Category: Faculty in the News
Professor shares thoughts on Affordable Care Act in BU Today opinion piece
In “POV,” BU Today‘s new opinion page that provides timely commentaries from students, faculty, and staff on a variety of issues, professor of health care management Stephen Davidson writes that many opponents of the Affordable Care Act (ACA), which was officially implemented earlier this month, are uniformed. Davidson finds that the opposition hasn’t taken the time to learn the facts, or simply doesn’t care to learn them. He continues, explaining why he believes reform is “critically important to the future of the American health care system.”
Excerpts from BU Today:
One reason, of course, is that millions of Americans have not had insurance, and therefore, have lacked access to beneficial medical services. In addition, US health care spending, which already is the highest in the world by far, is still growing, thus making it harder both for employers to continue to provide good coverage to employees and their families and for individuals to buy insurance even when their employers offer it. Finally, quality of care is too unreliable. Quality measures vary widely from state to state. Even doctors, when they or their families are patients, have trouble getting the care they know they need.
These are serious problems, and the continuing failure to deal with them makes them worse. In 2010, the president and his congressional allies were able to pass the ACA, which, while not perfect, addresses all of these problems in ways that are reasonable. If fully implemented, the health care system will improve, and we will all benefit.
What are some key provisions? Practically all Americans must obtain health insurance (the “individual mandate”). Those who have trouble paying for it may be eligible for subsidies to help. Moreover, insurers must provide coverage for all who seek it, even those with prior medical conditions, and except for age, may not charge individuals more because of personal characteristics, even factors that increase the risk of needing care. Thousands of young adults up to the age of 26 are still covered on their parents’ insurance policies while they continue as students or look for a job with coverage. According to estimates, in 2012, almost 13 million people received rebates totaling more than $1 billion because private insurers spent more than the maximum permitted by the law (85 percent for large-group insurers; 80 percent for those in the individual and small-group markets) on overhead, executive compensation, and profit instead of on medical services and efforts to improve quality of care. Health insurance exchanges should make it relatively easy for individuals to compare competing insurance policies and to choose the one that is best for them. And many provisions encourage reform of the way care is delivered and paid for to increase quality and save money.
Read the full piece here.
Media references SMG assistant professor’s paper “Fake it Till You Make it”
The Wall Street Journal has repeatedly spotlighted the research of Georgios Zervas, Boston University School of Management assistant professor of marketing, on the consequences of fake online reviews. Both the Journal’s Corporate Intelligence blog and its “Morning Risk Report,” which provides insights and news on governance, risk, and compliance, featured recent posts on the writing and solicitation of fake online reviews.
One post, “Fake Reviews Raise Reputation Stakes,” was prompted by New York attorney general Eric Schneiderman’s targeting fraudulent online reviewers this week under his new initiative “Operation Clean Turf,” a yearlong undercover investigation into the reputation management industry, the manipulation of consumer-review websites, and the practice of astroturfing.
Zervas notes that the consequences for writing and soliciting fake reviews are very low and that, for anyone with a computer, crafting a fake review is simple. He is quoted saying:
“The New York attorney general is trying to increase the cost of being uncovered as a fraudster. I think it’s a small first step in the right direction.”
Zervas, who completed his PhD in 2011 in computer science at Boston University, also explains that the problem of fake reviews extends beyond New York’s borders. His paper “Fake it Till You Make it” was co-authored with Harvard Business School assistant professor Michael Luca.
Focusing on the issue of fake restaurant reports, BBC News, in the article “Yelp admits a quarter of submitted reviews could be fake,” writes,
Michael Luca of Harvard Business School and Georgios Zervas of Boston University studied the incidence of fraudulent reviews of Boston restaurants posted to Yelp, including those that had been filtered out.
After analysing more than 310,000 reviews of 3,625 restaurants, they found that negative fake reviews occurred in response to increased competition, while positive fake reviews were used to strengthen a weak reputation or to counteract unflattering reviews.
