Business & Entrepreneurship

ESG investing: Are your values truly reflected in your portfolio?

Katy Hill — Wed, 11 Dec 2024 15:27:46 +0000

ESG investing: Are your values truly reflected in your portfolio? Katy Hill Wed, 12/11/2024 - 08:27

Katy Marquardt Hill

Investors eager to align their portfolios with sustainability goals may be in for a surprise.

Researchers studying active U.S. stock mutual funds that claim to embrace environmental, social and governance principles found significant disparities in how these funds operate, revealing a tangled web of strategies that could leave investors questioning whether their values are truly reflected in their investments.

Simona Abis

“ESG labels often mean 100 different things,” said Simona Abis, assistant professor of finance at the Leeds School of Business. “Since we don’t agree on what they all mean, misunderstandings can arise, even when funds are not trying to mislead investors.”

The researchers, including Abis, Andrea Buffa, also an assistant professor of finance at Leeds, and Meha Sadasivam, a PhD candidate at Columbia University, aim to classify ESG funds more accurately by analyzing the investment strategies stated in mutual fund prospectuses.

From the vast pool of mutual funds that invest primarily in U.S. stocks and are actively managed—meaning a fund manager or team picks stocks and makes investment strategy decisions—the researchers identified funds with ESG-related strategies using a dictionary of ESG terminology. They then read each prospectus, a document that provides details about a potential investment, manually. In a working paper describing the study, the researchers categorized the funds into three types based on what they found:

Exclusionary. These funds exclude certain stocks that do not align with their ethical or values-based criteria. Through screening processes, they may eliminate companies with poor labor practices, for example, or those involved in fossil fuels, tobacco and firearms.
Impact. Funds in this category consider ESG factors, evaluating company stocks not just for their potential returns but for their impact on society and the environment. For example, they might prioritize companies that have strong sustainability practices or positive community engagement. These funds consider ESG factors above and beyond fund returns.
Opportunistic. While these funds also consider ESG factors, they do so only to improve their assessment of a company’s risk factors and/or its return potential. As a result, these funds may invest in companies with lower ESG ratings if they believe they will deliver higher returns.

The researchers found that only 20% of funds using ESG terminology genuinely qualify as impact funds that prioritize non-financial ESG goals, while the majority fall into the other categories.

The ambiguity in terminology used by so-called ESG funds could potentially mislead investors who believe they are supporting funds with a mandate to select holdings aligned with ESG principles, Abis said.

“The challenge lies not just in how funds are labeled, but in the very meanings we attach to those labels,” she added. “Without clear definitions, a fund claiming to focus on ESG might be interpreted in countless ways, leading investors to believe they are supporting impact-oriented initiatives when they might not be.”

ESG investing has experienced a surge in popularity over the past decade, significantly increasing the assets managed by these funds. ESG funds—meaning any funds mentioning ESG terminology in their prospectuses—represented about 4% of the total number of active equity mutual funds in 2015, managing less than 2% of the capital invested in this industry, according to the paper. After only seven years, ESG funds grew by a factor of 5, representing 22% of active equity mutual funds and managing almost 20% of the invested capital.

However, the portion of capital managed by impact funds—those preferring companies with a better societal and/or environmental impact—has dwindled from 40% of the assets managed by funds mentioning ESG terminology in their prospectuses in 2015 to just 6% in 2022, according to the researchers.

Opportunistic strategies

The majority of new ESG funds are now classified as opportunistic, indicating a more flexible approach, or as “mention-only” funds, which often begin as traditional non-ESG funds and later incorporate ESG considerations into their investment processes.

“This contrast highlights a key challenge: When we hear about a surge in ESG investment, we might mistakenly believe that it’s all about saving the planet. In reality, many funds are simply integrating ESG factors for risk management rather than pursuing a dedicated impact agenda," Abis said.

In recent years, the U.S. Securities and Exchange Commission has been developing regulations aimed at increasing transparency regarding ESG claims made by investment funds. These efforts include clearly defining “ESG fund" and ensuring that funds accurately communicate their investment strategies related to environmental, social and governance factors.

Despite this progress toward greater clarity and standardization, Abis said increased scrutiny around how ESG investing is defined and delivered is still necessary. “Even with clearer regulations, if funds do not adopt standardized practices for measuring ESG impact, accountability will remain a significant issue,” she said.

She added that responsibility also falls on investors, who “often overlook fund prospectuses, which contain crucial information about how a fund approaches ESG.” By taking the time to understand a fund’s narrative and look beyond superficial labels, she said, investors can empower themselves to make more informed decisions.

A new study reveals significant disparities among funds using ESG labels, challenging investor perceptions.

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Colorado’s economic forecast for 2025: Slower growth amidst uncertainty

Katy Hill — Mon, 09 Dec 2024 15:16:48 +0000

Colorado’s economic forecast for 2025: Slower growth amidst uncertainty Katy Hill Mon, 12/09/2024 - 08:16

Katy Marquardt Hill

Despite a complex national and global economic landscape, Colorado’s economy will continue to grow in 2025, according to the 60th annual Colorado Business Economic Outlook, released Monday by the Business Research Division at the Leeds School of Business.

