April 19, 2024

Shortcuts: Sometimes Second-Best Makes a Better Role Model

Here’s something to think about. It may not be A-Rod’s drug use or lying that should preclude him from being a role model. It’s his very success.

Recent research into role models says we may be choosing the wrong people to emulate, and that could be hurting us professionally.

“The more exceptional performers are, the less we may learn from them,” said Chengwei Liu, an assistant professor of strategy and behavioral science at the University of Warwick in Britain.

In fact, he said, we may do better to look to solid workers who aren’t as flashy as those at the top, but consistently perform well.

Professor Liu and his co-author, Jerker Denrell, a professor of behavioral science at the University of Warwick, drew their conclusions by developing a simulation model in which success depends both on skill and past success. In other words, the probability of success increases if the previous outcome was a success.

Based on simulated data, they looked at how average skill levels vary with the number of successes achieved and found that players who achieved exceptional performance had an average skill level that was lower than the skill level of those with fewer successes.

“The most successful players are not the most impressive,” they wrote. “Rather, the moderately successful players are the most impressive ones.”

That’s because “chance events outside the control of individuals often influence performance,” Professor Liu wrote in the paper, which was published in the June 2012 issue of Proceedings of the National Academy of Sciences.

Luck and the rich-get-richer dynamic — in which those who succeed early are more apt to receive resources and attention — often play a crucial role in determining who ends up on top.

Those at the pinnacle of their field may also have taken huge risks, which could be dangerous to imitate.

And, to circle back to my A-Rod example, it may be illegal or unethical deeds that push the supersuccessful to the top. We’ve seen it so often that we shouldn’t be surprised, yet somehow we always are.

“We tend to be attracted to extreme performance, but maybe it should make us more suspicious,” Professor Liu said.

Annie Murphy Paul, who wrote about role models on the Brilliant Blog, said: “As a society, we fetishize the guy who is No. 1, with the idea that if we do what he does, we’ll be successful. However, research suggests that can be very misleading. No. 1 might be the outlier and No. 2 might have gotten to where he is through hard work and prudent decision-making.”

There’s another problem with looking at the best of the best. Rather than being inspirational, it might just be depressing.

“There’s a simple idea that exposure to illustrious role models will inspire people to think, ‘I can be just like that,’ when really it’s a much more complicated psychological process,” said Ms. Paul, who writes about social science and the brain. “Often we look at them and think, ‘I’m not anything like that.’ ”

For example, Sheryl Sandberg, the chief operating officer of Facebook, mother and best-selling author, may be a great role model. Or she may seem so perfect that matching her success seems unattainable.

Research looking specifically at the impact of female role models on women’s desire to be leaders says the latter is often the case.

In one experiment, conducted by Crystal L. Hoyt, an associate professor of leadership studies and psychology at the University of Richmond, and a graduate student, Stefanie Simon, 60 female college students were told they were being asked to look at leaders’ influence on group productivity. In fact, the experiment was to see how the women were influenced by various role models.

The women were asked to assume the fictitious leadership role of president of the human resources department and lead a selection committee to hire a new junior associate.

E-mail: shortcuts@nytimes.com

Article source: http://www.nytimes.com/2013/08/10/your-money/sometimes-second-best-makes-a-better-role-model.html?partner=rss&emc=rss

Bucks Blog: Fewer Bank Accounts May Lead to More Savings, Study Finds

When it comes to bank accounts, less may be more if your goal is to save money, new research finds.

The report, from researchers at the University of Utah and the University of Kansas, found that test participants who had multiple bank accounts saved less than subjects who had a single account, suggesting that consolidating accounts may help you spend less.

It appears, said Promothesh Chatterjee, an assistant professor of marketing at the University of Kansas School of Business and one of the study’s authors, that if you have multiple accounts, it becomes easier to justify spending from one account because you can reason that funds are available in the others. “If you have a single account,” he said, “you know exactly how much money you have and how much you’ll have left.”

The report will be published in the May issue of Organizational Behavior and Human Decision Processes, a journal that tracks applied psychology.

The report is based on four related studies, involving 566 subjects, who were randomly assigned to have either a single liquid bank account, or three accounts. (The subjects were college students who received partial course credit for participating.) The students earned money — up to $100 total — for completing certain tasks on a computer. They were then given opportunities to buy items (in one case, the items included university T-shirts, notebooks and a computer mouse) with their earnings, or have the money added to their savings balance.

“In this research, we demonstrate that individuals allocating their earnings to a single account saved more than those who spread their earnings across multiple accounts,” the report says.

It’s not that people can’t do the math to add up the multiple accounts, Professor Chatterjee said. “But somehow, when we are motivated to spend, we don’t want to do the accounting.”

The finding suggests that having one account — or at least, one checking and one savings account, rather than multiple savings accounts — could encourage savings more effectively. If such an arrangement isn’t practical, or if you are strongly attached to multiple savings accounts, the report says, one alternative may be to use a software program that consolidates your accounts onto one screen, so you can see  your total balance in one place.