Obama taps David Weil to lead Wage and Hour Division
Excerpts from BU Today:
David Weil, a BU expert in labor market policy and industrial and labor relations policy, has been chosen by President Obama to lead the US Department of Labor’s Wage and Hour Division. The nomination, which requires confirmation by the US Senate, was one of 29 made in a September 10 announcement by the president, who says he is “grateful that the talented and dedicated individuals have agreed to take on these important roles and devote their talents to serving the American people.”
Weil, a School of Management professor of markets, public policy, and law and an Everett W. Lord Distinguished Faculty Scholar, has advised government agencies, including the Wage and Hour Division and the Occupational Safety and Health Administration, as well as workplace agencies in other countries. His research has been supported by the National Science Foundation, the Department of Labor, the National Institutes of Health, the National Institute for Occupational Safety and Health, and the Alfred P. Sloan Foundation.
Kenneth Freeman, SMG’s Allen Questrom Professor and Dean, says Weil is a valued member of the SMG community, whose “commitment to groundbreaking research and outstanding teaching is exemplary.”
If confirmed, Weil would oversee a division that ensures American workers are adequately compensated for the work they have done by being paid the minimum wage and required overtime compensation. It also protects responsible employers from competition with companies that do not comply with federal wage and hour requirements by enforcing the Fair Labor Standards Act, which also regulates child labor. The agency also oversees the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and employment standards and worker protections as provided in several immigration-related statutes.
A recent post on the Academy of Management Review’s (AMR) Ethicist Blog explores new questions gaining traction in management education: Are today’s students “ethically broken” when they enter business schools? And, “through the use of ‘normal’ business school language, modeling, and metrics,” in the classroom, does management faculty “perpetuate ‘broken’ student perspectives and behaviors”?
AMR turned to Boston University School of Management Assistant Professor Kabrina Kebrel Chang to answer these questions, writing, “Chang and her holistic re-framing of how Boston University School of Management is approaching business ethics were featured in a recent Wall Street Journal article. She is a lawyer who teaches business law and ethics at BU, and her research includes how social media is fundamentally influencing employment decisions.”
Asked about how she approaches ethics, particularly in the undergraduate classroom, Chang explains,
I am at a b-school in the Northeast and students are uber-motivated. Being in a business school, sadly I take it as a given that we will need to break many of the money=happiness equation. Breaking the equation has to happen in more than one class, and they have to see real examples.…My focus is on the critical thinking skills—getting [students] to broaden their horizons when it comes to decision-making will have a real impact on their ability to make decisions that will take into account the betterment of people and not just the betterment of their business….My take on ethics and the take I employ now…is not to teach [students] right and wrong but to teach them that there’s more to think about with a decision.
CEO magazine says yes, SMG’s Vinit Nijhawan says no
Excerpts from BU Today:
A generation after Massachusetts was dubbed “Taxachusetts” for its putative hostility to business, the charge has been resurrected in the magazine via its latest state rankings, determined by a survey responded to by 736 CEOs. The commonwealth was rated 47th among states for the warmth of its business climate, slightly better than New York, Illinois, and dead-last California. Texas won the best-of designation.
“If I were designing Hell for a company, I couldn’t do as good a job as Massachusetts has,” one anonymous CEO told the magazine. Another groused that the company was moving operations out of Massachusetts and three other states and firing employees there, as “the regulatory and tax environment has become untenable.” The magazine itself slammed Governor Deval Patrick’s plans to raise income taxes and eliminate corporate deductions (coupled with a cut in the sales tax), proposals that legislators may scale back.
We ran the matter by Vinit Nijhawan, managing director of BU’s Office of Technology Development and a School of Management lecturer. He has started or served on the boards of about a dozen technology companies since coming to Massachusetts from Canada a quarter century ago. “The biggest one grew to 400 people worldwide,” he says, “and it had about $60 million in sales.”
BU Today: California and Massachusetts are hubs for technology companies. If they‘re so awful for business, why would CEOs cluster in those states?
Nijhawan: It’s really clear why: because a lot more emphasis is placed in those states on human capital and lifestyle. If you’re starting a technology company, you have enormous access to technology and people in those places, more than anywhere else. That suggests that the CEOs they interviewed were from bigger companies, especially companies in low-margin commodity markets, like retail. There, the difference between having a 6 percent state sales tax versus a 3 percent tax probably makes a difference to your bottom line, because your margins are thin.