Richard Wobbekind

The forecast, developed by the Business Research Division in collaboration with the State of Colorado and insights from more than 140 leaders across the business, education and government sectors, projects job growth of 1.2% in 2025. This would mean an additional 36,700 jobs throughout the state, with 10 of Colorado’s 11 major industries expected to add jobs.

Several factors are contributing to Colorado’s growth, including a strong labor market, population expansion and continued investment in key industries. However, after being a leading economy in recent years, Colorado's economy is in a slowing trend, with more moderate employment and GDP growth on the horizon.

“Following the great financial crisis until 2023, Colorado was one of the top-performing state economies. More recently we have moved more to the middle of the pack, perhaps suggesting that we are leading in the slowdown as well,” said Richard Wobbekind, senior economist at the Leeds School of Business and faculty director of the Business Research Division.

Slower growth could become the new norm for Colorado, as population growth, particularly from net migration, continues to slow, posing challenges for labor force and job expansion.

Brian Lewandowski

“One of Colorado's challenges is the supply of labor," said Brian Lewandowski, executive director of the Business Research Division. "Slow net migration coupled with the wave of retirements means that labor shortage will be an ongoing phenomenon in 2025."

Colorado added an estimated 46,800 jobs in 2024, reflecting growth of 1.6% over 2023. Jobs are expected to grow at a more modest pace in 2025, with all industries except information projected to add jobs, led by education and health services, government, and construction.

Here’s a closer look at industries that will likely grow in 2025.

Education and health services: This sector is expected to continue growing in 2025 at 2.3% as the demand for health care services increases with Colorado's aging population. Challenges in health care include potential increases in uninsured patients due to Medicaid redeterminations. Education will also face difficulties as schools adjust to the evolving needs of online learning and fluctuating enrollment numbers.

Government: Government jobs are projected to increase by 1.3% in 2025, recovering from pandemic-related losses. Local government positions are expected to rise by 2.1%, while state government employment remains flat and federal government jobs see modest growth.

Construction: After a slight decline in 2024, construction is expected to rebound with an increase of 6,000 jobs in 2025. This is largely due to a rise in single-family home permits.

Trade, transportation and utilities: As the largest provider of jobs in Colorado, this sector is projected to grow by 0.3%, adding 1,500 jobs. Factors impacting growth include a slowdown in retail trade, a shift in spending from goods to services and the stabilization of warehouse jobs after pandemic-era spikes.

Financial activities: This sector is expected to grow by 1.4% in 2025, with commercial banking showing strength and commercial real estate improving. The forecast calls for the addition of 2,600 jobs.

Professional and business services: With Colorado’s reputation for innovation and entrepreneurship, this sector is forecast to grow by 1.6%, reaching 303,600 jobs in 2025. Although growth has slowed in recent years, it remains one of the state’s key economic drivers. Colorado’s position as one of the most innovative, educated and entrepreneurial states bodes well for the sector’s future.

Natural resources and mining: Although small in terms of total jobs, this sector contributes significantly to Colorado’s economy. It’s expected to grow by 4.4% in 2025, adding around 1,000 jobs, as modest growth in energy production should boost demand.

Colorado’s population

Following rapid expansion during the 2010s, Colorado’s population growth, especially from net migration, is slowing.

The population in 2025 is expected to grow 51,000, following an increase of 43,000 in 2024. Most of this growth is still driven by births, with deaths returning to pre-pandemic levels. Net migration will also contribute to the rise.

Though long-term population growth in Colorado is expected to slow due to challenges like declining birth rates, an aging population, and increased competition for labor, the state will likely continue to outpace the national average, growing at about twice the national rate.

Trends and challenges

The report highlights several key trends and challenges that will shape Colorado's economic outlook in 2025:

Regulatory and policy uncertainty. There are several economic uncertainties tied to the policies of the incoming administration. The committee expects President-elect Donald Trump to follow through on his campaign promises, particularly around taxes, tariffs and immigration. Tax cuts could boost the economy in the short term by increasing demand, but the impact depends on their size and how they’re financed. Tariffs may create inflationary pressures, and the new immigration policy could have an impact on the labor force.

Worker shortage: Colorado’s labor force participation rate remains below pre-pandemic levels, with many jobs going unfilled. The state’s labor force participation rate was 62.6% in October 2024, compared to 63.3% in January 2020.

Artificial intelligence: AI is rapidly transforming industries, and Colorado is taking a leading role in regulating its impact. The Colorado Artificial Intelligence Act, passed in May 2024, is the first comprehensive state law in the U.S. regarding AI development and deployment. The law, which takes effect in February 2026, aims to prevent algorithmic discrimination in AI systems used for job screening.

Housing: Higher mortgage rates and limited housing supply continue to pose affordability challenges, especially for workforce housing.

In 2025, Colorado job growth is projected at 1.2%, with most industries adding positions, according to the Leeds School’s newly released Colorado Business Economic Outlook.

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Finances a mess? Your shopping mentality might be the problem

Katy Hill — Mon, 02 Dec 2024 15:52:30 +0000

Finances a mess? Your shopping mentality might be the problem Katy Hill Mon, 12/02/2024 - 08:52

Katy Marquardt Hill

When you shop, do you favor quantity or quality? Your approach to spending has big implications for your overall financial health, according to a new study forthcoming in the Journal of Consumer Research.