Do you have multiple savings accounts? If so, do you think that helps, or hurts, your attempts to save?

Article source: http://bucks.blogs.nytimes.com/2013/04/18/fewer-bank-accounts-may-result-in-more-savings/?partner=rss&emc=rss

Bucks Blog: No Link Seen Between Low Credit Scores and Bad Job Behavior

12:15 p.m. | Updated To more clearly distinguish between credit reports and credit scores. Employers don’t use credit scores in employment screening, but they can and do access credit reports.

Nick Bilton

A soon-to-be published study by researchers at Louisiana State University and two other colleges finds no connection between poor credit scores and bad behavior on the job.

The findings are of interest, the researchers say, because many companies conduct credit checks on potential new hires as part of the employment screening process. Yet the validity of using an applicant’s credit history as a measure of future job performance has been largely unexamined.

While the study examined credit scores, employers generally do not get access to them. They see only the credit report, which helps determine the score.

Credit scores were initially used solely by lenders to determine whether a potential borrower qualifies for a loan, but are now increasingly used for other reasons including determining insurance rates.

The study is to be published in The Journal of Applied Psychology and is currently available online. In addition to researchers at L.S.U., the authors include researchers from Northern Illinois University and Texas Tech University. It used personality data collected from 142 employees and performance data provided by supervisors. The researchers then asked the employees to obtain their credit scores from FICO Limitations include the relatively small size of the study, and a connection of most participants to a single university.

Jeremy Bernerth, assistant professor at L.S.U.’s business school and a lead author of the study, said the findings showed that poor credit scores weren’t related to an employee’s propensity, say, to steal from an employer or engage in other “deviant” behavior.

The study did find a link between credit scores and personality types. For instance, conscientiousness is related to good credit, the study found. But the findings also suggest that “agreeableness” is related to lower credit scores. That might suggest, Professor Bernerth said, that easygoing individuals might have worse credit scores than disagreeable or rude people because they end up co-signing loans for friends or taking out additional credit cards at the suggestion of store clerks.

Have you had a job application denied based on a credit check?

Article source: http://feeds.nytimes.com/click.phdo?i=cbb562646b701632f895d7dcffa81003

Economix Blog: Judith Scott-Clayton: College Is Cheaper Than You Think

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Judith Scott-Clayton is an assistant professor at Teachers College, Columbia University.

The College Board released its annual report on the cost of college last week, and guess what? It’s going up. Again. Cue the headlines: “College Costs Reach New Highs”; “Public College Costs Surge 8.3 Percent”; “College Tuition Is Out of Control.”

Today’s Economist

Perspectives from expert contributors.

What has been buried in much of the resulting coverage is that while colleges’ published tuition and fees have indeed increased, these so-called “sticker prices” are not all that informative. For the average full-time student, net tuition – which subtracts grants and tax-based aid – is less than half of the published price at private nonprofit four-year schools and less than a third of the published price at the typical public four-year institution.

Moreover, trends in sticker prices and net prices have diverged over the past several years, such that many students are actually paying less now to attend college than they would have five years ago.

The College Board

This divergence is the result of a 40 percent increase in grant aid and a 78 percent increase in tax-based aid since 2005-6. The average full-time undergraduate now receives about $6,500 annually in grant aid and nearly $1,000 in tax-based aid to help defray tuition and fees (these figures, also from the College Board, are averaged across all students, including those who received no aid). Only about one-third of full-time students pay the published sticker price, and even this third may receive significant tuition tax credits that lower the effective cost.

After accounting for this assistance, net tuition and fees in the public four-year sector, at $2,490, are only $170 higher today (in constant 2011 dollars) than they were five years ago. At private nonprofit four-year institutions, net prices are $500 lower than they were five years ago. And at community colleges, the average student actually faces a negative net price – meaning they receive about $800 more in aid than they are charged in tuition and fees.

This growing gap between sticker prices and net prices is not a bad thing; it enables colleges (or states) to price discriminate. Because tuition at most public and nonprofit institutions fails to cover per-student expenditures, keeping published prices low would mean providing a blanket subsidy to all students regardless of need.

The trade-off, however, is increased complexity, and often total confusion. Many students and their families consider only published prices when comparing colleges, without taking financial aid into account.

And families’ perceptions of sticker prices are themselves often wildly inflated, perhaps in part because of news coverage that tends to focus on prices at elite four-year institutions, like Columbia University (with published tuition and fees exceeding $45,000) rather than the public two- and four-year institutions that most students attend. Participants in one recent study, for example, overestimated the published tuition costs of community college by more than 300 percent.

This confusion is one reason why colleges are now required, as of Oct. 29, to offer “net price calculators” on their Web sites. Having explored a handful, I have found quite a bit of variation in both the amount of information students are required to input and the resulting output.

