from What is behavioral?

Tyler Cowen, economist and a blogger at Marginal Revolution has a new book, Create Your Own Economy. A review by the Enlightened Economist blog expounds on ideas raised by the book, including “people have extremely different modes of cognition and behavior, which behavioural economics entirely ignores. The limitations of behavioral economics stem from its lack of universality….There is, I think, good experimental evidence that some people do respond more like 'rational economic man' than others - and indeed that economists are more likely to fall into that category themselves.”

Posted by Qn Editorial Staff
Read What is behavioral?

Comment from Does money change your thinking?

GDP growth in the third quarter signaled an end to the recession. The fact that little has changed for many struggling Americans is evidence for some that GDP has outlived its use as a key economic indicator. The World radio program has coverage of the debate among economists on alternative measures.

Posted by Qn Editorial Staff
Read Does money change your thinking?

Comment from Do you need a nudge?

NPR has a story on the origins of behavioral economics with a look at the work of Thaler and Nobel laureate Daniel Kahneman among others.

Posted by Qn Editorial Staff
Read Do you need a nudge?

Comment from Do you need a nudge?

The FinanceProfessor blog has a video of a short talk by behavioral finance expert Shlomo Benartzi hitting a number of the key areas where people tend to make irrational economic choices. Richard Thaler is Benartzi’s partner in the Save More Tomorrow program.

Posted by Qn Editorial Staff
Read Do you need a nudge?

Comment from Do you need a nudge?

Good

Posted by kuntal shah
Read Do you need a nudge?

Comment from Do you need a nudge?

For more about Richard Thaler and Cass Sunstein's book Nudge visit the book's website or regularly-updated blog.

Posted by Qn Editorial Staff
Read Do you need a nudge?

Comment from What is behavioral?

Strategy and Business looks at managing with the brain in mind.

Posted by Qn Editorial Staff
Read What is behavioral?

Comment from Do you need a nudge?

The IMF's Finance and Development magazine has a profile of another of the founders of behavioral economics, Daniel Kahneman.

Posted by Qn Editorial Staff
Read Do you need a nudge?

Comment from Do you need a nudge?

A long article in Prospect covers the role that behavioral research is playing the British politics.

Posted by Qn Editorial Staff
Read Do you need a nudge?

Comment from Are we good at making choices?

For more on the SOM faculty involved in this discussion, you can visit their faculty web pages.
James Choi
M. Keith Chen
Judith A. Chevalier

Posted by Qn Editorial Staff
Read Are we good at making choices?

Comment from What is behavioral?

Watch Andrew Redleaf’s guest lecture on the efficiency of markets presented in Robert Shiller’s Financial Markets class at Yale University.

Posted by Qn Editorial Staff
Read What is behavioral?

Comment from What are you thinking?

For more on Robert Shiller see his SOM faculty page.

In addition, his Financial Markets class taught at Yale is available in its entirety online through Open Yale Courses. It includes a guest lecture by another Q6 contributor, Andrew Redleaf, talking about the efficiency of markets.

Posted by Qn Editorial Staff
Read What are you thinking?