Rodrigo Dias

It finds that consumers generally fall into two camps: those who tend to invest in fewer higher-quality items and those who buy a larger amount of cheaper goods. Your disposition toward quality or quantity can predict a host of financial outcomes, including your debt and savings levels.

“Your preference for quality or quantity significantly influences not just what you buy, but how well you manage your finances overall,” said Rodrigo Dias, lead author of the study and assistant professor of marketing at the Leeds School of Business.

Encompassing more than 24,000 participants and 32 studies, the research found that shoppers who prioritize quantity tend to spend more, borrow more and accumulate more debt than those who favor quality.

The spending spectrum

Consumers who lean toward quantity often find themselves spending more and saving less, Dias said.

One reason for that is expense-tracking. “The more you track your spending, the less you spend,” Dias said. “Higher-quantity people are always buying and not as motivated to keep track of their purchases. And if they don’t track, they end up spending more.”

The research indicates that those who consistently prefer quality across their purchases tend to manage their finances better than their quantity-focused consumers.

These consumers spend less, in part, because they tend to consider alternative ways of spending their money along with potential benefits and drawbacks—what’s called “opportunity cost”—more so than quantity-focused shoppers.

Quantity drives debt

Consumers who prioritize quantity take on more debt to support their higher spending, Dias noted.

The researchers also found those who prefer quantity showed a concerning pattern of recurring debt accumulation over time. “A worrisome finding is that quantity-focused consumers allocate less money toward paying off their debt,” Dias said. “As a result, over time, they are saddled with greater debt even in categories for which initial borrowing was the same.”

An example of this pattern is the association with student loan debt. By analyzing a dataset with a representative sample of over 10,000 U.S. consumers, the researchers found that those who preferred quantity owed about $43,000 in their student loans, while those who preferred quality owed about $38,000. This finding held even after the researchers accounted for a host of factors that may affect consumers’ debt levels, such as income, age, education and marital status.

Seeking quality, choosing quantity

Many consumers struggle with a self-image that doesn’t align with their spending habits.

"People often think, 'I only buy quality clothes,' yet they may purchase cheaper household items without realizing it. This discrepancy between how they rationalize their choices and what they actually buy is striking," Dias said.

The researchers found that people generally do not exhibit a mix of the two shopping habits. Dias pointed out a fascinating consistency in the study. "If you look at the data, it becomes clear: Quality people tend to prefer quality across the board, and quantity people do the same.” Over time, consumers don’t tend to change their preferences, he added.

And while many consumers aspire to favor quality, some openly admit to preferring quantity. "About 25% to 30% of people tend to prefer quantity over quality," he said.

The research also uncovered some troubling personality traits linked to a preference for quantity. "We found that compulsive buying—shopping to cope with negative feelings—is associated with a preference for quantity over quality. Materialistic consumers also prioritize quantity, equating possessions with their self-worth."

In addition, the research established a significant connection between quality-quantity preferences and actual spending behavior. Those who preferred quantity spent an average of $89 in a shopping simulation, compared with $79 for those who favored quality. “This shows that preference directly translates into spending. The more you lean towards quantity, the more you’re likely to overspend,” Rodrigo noted.

Understanding your spending habits

Since the study finds that consumers generally don’t change when it comes to spending patterns, it’s important to be self-aware since “understanding your own spending habits can lead to smarter financial choices," Dias said.

The researchers developed a "quality-quantity trade-offs" scale, which can help people assess their spending tendencies.

Are you a quality or quantity shopper?

According to the researchers, the following questions will guide you in assessing your tendencies and preferences. Rate yourself on a scale of 1 = strongly disagree and 7 = strongly agree. The average score of survey respondents follows each statement.

When I shop for items, quantity is more important than quality. (2.95)
When I am buying things, I prefer to buy more items, even if it means they are slightly lower in quality. (3.06)
If I had to choose between quality and quantity, I’d choose quantity. (2.87)
I usually prefer to buy more of something, even if that means giving up on quality. (2.95)

Based on the study’s findings, here are some tips for consumers to take control of their finances:

Reflect on your purchases. Do you typically buy fewer, higher-quality items, or do you gravitate toward deals and bulk purchases? Recognizing your natural inclination can help you make more conscious spending choices. “In hindsight, a lot of people realize that they're just buying stuff and not getting a lot of joy out of it,” Dias said.
Understand your emotional triggers. Recognize how emotional satisfaction from purchases can lead to impulsive buying and financial strain.
Consider the long-term costs. While buying in bulk or opting for cheaper alternatives might seem appealing in the moment, it could lead to greater spending in the long run. Higher-quality items often last longer, potentially saving you money over time.
Shop savvy. Be critical of promotions. If you prefer quality, don’t let quantity discounts sway your decisions unless it aligns with your values. “Recognizing these emotional connections can help you make smarter choices,” Dias said.

Consumers who prioritize quantity over quality in purchases tend to spend more, borrow more and accumulate more debt, a new study shows.

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CUriosity: Should you trust 5-star reviews?

Daniel William Strain — Fri, 15 Nov 2024 22:49:50 +0000

CUriosity: Should you trust 5-star reviews? Daniel William… Fri, 11/15/2024 - 15:49

Katy Marquardt Hill

In CUriosity, experts across the ��ƷSM��ӰƬ campus answer pressing questions about humans, our planet and the universe beyond.