Many calculators, like one used by the University of Florida, require the user to page through multiple screens, inputting detailed information that most casual explorers will not have on hand (e.g., what year the eldest parent was born, what type of tax form was filed, how much income was earned from interest and dividends). But the resulting output is similarly precise, providing information on specific types of federal, state, and institutional aid.

Others, like one used by Southwestern Oklahoma State University, require the student to answer just nine basic questions, but provide only a single number for “estimated grant aid” that does not, for example, take account of students’ eligibility for state merit-based grants.

Unfortunately, some of these calculators are likely to increase families’ confusion. For example, the output of the calculator of the University of California, Los Angeles, (for a single-parent family with $30,000 in parental earnings, $2,500 in parental assets, $2,500 in student earnings and $500 in student assets) included a “self-help award” of $9,200 – which sounds great until you read the fine print, which clarifies that this type of “award” means loans and work-study, not grants.

Finally, another story that is often missed in discussions about college costs is that for most students, the main cost of college is not tuition and fees, but the opportunity cost of time – that is, if one were not in college, what productive activity could one be doing instead? For example, while community college students may receive on average $800 more in aid than they pay in tuition and fees, this $800 is not going to cover all of the earnings forgone if the individual enrolls full time in school.

Unless, of course, that individual is already unemployed. Given current economic conditions, the opportunity cost of enrolling in college is lower than it has been in a long time. Granted, this is hard to get excited about. But the declining opportunity cost of college is one big reason that college enrollment rates have reached all-time highs in the last few years, even while published tuition prices have been rising.

Article source: http://feeds.nytimes.com/click.phdo?i=c6a7726398493b3e54401ac9291fb2e8

On Economy, Raw Data Gets a Grain of Salt

Three months later, the government announced a small change. The economy, it said, actually had expanded at a pace of only 0.4 percent in the first quarter.

Instead of chugging along in reasonable health, the United States had been hovering on the brink of a double-dip recession.

How can such an important number change so drastically? The answer in this case is surprisingly simple: the Bureau of Economic Analysis, charged with crunching the numbers, concluded that it had underestimated the value of vehicles sitting at dealerships and the nation’s spending on imported oil.

More broadly, politicians and investors are placing a great deal of weight on a crude and rough estimate that has never been particularly reliable.

“People want the best information that we have right now. But people need to understand that the best information that we have right now isn’t necessarily very informative,” said Tara M. Sinclair, an assistant professor of economics and international affairs at George Washington University. “It’s just the best information that we have.”

The growth rate that the government announces roughly one month after the end of each quarter — news much anticipated in Washington and on Wall Street — has been off the mark over the period from 1983 to 2009 by an average of 1.3 percentage points, compared with more fully analyzed figures released years later, according to federal data.

The second and third estimates, announced at subsequent one-month intervals, are no more reliable. The first quarter this year offers a typical example. The government estimated the annual growth rate at 1.8 percent in May and 1.9 percent in June before issuing its most recent estimate of 0.4 percent.

Perhaps more important, the government underestimated the depth of the recession by a wide margin, initially calculating that the economy contracted by an annual rate of 3.8 percent in the last quarter of 2008. It now estimates the contraction rate at 8.9 percent. Instead of an annual growth rate of 0.2 percent from the fourth quarter of 2007 through the first quarter of 2011, the government now estimates that the economy contracted at an annual rate of 0.2 percent during that period.

The basic problem is easy to understand: More than half of the ingredients in the first estimate are based in whole or in part on projections from past months. The government doesn’t actually know how much people spend on their cellphone bills or how much companies spend on construction. It simply makes an educated guess based on past spending. Even in the third estimate, 22 percent of the data still comes from projections.

If basic assumptions start changing rapidly — business failures during a recession, start-ups during a recovery — the estimates can quickly lose touch with economic reality.

“When we most want timely information is when they’re least able to give it to us,” said Professor Sinclair. “That’s exactly when those historical patterns are breaking down.”

The Bureau of Economic Analysis, an arm of the Commerce Department, makes some efforts to warn users about these problems. It emphasizes transparency and is uncommonly open to public questions. It says it provides a valuable public service, but that the data reflects only the best available information. But policy makers, investors and the public continue to treat the data as highly significant.

“These are really not much more than educated guesses and yet the marketplace puts enormous weight on them because financial markets are high-frequency trading places based on immediate data,” said Madeline Schnapp, director of macroeconomic research at TrimTabs Investment Research.

A growing number of economists say that the government should shift its approach to measuring growth. The current system emphasizes data on spending, but the bureau also collects data on income. In theory the two should match perfectly — a penny spent is a penny earned by someone else. But estimates of the two measures can diverge widely, particularly in the short term, and a body of recent research suggests that the income estimates are more accurate.

Article source: http://feeds.nytimes.com/click.phdo?i=8a5d84d96bfd728368c55291dc081e03