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The Situation of Chicago School “Law and Economics”

Posted by The Situationist Staff on June 10, 2012

From Business Week (an article, by Peter Coy, including several quotations from Situationist Editor, Jon Hanson):

Q: How many Chicago School economists does it take to change a light bulb?
A: None. If the light bulb needed changing, the market would have done it by now.

Chicago-style free-market economics is an easy target for satire, but the movement that flourished at the University of Chicago’s economics department in the 1960s, ’70s, and ’80s really did change the world. Giants such as Milton Friedman, Gary Becker, Robert Lucas, and Eugene Fama provided the intellectual foundation for the political philosophy of President Ronald Reagan and British Prime Minister Margaret Thatcher. In his approach to tax cuts and deregulation, Republican presidential candidate Mitt Romney is an heir to that tradition.

It wasn’t just economics that Chicago revolutionized. Across campus at the University of Chicago Law School, scholars such as Ronald Coase, George Stigler, and Richard Posner were inspired to apply economic analysis to laws and regulations, developing a field that came to be called “law and economics.” It was law and economics types who promoted the now-conventional idea that the benefits of a regulation must be weighed against its costs. Placing a dollar figure on society’s valuation of a human life went from appalling to standard.

They rethought antitrust law, junking simplistic big-is-bad formulations to focus on whether a giant like IBM (IBM) or Microsoft (MSFT) could actually raise prices with impunity. In tort law, they questioned punitive damages that seemed to them motivated by righteous indignation rather than a cool calibration of how to discourage future wrongs. At the apogee of the Reagan-Thatcher era, Chicago Law drew enthusiastic support from businesses and foundations that embraced its small-government message. “Chicago can rightly claim to have been extraordinarily influential in the growth of the field,” says Jon Hanson, a Harvard Law School professor and specialist in psychology and law.

Now Chicago’s law and economics program is coping with problems born of its success. Its intellectual dominance has triggered a pushback from other social scientists who say it’s bloodless—treating people as if they are, or ought to be, perfectly rational calculators of their own self-interest. Even some true believers complain that the field has become too technical. Posner, a federal appellate judge in Chicago, wrote last year in the alumni magazine of the risk that “economic analysis of the law may lose influence by becoming too esoteric, too narrow, too hermetic, too out of touch with the practices and institutions that it studies.” Finally, so many other law schools have launched law and economics programs, and so many judges have learned the lingo, that today law and economics “is like the air you breathe. It’s just pervasive,” says David Weisbach, a Chicago Law professor. That ubiquity has made Chicago less distinctive.

Chicago Law doesn’t take such matters lightly. Last October, Dean Michael Schill announced a major initiative to deal with the challenges, to capitalize on the school’s place in history, and to keep law and economics relevant for the 21st century. He called it, predictably, Law and Economics 2.0. “Just as Chicago was at the forefront of the first wave of law and economics, so it shall be in the future,” he wrote to alumni.

Schill’s big idea is to open new frontiers, both intellectual and geographic. This summer the school will play host to 75 Chinese legal scholars, who will get to meet stars like professor emeritus Ronald Coase—still writing in the field at the age of 101. “Coase is a god in China,” says Omri Ben-Shahar, who is directing a newly created University of Chicago Institute for Law and Economics.

Meanwhile, Chicago Law professors are lobbing new bombs into the arena—fresh ideas for injecting economic thinking into law and regulation. Chicago Law professor Todd Henderson proposes paying bank examiners in part with “phantom” securities linked to the banking companies they regulate. The phantom bonds, essentially derivatives, would rise and fall in concert with a bank’s debt. If banks took too much risk, regulators would feel a hit to their own wealth. To keep regulators from getting so cautious that they ban legitimate transactions, Henderson would throw some phantom stock into their pay packages as well. “There is no reason we can think of why bank regulators should not be paid for performance,” he wrote in the spring 2012 issue of Regulation, a magazine published by the libertarian Cato Institute.

Chicago Law isn’t all about law and economics. President Barack Obama, after all, taught there from 1992 to 2004. So did Supreme Court Justice Antonin Scalia, from 1977 to 1982. (If only they’d overlapped!) Scalia’s brand of constitutional “originalism,” which deeply respects the intent of the Founding Fathers, is an alien idea to the law and economics crowd, who view law as something more useful than sacred.

Even within law and economics there’s ideological diversity. “I don’t think it lines up to any political agenda,” says Lee Ann Fennell, a specialist in property law. Fennell, daring to challenge a central tenet of law and economics, has written that sometimes property rights can be too strong—say, allowing irrational homeowners to block worthy projects even when accommodating them somehow would be better for all. Her solution: Create an exchange where property owners could surrender certain veto powers over land use for a price before conflicts ever arose. That would help new projects sail through.

Still, there is something to the critique that economics can blind legal scholars to other perspectives. The first generation of law and economics scholars reduced people to stick-figure profit-maximizers who would make rational choices every time. “They came into law schools saying, ‘We are social scientists and you are not,’” says Harvard Law’s Hanson. Their authority was undermined when a new wave of social scientists, including Daniel Kahneman, Amos Tversky, and Chicago’s Richard Thaler, presented evidence that people can be irrational, lack willpower, and have shifting, inconsistent senses of what’s in their own best interest.