As the holiday shopping season ramps up, Nicholas Reinholtz, assistant professor of marketing in the Leeds School of Business, delves into the question: “Should you trust 5-star reviews?”

Credit: Adobe Stock

There’s no understating the influence of online reviews on consumers’ purchase decisions. Nine out of 10 say they consider reviews before making a purchase, and 45% simply won’t purchase a product if it has no reviews available, according to recent research from consumer research firm PowerReviews.

But there are limitations to relying solely on user ratings and online reviews to evaluate product quality, according to Nicholas Reinholtz, who researches consumer behavior including financial decision-making, product and price search.

Reinholtz sat down with ��ƷSM��ӰƬ Today to discuss how consumer expectations and other factors affect ratings and how biases in rating systems can lead to inaccurate assessments—and potentially bad purchases.

Previously in CUriosity

Can humans handle the stress of traveling to Mars?

Should consumers be cautious and avoid getting too swept up in reviews?

My co-author Matt Meister, a former Leeds PhD student and current assistant professor of marketing at the University of San Francisco, and I have looked at Airbnb ratings, and we have a second paper that looks at ratings from REI. One thing both papers have in common is this idea that expectations can influence ratings.

So if you go on to Amazon and buy a $500 pair of headphones, and if there are any problems at all, you give it one star. You say, ‘I can't believe I paid $500 for a pair of headphones and there is a crackle.’ Unacceptable, right? Whereas if you paid $5 for the headphones, you give it five stars because they work.

That expectation should influence ratings does make sense. You can't have a five-point scale that encompasses the entire spectrum of human experience, right? Ratings are relative to the expectations you have going into the product purchase. There are multiple issues with that, and one of them is that when people are looking at products, they don't account for the fact that ratings reflect expectations.

With our research on Airbnb ratings, the point that we're trying to make is that it's totally fine and reasonable that people would give ratings that reflect their expectations. But it's problematic if future consumers don't recognize the role of those expectations and adjust for them accordingly.

Airbnb has this status symbol where they label certain hosts ‘superhosts.’ We look at Airbnbs that are superhosts in some time periods and not superhosts in other time periods, and we find that they get better ratings during the periods where they're not labeled a superhost. So presumably people are going into the experience saying, ‘Oh, I'm staying at a superhost, and so the same experience is rated slightly worse against those expectations.’

Are star ratings meaningless?

We should have a mantra: When you're on Amazon, more stars doesn't mean better. I don't think star ratings are useless because they can, particularly coupled with text reviews, identify truly problematic things, like if something gets a terrible rating.

I think if you're using ratings to compare, say, a product that looks better, but it's only 4.7 stars, whereas another similar product maybe looks a little bit worse, but it's 4.9 stars. Those are the types of situations where I think we really need to exert caution for a variety of reasons instead of just blindly following the ratings.

Nicholas Reinholtz

If we rate experiences, it's really hard to disentangle contextual influences from intrinsic ones.

For example, we looked at ratings for winter jackets on REI and merged those ratings with weather data. It turns out that people rate winter jackets better on warmer days and worse on colder days. The reason we think that happens is that you go outside on a super cold day and you're cold, and when you rate the jacket you're wearing, you're like, ‘Well, I'm cold, so this jacket must not be that great.’ Whereas you go out on a warm day, and the jacket feels great, right? It's perfect. You're totally warm.

What’s something surprising you’ve found in your consumer ratings research?

The thing that surprised me the most is how uncritically people accept reviews as a measure of quality. We had a thought experiment related to headphones. We asked study participants to imagine they are looking at two pairs of headphones online. One is a $500 pair of headphones that has a 4.6 rating. The other is a $5 pair of headphones with a 4.8 rating. We asked: Which of these two pairs of headphones do you think are higher quality? We were convinced that everyone would point to the $500 pair. It turns out only about 50% of people did. The other half endorsed the idea that the $5 headphones were higher quality.

As a researcher and expert on the topic, how do you personally use reviews?

We always like to think of ourselves as more savvy. There's a powerful draw of reviews, and I still catch myself looking at them and being like, ‘I think I'll like it, but, you know, it's a 4.7. Maybe there's something wrong with it.’ I was buying carabiners the other day, and I found myself looking for higher-rated carabiners—4.7 versus 4.9. And then I had to be like, ‘Come on, don’t do this.’

It’s a tough world out there for a consumer. And you don't have many people whose incentives are aligned with yours. These days I find myself gravitating more and more to brands, which is something I didn't do as a younger person, because I feel like you can build trust in brand quality, unlike picking a product on Amazon whose name you’ve never heard of and sounds like alphabet soup.

Consumers should proceed with caution when it comes to online ratings and reviews, according to researcher Nicholas Reinholtz.

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Your brain on Black Friday

Katy Hill — Wed, 13 Nov 2024 22:30:43 +0000

Your brain on Black Friday Katy Hill Wed, 11/13/2024 - 15:30

Katy Marquardt Hill

Holiday shopping season can turn the most rational consumers into impulsive shoppers. According to Ying Zeng, an assistant professor of marketing at the Leeds School of Business who studies consumer decision-making, a complex web of psychological triggers can send us into a buying whirlwind.