But retail’s very complex, because your outlets could be all over the country. Your income gets taxed differently if you’re here, so who gets affected? Basically, in-state shareholders and management. In the past 30 years, CEO salaries have increased dramatically. So I could see CEOs getting a big personal hit if they were here, versus, say, New Hampshire, which has no sales or income tax. But people aren’t going to move out of Massachusetts to Texas because of sales or income tax.
Read the full article on BU Today.
Bodie, PBS notes, is “perhaps country’s foremost expert on pension finance”
The NewsHour blog “The Rundown” features insight on little-known safer investing strategies by the School of Management’s Zvi Bodie, “perhaps the country’s foremost expert on pension finance.” Bodie is Boston University’s Norman and Adele Barron Professor of Management in finance and author, most recently, of the books Risk Less and Prosper and Essentials of Investing, 9th Edition.
In his latest NewsHour post, titled “The One Safe Investment and Why You Never Hear About It,” Bodie writes,
…I recommend that for people concerned about preserving the purchasing power of their savings, an investment program should start with the purchase of US Treasury Series I Savings Bonds, of which you can purchase up to $10,000 per year per person….I Bonds provide the ultimate in long-run liquid financial security to residents of the U.S. An investor in these bonds cannot lose any money or any purchasing power for up to 30 years, despite either inflation or deflation. They provide a return at least equal to the rate of inflation and, often, have paid a “premium” of interest above and beyond inflation.
At the moment, because of historically low interest rates, that premium is zero, but it is reset every six months. If, in September (or the following March or a year from September, etc.), new I Bonds do offer a premium, you can sell the current ones and use the money to buy the new ones.
Read the full post, see all the comments it has inspired, and watch a related video on “The Rundown” blog.
From “Relating Badly to Brands,” appearing in the April 2013 Journal of Consumer Psychology
Brand managers may dream of customers relating to their brands as committed partners, best friends, soul mates, or allies, but what if a brand portfolio offers rocky marriages, one-night-stands, power plays, stalkers, and secret affairs?
How, for example, should the New York Philharmonic react to recent news that a large percentage of first-time ticket buyers felt “stalked” by their customer service calls? What about frequent flyers’ mixed—and often negative—emotions about their airline of “choice”?
We recognize negative relationships with other people and appreciate how complex and powerful they can be. So why not in our bonds with brands?
A recent study by Boston University School of Management professor Susan Fournier and doctoral candidate Claudio Alvarez “Relating Badly to Brands” (Journal of Consumer Psychology, April 2013) calls for a new science of negative brand relationships, a field overlooked by much current research. Fournier is a professor of marketing and has been named one of academia’s most influential researchers for her work on brand theory.
Alerting brand managers to the importance of the negative
Fournier and Alvarez note that although negative brand relationships are more common and frequently more powerful, positive brand relationships are supported by much richer academic frameworks. ”Negative brand relationships are in fact more common than positive relationships,” they write, “with an average split across categories of 55%/45% for negative and positive relationships, respectively….Without a formal accounting of negative relationships, our brand management frameworks are misleading and incomplete.”
Applying new data to a marketing theory by Park et al. called the “Attachment-Aversion continuum,” Fournier and Alvarez conduct two studies using subjects across four countries to identify the range of relationships people have with a variety of brands. They first identify four dimensions along which brand relationships vary: positive/negative, significant/superficial, equal/unequal power, and deliberate/not under my control. They then have consumers assign brands to categories resembling their own primary personal relationship dynamics.The results highlight 27 significant types of consumer-brand relationships, including “flings,” “broken engagements,” “stalker-prey,” “addict/dealer,” “fleeting acquaintance,” and more.
Are we really distant from all the “bad” brands in our lives?