The human actor in some of the newest law and economics writing is truer to life. Henderson, for example, acknowledges that for some people money isn’t the motivation: “Once diligence has been priced, perhaps some regulators will slack,” he wrote in Regulation.

But Hanson wonders whether law and economics scholars on the whole have gone far enough in incorporating humanity. A case in point: Should the question of motivation matter in assessing damages? A dispassionate law and economics analysis still might say no, while an ordinary juror would say unequivocally yes. As the great jurist Oliver Wendell Holmes Jr. once wrote, “Even a dog distinguishes between being stumbled over and being kicked.”

Defenders of Chicago-style law and economics want to be seen not as ideologues, but as realists. Posner again: “We ask not whether the economic approach to law is adequately grounded” in any particular ethical system, “but whether it is the best approach for the contemporary American legal system to follow.” That’s an appeal to an older Chicago intellectual tradition—pragmatism.

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Posted in Behavioral Economics, Choice Myth, Deep Capture, Ideology, Legal Theory | Tagged: , , | Leave a Comment »

Corporations, Cars, the U.S.A., and Us

Posted by The Situationist Staff on June 1, 2012

Benjamin Levin just posted his excellent article “Made in the USA: Corporate Responsibility and Collective Identity in the American Automotive Industry” (forthcoming Boston College Law Review, Vol. 53, No. 3, p. 821, 2012) on SSRN.  Here’s the abstract:

This Article seeks to challenge the corporate-constructed image of American business and American industry. By focusing on the automotive industry and particularly on the tenuous relationship between the rhetoric of automotive industry advertising and the realities of doctrinal corporate law, I hope to examine the ways that we as social actors, legal actors, and (perhaps above all) consumers understand what it means for a corporation or a corporation’s product to be American. In a global economy where labor, profits, and environmental effects are spread across national borders, what does it mean for a corporation to present the impression of national citizenship? Considering the recent bail-out of the major American automotive corporations, the automotive industry today becomes a powerful vehicle for problematizing the conflicted private/public nature of the corporate form and for examining what it means for a corporation to be American and what duties and benefits such an identity confers.

By examining the ways in which consumable myths of the American corporation interact with the institutions and legal regimes that govern American corporations, I argue that the advertised image of the national in the global economy serves as a broad corporate veil, a way of obscuring the consumer’s understanding of corporate identity and corporate accountability. With these overarching issues and questions as a guide, this Article will historically situate the identification of corporate nationality within a broader framework of debates on corporate social responsibility and interrogate the way that we conceive of the American corporation and corporate decision making.

Download the article for free here.

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The Economic Situation of the Middle Class

Posted by The Situationist Staff on May 2, 2012

From Harvard Gazzette:

The American middle class has been battered by the loss of well-paying jobs for the 70 percent of the workforce without a college degree and failed by would-be protectors in government and private institutions, said panelists at the 35th Anniversary Forum of the Harvard Institute for Learning in Retirement on Friday.

Former Pennsylvania Gov. Ed Rendell, whose forthcoming book “A Nation of Wusses” criticizes politicians of both parties for failing to act in the country’s best interest, pointed to elected officials and corporate leaders who can’t see beyond the next election or quarterly earnings report.

“Nobody is looking at what happens 15 or 20 years down the road,” he said.  And regardless of political persuasion everyone has a stake in the future: “We can’t have a good economy if middle class income continues to go down.”

Frank Levy, an MIT urban studies and economics professor, outlined how the middle class has suffered declines since the 1970s as a result of trends ranging from globalization to rising tuition costs.

“Roughly speaking, the society, including the government and individuals, has made a lot of promises about payments to make in future that we can no longer make,” he said.

The middle class has been hurt by the failure of policymakers to plan and account for a sharp rise in health care costs and the widespread job losses tied to the housing collapse.

The question, Levy said, is: “How are we going to distribute the losses? How much will be absorbed by lower incomes and how much will be absorbed in the present versus the future?”

New York Times columnist Joe Nocera assigned another aspect of diminished incomes to the zeal corporate leaders since the 1980s have had for downsizing to boost profits, and the shift from pensions to mutual funds for retirees.  Nocera disavowed the conclusion of his 1995 book, “A Piece of the Action,” which painted a rosy picture of transition from a “country full of people who had money in the bank to a country of people who invested in the stock market.”

But as wages flattened with the decline of U.S. manufacturing, he said,  “This shift has turned out to be terrible for the people who have to save for their own retirement.”

It transferred risk from the institution to the individual, putting more pressure on the middle class, said Nocera, whose latest book, “All the Devils Are Here,” is about the hidden history of the financial crisis.

The best way to help middle-income residents in the United States would be to address the housing crisis, Nocera said. “We have no housing policy. Most people’s equity is tied up in their house and the country has not decided what to do with Fannie and Freddie.”

“Is it all the Republicans’ fault?” asked moderator Paul Solman, PBS business and economics correspondent and Harvard M.B.A. ’79, in introducing Rendell, a leading Democrat.