��ƷSM��ӰƬ Today sat down with Zeng to discuss the cognitive biases, social pressures and marketing tactics that drive the impulse to splurge and how consumers can navigate the shopping season without losing their sanity—or savings.

What influences shape consumer emotions and behaviors during major shopping events like Black Friday or Cyber Monday?

Mental accounting is one factor. Consumers may have different mental "accounts" for spending. Holiday shopping often falls under "one-time big purchases," making consumers less price-sensitive as they may perceive it as a special occasion expense outside of their regular budget. There is also “future discounting.” Consumers tend to downplay the effort required to earn money in the future, justifying overspending by believing they can easily make up the difference later. They may discount the future effort needed and overlook the true cost of their purchases.

There are also emotional aspects. One example is “sacred purchases.” Events like holiday gatherings hold sentimental value, leading consumers to prioritize the emotional significance over cost-benefit calculations. They may view spending on these events as an expression of love or family bonding that transcends monetary value and is thus less sensitive to overspending.

Finally, there is social influence. The hype and crowds associated with holiday sales create a fear of missing out. Shoppers may feel pressured to buy, even if they don't need the product, due to the perceived scarcity and social pressure from others.

Following the election, some younger consumers have been ‘doom spending,’ particularly on self-care products. Are similar psychological factors at work?

I think "shopping therapy" or cathartic shopping is slightly different from holiday shopping. Shopping therapy refers to using shopping to reduce stress, so it is more prevention-focused, meaning that it helps people recover from negative feelings. Holiday shopping is usually more promotion-focused, meaning that the goal is to build a more desired lifestyle or to create better memories during holidays. It helps create positive feelings beyond the status quo.

How do retailers tap into consumer psychology to attract shoppers during holiday sales events?

Retailers tend to center holiday sales around discretionary items like electronics, clothing and fashion. These products appeal to consumers' desire for an enhanced lifestyle, so using social media and social influence is effective for promotion.

Retailers leverage sales and promotions during peak demand periods, often at the end of the month or year when revenue pressure is high. By creating a sense of urgency and scarcity through limited-time offers, they tap into consumer psychology to drive sales.

What strategies can help consumers make more thoughtful and informed decisions during major shopping events?

Make future pain present. Visualize the effort required to earn the money for a purchase by considering how many hours or days of work it would take. Shift your mindset from a future perspective to a present one to better assess the true cost.

Also ask yourself if you would still want the product without the social pressure or hype surrounding it. Consider whether you truly desire the item or if it's merely a result of external influence.

��ƷSM��ӰƬ Today regularly publishes Q&As with our faculty members weighing in on news topics through the lens of their scholarly expertise and research/creative work. The responses here reflect the knowledge and interpretations of the expert and should not be considered the university position on the issue. All publication content is subject to edits for clarity, brevity and university style guidelines.

��ƷSM��ӰƬ marketing Professor Ying Zeng examines why consumers get swept up in holiday shopping madness and what they can do to shop smarter.

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How AI can enhance the accuracy of eyewitness identification

Katy Hill — Thu, 07 Nov 2024 16:11:49 +0000

How AI can enhance the accuracy of eyewitness identification Katy Hill Thu, 11/07/2024 - 09:11 Katy Marquardt Hill

Imagine a robbery has occurred, and police ask witnesses to identify a suspect from a lineup. “I remember his eyes,” one witness says, while another simply states, “I recognize him.”

The first witness will be viewed as less trustworthy due to a cognitive bias known as the featural justification effect. This has to do with how people interpret confidence and memory reliability in the context of an eyewitness's lineup identification. Research shows that eyewitnesses who provide detailed descriptions of features raise doubts, while general recognition statements tend to be viewed as more accurate.

Now imagine that an artificial intelligence system analyzes the witness statements before they’re evaluated by law enforcement. Using natural language processing, it assesses the language used by each witness from a neutral perspective, uninfluenced by a potential human bias resulting from the featural justification effect. The AI can also provide numeric scores based on the likelihood of accuracy, helping investigators focus on statements that have a better chance of being accurate.

David Dobolyi, assistant professor of organizational leadership and information analytics at the Leeds School of Business, recently co-authored a study in the Journal of Applied Research in Memory and Cognition that explores how advanced AI tools can enhance understanding of witness statements, mitigate bias and improve decision-making in law enforcement contexts.

Dobolyi said AI and natural language processing can provide deeper insights into eyewitness reliability. "The traditional analysis has been basic—just counting words. But with recent advancements in AI, we can assess statements in a much more sophisticated way," he explained.

The study, led by Lauren Kelso, a graduate student in the University of Virginia’s Department of Psychology and additionally co-authored by Jesse Grabman, assistant professor of psychology at New Mexico State University, and Chad Dodson, psychology professor at the University of Virginia, focuses on how AI can help jurors and law enforcement assess the confidence and accuracy of eyewitnesses.

"Just because someone says they’re confident doesn’t mean they’re right. The worst mistakes come from highly confident witnesses who are actually wrong," Dobolyi said.