One important finding from these studies is the challenging of the assumption that brand negativity stems from perceived distance between consumer and product. Building on their comparison between brands and interpersonal dynamics, the authors argue, “negative relationships do not all involve distanced self-connections and low interdependence between partners.” For instance, the authors point to past studies exploring the following brand relationships, encompassing both the passionate (or close) and the negative:
- The ”monstrous relationships” fans have with the Twilight media brand, which justifies partner violence and emotional abuse as an ultimate act of protection and love
- Products that generate compulsive consumption, addictions, and dependencies, from alcohol to cigarettes to social media
- Credit card and consumer lending agencies, including ones where “consumers are lured into lending relationships with a courteous attitude and quick, easy credit offered under conditions that are not fully disclosed”
As negative brand relationships are common and cause damage to both consumers and companies, Fournier and Alvarez urge, “managing negatives may actually be more important for brand equity development than cultivating positive connections with brands.”
Read more about “Relating Badly to Brands” in the Journal of Consumer Psychology.
The annual magazine Research at Boston University has profiled the pioneering work and social impact of the School of Management’s Nalin Kulatilaka. In their feature “Considering Community,” they write,
Perhaps it is no wonder that an electrical engineer who became a professor of finance would take an interest in how green buildings can provide monetary benefits for the people who have the resources to fund renewable energy projects….
That’s part of the story of Nalin Kulatilaka, who teaches in the School of Management and is a codirector of the Clean Energy & Environmental Sustainability Initiative.
“My research is on sustainable energy investments,” Kulatilaka says. “From renewable energy sources like solar and wind to energy conservation and energy efficiency investments like building retrofits.”
The thrust of his work is to incentivize the up-front funding for green energy buildings from banks and other sources by writing a new kind of contract for the loans that fuel such changes. The contracts are intended to monetize the savings that green energy can achieve, so that the investors who put up the capital can capture some of the money saved as revenue from the project.
“We are now designing contracts where the building owner and tenant could share the savings.”
Recently, Kulatilaka has worked on buildings owned by the Cambridge Housing Authority in Central Square. Some were heated entirely by electricity, some were particularly leaky, and all lacked the investment capital needed for retrofits.
“My contribution there, with Professor of Earth & Environment Robert Kaufmann and a team of students, was to first assess the opportunity; to try to quantify what the savings would be by using various statistical techniques that analyze the demand patterns of the building,” he says.
“We are now designing contracts where the building owner and the tenant could share the savings. These would occur in such a way that funding could be attracted from conventional—or at least semi-conventional—sources like large banks.”
“It’s a mandate! It’s a tax! How word choice effects Obamacare enrollment.”
The Washington Post‘s Wonkblog, in their Health Reform Watch column, recently spotlighted a study co-authored by Boston University’s Keith Marzilli Ericson on the impact of terminology on enrollment in mandated health insurance. Ericson, an assistant professor of markets, public policy, and law at the School of Management, is also co-author of a related National Bureau of Economic Research paper titled “Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange.”
As The Washington Post reports,
It was this week, one year ago, that the Affordable Care Act had its day in court—the Supreme Court, that is.
The health care law had the longest oral arguments of any case the high court has heard; supporters lined up for a seat in the courthouse four days in advance.
Obamacare’s mandated purchase of health coverage survived the challenge. It may not, however, have gotten off scot free: New research suggests the controversy over the mandate may been a blow to its credibility—and Americans’ willingness to comply.
That’s the takeaway from a new paper, authored by Boston University’s Keith Marzilli Ericson and University of Pennsylvania’s Judd Kessler that looks at the difference between describing the health law’s penalty for not carrying insurance as a “mandate” or a “tax.”
The two are, as Ericson describes it, “logically identical.” Beginning in 2014, a person who fails to purchase health insurance will pay a $95 fine, regardless of whether they consider that a tax penalty or a fee for non-compliance with the mandate.
Ericson, whose research focuses on the intersection of health insurance and behavioral economics, had an inkling that the description would matter. He has researched the Massachusetts health reform effort, where a mandate helped the state achieve the highest rate of insurance in the country.
“We expected that the mandate would encourage insurance purchase more than a tax,” he says. “We thought that it establishes a social norm, and a sense of obligation.”