In the study, 1,010 participants evaluated a series of eyewitness identifications, each accompanied by a confidence statement. Participants were divided into four groups: One received no AI assistance, while the others were provided with different types of AI support, including predictions about the accuracy of identifications and graphical explanations. Each group assessed the likely accuracy of the eyewitness’s identification based on either a featural or recognition justification, allowing researchers to analyze how AI assistance influenced their judgments.

Results indicated that AI assistance significantly reduced the featural justification bias among participants who found the AI helpful. Those who perceived the AI as very useful tended to rate the accuracy of both featural and recognition statements similarly, effectively overcoming the bias. In contrast, participants who did not view the AI as beneficial continued to exhibit the bias.

While Dobolyi cautioned against blind trust in AI, he said he sees its potential to support more informed decisions in legal contexts. "We want tools that can help people make better, less biased decisions—if we can confirm their accuracy," he said.

As the research evolves, Dobolyi said it’s important to emphasize transparency in AI decision-making. "It’s essential that we understand why an AI makes a recommendation, especially in high-stakes situations like eyewitness testimony," he said.

New research examines how natural language processing tools can help mitigate bias in eyewitness lineup statements.

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A spinout that revolutionized protein discovery for insights into disease treatment

Megan Maneval — Mon, 04 Nov 2024 18:52:39 +0000

A spinout that revolutionized protein discovery for insights into disease treatment Megan Maneval Mon, 11/04/2024 - 11:52

SomaLogic is among three spinout companies founded by ��ƷSM��ӰƬ Professor Larry Gold and has significantly impacted global health care research and diagnostics.

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When will Singles’ Day find its place in the US?

Katy Hill — Thu, 31 Oct 2024 16:40:19 +0000

When will Singles’ Day find its place in the US? Katy Hill Thu, 10/31/2024 - 10:40 Katy Marquardt Hill

Singles’ Day is upon us. Never heard of it? Nov. 11, chosen because the date represents four ones standing together, is a shopping extravaganza in Asia featuring weeks of massive discounts, promotions and flash deals that span from tech to fashion.

“Singles’ Day in Asia is like the overlap in the Venn diagram of Black Friday and Valentine's Day,” said Peter McGraw, a behavioral economist and professor at Leeds School of Business. “It feels very Black Friday with huge sales and doorbusters promotions. Yet it also has a celebratory element to it; a proud celebration of singlehood.”

Originating in 1993 as an informal celebration of single living at a Chinese university, Singles’ Day has evolved into one of the world’s largest online shopping events, with two of China’s largest e-commerce companies generating estimated sales of $156 billion in 2023 (by comparison, Black Friday and Cyber Monday online shoppers spent $22 billion in 2023.)

“Singles’ Day (in Asia) is beyond anything that we can imagine in the United States,” McGraw said, adding that it’s a powerful demonstration of the buying power of singles.

So why aren’t more U.S. retailers on board?

“My prediction is it's going to go from almost nothing to everywhere,” McGraw said. “Probably not this year or next year. But soon enough, the rise of singles will be impossible to ignore. For U.S. companies, suddenly there's going to be an all-hands-on meeting: Singles’ Day is coming. What are we doing about it? ”

Overlooked business opportunities

Despite the fact that 50% of U.S. adults today are single, 28% live alone and 25% of millennials are projected to never marry, this demographic shift is largely overlooked by U.S. retailers, McGraw said.

“You're seeing a rise in singles throughout the world, and Asian companies are all in on it—and not just as a holiday promotion,” he said. “There's a lot of innovation in product design and services, from right-sized packaging on groceries to single-seat cinema aisles and one-person karaoke booths. It’s shocking to me that American companies are asleep at the wheel with regard to this phenomenon.”

There are several possible reasons, according to McGraw. The upper echelons of American businesses are largely made up of men with traditional family structures, so they are not seeing this emerging trend. “U.S. companies haven’t noticed the competitive advantage yet,” he said.

Singles’ Day also falls on Veterans Day, observed annually on Nov. 11 in the U.S. “That doesn’t help, but it’s not a deal-breaker. The two are not mutually exclusive,” McGraw said.

“If you're a business and you want to connect with this emerging demographic, it’s easy to start by building it into your media strategy,” he said. “You don't have to do a major pivot. Start by messaging this overlooked demographic.”

For McGraw, the untapped potential of the solo consumer market is not just a missed opportunity. It represents a chance to truly acknowledge and celebrate the individuality of singles.

"Singles rarely see themselves thriving in the media—they’re cast in sad songs or as characters missing something. An encouraging social media post or discount code acknowledges them and goes a long way, giving companies a low-cost way to build goodwill with a huge, often overlooked demographic."

With 25% of millennials projected to never marry, independence is becoming profitable. It’s time that U.S. businesses adapt to this growing trend, according to ��ƷSM��ӰƬ marketing professor Peter McGraw.

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The 5-day office mandate: A tipping point for employee well-being?

Anonymous — Wed, 23 Oct 2024 16:38:36 +0000

The 5-day office mandate: A tipping point for employee well-being? Anonymous (not verified) Wed, 10/23/2024 - 10:38

Katy Marquardt Hill

Large companies like Amazon and Dell are enforcing a return to office five days a week, a significant moment for many of their employees. More than a logistical change, return-to-office mandates raise important questions about the balance between organizational goals and employee well-being.