Banner photo courtesy of flickr user DigiDreamGrafix.com
SMG experts on money laundering, Toyota management changes, Apple, and banking
Boston University Public Relations’ Professor Voices blog features a sampling of quotes by experts from BU’s School of Management on recent issues impacting the business world:
Lawmakers rip into regulators over money-laundering prosecution (Washington Post): “The level of this money laundering and the fact it’s gone on for so long meant that regulators have been asleep.” Mark Williams
Wall St. will keep close iWatch on Apple product (Boston Herald): “It is clear that Apple needs to create a new category and do it soon. A watch is easier to launch than a TV. It’s easier to produce since it is a variation on the iPod mini and the iPhone, and uses the same app structure and Siri plus Bluetooth integration. Moreover, it has global appeal and can rekindle Apple’s cool factor.” N. Venkat Venkatraman
Toyota hires outsiders to help with global growth (AFP): “Toyota’s leadership changes portend a new era. New directors, drawn from beyond Japan’s shores, will help develop a truly global view at the top.” James Post
If the Catholic Church were a business, how would you fix it? (NPR “All Things Considered“): “Without systematic accounting and disclosure, there is enough doubt these days about how money is being managed that we don’t know whether the hungry are being fed, the naked are being clothed and those in need are getting health care and education.” James Post
Apple’s cash drama is far from over (MarketWatch): “It’s the real human drama here, and it certainly is a corporate drama. This sort of has it all, an iconic company which has been doing extraordinarily well and has buckets of cash, billions of buckets of cash. [Apple CEO] Tim Cook and the board are the ones in the hot seat here. They have to make a decision about distribution or no distribution and they have to have some compelling explanation for whatever they choose.” James Post
Mayo, a financial powerhouse, is poised to propel expansion (Minnesota Public Radio): “From a profitability standpoint they are successful. I don’t doubt people will step forward and write large checks. In a 20-year period, they should be able to successfully put together a package of financing and donations that’ll allow them to do this.” Elizabeth Keating
No longer unsung, Samsung turns up heat on Apple (Boston Herald): “I think 2013 is a watershed year for Apple. Will it lose to Google-Samsung dominance … or will it show true innovation with the phone and its strong ecosystem?” N. Venkat Venkatraman
Deferred pay draws Fed’s scrutiny (Wall Street Journal): “The lack of data on deferred compensation has benefited top-paid U.S. bankers and disadvantaged otherwise concerned shareholders.” Mark Williams
Behind the mega airlines merger (NECN): “They need each other. American Airlines is in bankruptcy and US Air is a smaller competitor on the East coast and in other places and it’s getting dominated by other big competitors that are out there. They just need each other.” Allen Michel
How governments spur private-sector demand for green buildings (Forbes): “Input suppliers such as game developers won’t invest until there is sufficient demand, or a large installed base, but demand won’t arise until there is an ample supply of key inputs. In our setting, government green-building procurement policies can stimulate private-sector building professionals to gain expertise in LEED, while also bolstering private-sector demand for LEED buildings.” Timothy Simcoe
There could be something wrong with 42 million credit reports (Business Insider): “Most people do not realize how many prices are affected by their credit scores. Even what you pay for car insurance depends on it. The FTC report seems to suggest that the rate of serious error is only about 5%, but that is enough to make it worth checking whether the information the credit reporting agencies have on you is correct.”Michael Salinger
The biggest financial asset in your portfolio is you (New York Times): “I see myself, for example, as a convertible bond. I’m protected by tenure at a solid university and have the potential to do extra things for income. I have a lot more capacity to take risk in my portfolio than I choose to use. I’m risk-averse, don’t like to gamble and don’t get a kick out of winning. I hate to lose.” Zvi Bodie
Fatigued users fall away from Facebook (TechNewsWorld): “It is inevitable that people will feel tired after an initial euphoria. Even if people spend less time but they find that time to be useful and valuable, Facebook can monetize it. Otherwise, it is a troubling sign.” N. Venkat Venkatraman
Does an ‘A’ in ethics have any value (Wall Street Journal): “We need to hit the students hard when they first get here, remind them of these principles throughout their core classes, and hit them once again before they leave.” Kabrina Chang
Creating the ‘innovative mindset’ (Telegram & Gazette): “I don’t think is something as concrete as gravity. If you are in a public trade organization you have to guaranty innovation every year, all the time.” Susan Fournier