Christina Lacerenza

Some employees may face unique challenges that a rigid return-to-office policy does not address. Meanwhile, companies risk alienating talent that values flexibility and work-life balance. They could also disproportionately impact those already facing systemic barriers in the workplace, such as racial and ethnic minorities, individuals with disabilities and caregivers.

Christina Lacerenza, assistant professor in the Organizational Leadership and Information Analytics division at the Leeds School of Business, teaches courses on teamwork and collaboration, organizational development and organizational theory. Lacerenza sat down with ��ƷSM��ӰƬ Today to discuss the implications of return-to-office mandates for employee dynamics.

What are the potential impacts of returning to the office full time on employee morale?

The return to the office will likely have both positive and negative effects on employee well-being. On one hand, it could potentially lead to an increase in relationship development among employees, particularly in developing affective trust, which is harder to establish in purely virtual settings. Employees may find it easier to connect on an emotional level, which can enhance team dynamics and overall morale.

However, shifting from a flexible remote work environment to a more structured office setting can create challenges. Moving from a space that has less boundaries around work arrangements to a more structured work environment can be hard for employees to successfully navigate. Employees may feel that they're losing their sense of autonomy and empowerment as well as ownership of how they're scheduling their day.

Overall, there are pros and cons to working remotely and working in-person—there’s a recent meta-analysis of 108 studies that looks at some of these effects. It’s important to carefully consider these factors and be mindful when planning your work arrangement.

How might these mandates affect women and underrepresented communities?

This has been a topic of much interest lately and so there is some work discussing how remote versus in-person work arrangements impact women and other minorities. Remote work can be somewhat of a double-edged sword for women where it enables women—and working parents more generally—to better navigate job demands and family demands, but it can also have a negative impact on professional or career development. There is some work discussing how mentorship can suffer when working remotely because it can be more challenging to establish high-quality relationships.

In terms of improving career trajectory, women also benefit more from smaller, tight-knit support groups, whereas men prosper from a large number of contacts (or “weak ties”). Establishing these packs, as I like to call them, might be easier in an in-person environment.

It also depends on career level, too. If you are more junior, you might want to work in an in-person environment so you have easier access to mentorship, sponsorship and support. Your first job out of college, for example, should probably include some element of in-person work.

If you are more senior, though, working remotely can be helpful—especially as a woman—because you’re able to focus more on your individual work, be more productive and also better navigate multiple demands. Because there are benefits to both working remotely and working in the office, I’m a strong proponent of the hybrid work model.

What are the potential long-term effects of these mandates on workplace culture?

We may see greater homogeneity in work preferences and styles among organizations depending on their mandated work arrangement. Employees who prefer flexible work arrangements are going to select out of companies that don’t offer those, while employees who value in-office work will seek positions at companies with more structured policies.

The future will likely also look more fluid than it has in the past due to changes in technology as well as changes in employee needs. I also think this flexibility is influenced in part by shifting employee preferences as the generational makeup of the workforce evolves.

How can employees establish a productive workflow when returning to the office?

Having some ownership around what your day looks like is really important, especially as it relates establishing a “flow” mindset. That's when we find a lot of meaning in what we're doing. It's when creativity just flows naturally. So it's important as an employee to be more intentional about creating an environment where you can get into that flow state.

You also want to achieve a team level of flow if you are collaborating, demonstrating “burstiness,” where you're able to create a high level of psychological safety within your team and each individual feels they can speak up without fear of judgment. Effective ideas and discussions are flowing rapidly and effortlessly.

If you’re an employee returning to the office full time, you have to be more intentional about creating the space for burstiness or flow to happen. Working from home offers fewer distractions, making it easier to enter a flow state.

How can companies ensure their return-to-office policies are inclusive?

If your company aims to maximize inclusivity, allowing people to show up in the way that best suits them would be the gold standard. The data suggest having a hybrid approach to your work arrangement is an effective solution because it allows you to harness the benefits of working from home and working out of the office and provides employees with ownership around how they complete their work.

But from an employer perspective, it's a lot harder to manage because the structure is fluid and you are essentially managing two different types of environments at the same time. This is why I think companies are pushing back—because it takes a lot of resources, and there's a lot of onus on leadership in a hybrid work model.

In companies with stricter work arrangements, leaders need to consider whether they are creating policies, practices and procedures that allow employees to feel like they belong and that they're able to bring their unique strengths to the table. Inclusion involves achieving a balance between the two—having a sense of belonging as well as uniqueness. With a strict policy around how employees show up and complete work, uniqueness might be at risk. So finding ways that you can allow your employees to demonstrate authenticity and contribute in a way that's unique to them is going to be really important.

As companies mandate full-time office attendance, Professor Christina Lacerenza shares her take on the implications for employee well-being and inclusivity.

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Posting about politics? It may cost you a job

Anonymous — Tue, 22 Oct 2024 13:41:01 +0000

Posting about politics? It may cost you a job Anonymous (not verified) Tue, 10/22/2024 - 07:41

Katy Marquardt Hill

If you’re applying for a job, think twice before posting politically charged content on social media.

Jason Thatcher

As the political landscape in the U.S. becomes increasingly polarized, contentious posts and heated debates on social media are reaching far beyond the online realm. They now profoundly affect the hiring process.

Recent research from Jason Thatcher, professor of organizational leadership and information analytics at the Leeds School of Business, indicates that a person's political views, as expressed online, can significantly influence their employability.

“Your political orientation as a self-disclosed characteristic is being seen more and more like a personality trait among potential employers,” Thatcher said.

Social media has long been a tool for vetting job candidates. According to a 2018 CareerBuilder survey, 70% of employers said they researched potential job candidates on social media, and 57% of them found content that led them to reject an applicant. But the main reasons for rejection were inappropriate photos; posts about drinking, using drugs or criminal behavior; discriminatory comments related to race, gender or religion; lying about qualifications and poor communication skills. Politics didn’t make the list in 2018.

Given deepening political tensions in the U.S., Thatcher is currently researching how social media posts about polarizing political topics, particularly immigration, can affect whether a job applicant secures an interview. Initial findings suggest that such posts can overshadow a candidate's relevant qualifications, making an interview less likely.

“If you post a really inflammatory comment about immigration, be it conservative or liberal, if I'm on the hiring side, I sometimes ignore all the other information that I find about your ability to do the job,” he said.

Thatcher’s research team chose to focus on immigration because it’s a highly divisive topic, but he said there are others that would likely produce similar results.

“I would suspect the Jan. 6 invasion of the U.S. Capitol, because it violated so many norms, could be a really problematic topic. Abortion is also a really tough issue,” he said. “Frankly, I think we all agree to disagree on these issues. We recognize people have different points of view. But it's the rhetoric and venom tied to them that makes them particularly inflammatory.”

Thatcher said sharing divisive political views online signals to employers that a candidate may be hard to work with or is going to pick a fight. His advice for job seekers? “Make everything private for the next six months...and scrub your last eight years if you have to.”

The broader implications of this research are stark: Biases inevitably arise as hiring managers pick up on political cues from job candidates, Thatcher said.

Political affiliation isn’t a protected class under federal law, although some states including California, Louisiana and South Carolina prohibit some form of political affiliation discrimination in the private sector. Others, including Colorado, offer limited protections on “political activity,” such as attending a rally or signing a petition. In some states, although not many, refusing to hire someone because their social media activity reveals they support a certain candidate for president could be considered illegal.

“Ethically, politicized information should not affect your opportunities in the workplace,” Thatcher said, adding that employers should judge signs of character based on the interview. But the reality, he says, is “what you post will affect your opportunities.”

How doxing affects hiring

Thatcher’s research also examines how doxing—in which private or sensitive information is maliciously shared online—also poses a serious risk for job candidates.
In a recent study in the Journal of Applied Psychology, he and other researchers looked at how job candidates' political affiliations and online information, including information obtained through doxing, can sway potential employers’ perceptions.

For instance, a politically contentious Facebook post could be anonymously submitted to an employer to sabotage a job candidate's chances. This trend has become increasingly concerning as doxing incidents rise, Thatcher said. According to the Anti-Defamation League, 27% of American adults have experienced severe harassment online, which includes doxing.

In the study, participants were asked to review fictional resumes for a managerial position alongside either positive or negative political content linked to job candidates. When the information was obtained through doxing, participants exhibited increased suspicion toward the candidate, suggesting a lack of trust in victims of doxing compared to those evaluated through traditional human resources screenings. This led to concerns about the candidate’s potential to represent the organization well and fears of public retaliation.

“The mere fact that that content exists...results in employers looking at you with greater suspicion," Thatcher said.

He added that doxing (short for “dropping documents”) can have long-term impacts on your employability and emphasized: “It can affect whether you can ever find work again.”

Advice for job seekers

The implications of this research are clear: Job applicants should be cautious about politically provacative social media posts. In turn, Thatcher said, organizations need to limit social media screenings to professional platforms like LinkedIn, where they are most likely to find job relevant information.

Here’s what job seekers should do:

Be prepared for screening. Given that more than two-thirds of employers say they screen potential job candidates on social media, be ready. Clean up your social media presence well before starting your job search.
Be prepared for the unexpected. You never know who may approach potential employers with information you’ve posted—or the spin they will put on that information if it is a dox—so prepare to answer uncomfortable questions.
Limit personal information. Once something is posted, you lose control over how it may be used. Be careful when posting pictures and content that disclose information about your family and friends or where you live.
Always consider how your posts might make others feel. It’s likely OK to post political content if you use a measured tone, Thatcher said, but “it’s more problematic when you post negatively about people who don’t share your opinion or party affiliation.”
Actively manage your online presence. Make sure your Facebook, Instagram and other social media profiles are set to private. And when it comes to job searching, remember: “Getting your foot in the door gets harder if you post politicized content,” Thatcher said.

Employers have been screening applicants on social media for years, but political posts weren’t what they were looking at—until now, research finds.

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The 5-day office mandate: A tipping point for employee well-being?

What are the potential impacts of returning to the office full time on employee morale?

How might these mandates affect women and underrepresented communities?

What are the potential long-term effects of these mandates on workplace culture?

How can employees establish a productive workflow when returning to the office?

How can companies ensure their return-to-office policies are inclusive?

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Posting about politics? It may cost you a job

How doxing affects hiring

Advice for job seekers

Off