“Yes,” Rendell said, to widespread laughter at the nearly full First Parish church in Cambridge.

Rendell said the best thing that could happen to corporate America would be to get rid of quarterly earnings reports that put shareholders’ returns ahead of visionary and wise business management.

There was agreement among the panelists that U.S. corporations should pay more taxes.

Levy noted that the United States is in the bottom third of corporate taxes paid in the world.

Nocera said that tax reform would free up a lot of corporate money for better purposes.

“You would generate more revenue and make the corporations more efficient because GE wouldn’t have a 1,000-person tax office to find loopholes,” Nocera said. “But the reason it will never happen is this is how Congress lives and dies. They generate their own revenues by saving those loopholes or creating new ones.”

The panelists agreed that skyrocketing tuition is hitting the middle class hardest.

“If you’re poor, you can get grants and the rich pay full price,” said Nocera, using the example of the California public college system that now charges in-state students $30,000. “If you’re middle class you can’t afford it.

“The state of California has taken this jewel and said we’re not going to cut back on our prison system but we’re going to cut back on our university system and balancing its budget on the backs of the middle class.”

Nocera concluded, however, “The middle class is under siege but it’s not quite as hopeless as people like me portray it.”

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Resisting Materialism

Posted by The Situationist Staff on April 15, 2012

From the Center for a New American Dream () at http://www.newdream.org:

Psychologist Tim Kasser discusses how America’s culture of consumerism undermines our well-being. When people buy into the ever-present marketing messages that “the good life” is “the goods life,” they not only use up Earth’s limited resources, but they are less happy and less inclined toward helping others. The animation both lays out the problems of excess materialism and points toward solutions that promise a healthier, more just, and more sustainable life.

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How Deceptive Advertising Preys Upon Our Minds

Posted by Adam Benforado on March 1, 2012

In my Business Organizations course this semester, we have been spending some time thinking about the collection and use of consumer data by corporations.  We have looked at the types of information that companies gather, how they employ statisticians to “weaponize” this information, and whether (and in what ways) the government might effectively (and constitutionally) regulate in this area.

Our discussion has been particularly well timed, given recent articles exposing corporate practices and proposals floated by the Obama administration to address certain types of consumer data mining practices.

One thing that surprised me in speaking with students was how unworried many of them were about corporations carefully monitoring and cataloging their behavior and characteristics.  As one student remarked, “If all of this means that Target knows when I’m in my second trimester and sends me free coupons for lotions, I think that’s great!”

I have a hunch that part of the comfort with corporate “data management” is a result of generational differences: many of my 24- or 25-year-old students have grown up in an environment in which life is lived online without window shades  and where privacy may be less valued.  Another part of the story may simply be a lack of understanding of how manipulative corporations actually are.

This leads me to wonder if with a greater knowledge of the science of advertising and marketing, we will see more restrictions on corporate actions.  If so, here is to people like Adam Craig and his colleagues who have just written an interesting new article on neural processing during exposure to deceptive advertising.

Here is the abstract:

When viewing advertisements, consumers must decide what to believe and what is meant to deceive. Accordingly, much behavioral research has explored strategies and outcomes of how consumers process persuasive messages that vary in perceived sincerity. New neuroimaging methods enable researchers to augment this knowledge by exploring the cognitive mechanisms underlying such processing. The current study collects neuroimaging data while participants are exposed to advertisements with differing levels of perceived message deceptiveness (believable, moderately deceptive, and highly deceptive). The functional magnetic resonance imaging data, combined with an additional behavioral study, offer evidence of two noteworthy results. First, confirming multistage frameworks of persuasion, the authors observe two distinct stages of brain activity: (1) precuneus activation at earlier stages and (2) superior temporal sulcus and temporal-parietal junction activation at later stages. Second, the authors observe disproportionately greater brain activity associated with claims that are moderately deceptive than those that are either believable or highly deceptive. These results provoke new thinking about what types of claims garner consumer attention and which consumers may be particularly vulnerable to deceptive advertising.

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Posted in Deep Capture, Marketing, Neuroscience | Tagged: , | 2 Comments »

The Situational Effects of Food Advertising

Posted by The Situationist Staff on February 9, 2012

Pierre Chandonm and Brian Wansink recently posted their paper “Is Food Marketing Making Us Fat? A Multi-Disciplinary Review” on SSRN.  Here’s the abstract.

Whereas everyone recognizes that increasing obesity rates worldwide are driven by a complex set of interrelated factors, the marketing actions of the food industry are often singled out as one of the main culprits. But how exactly is food marketing making us fat? To answer this question, we review evidence provided by studies in marketing, nutrition, psychology, economics, food science, and related disciplines that have examined the links between food marketing and energy intake but have remained largely disconnected. Starting with the most obtrusive and most studied marketing actions, we explain the multiple ways in which food prices (including temporary price promotions) and marketing communication (including branding and nutrition and health claims) influence consumption volume. We then study the effects of less conspicuous marketing actions which can have powerful effects on eating behavior without being noticed by consumers. We examine the effects on consumption of changes in the food’s quality (including its composition, nutritional and sensory properties) and quantity (including the range, size and shape of the packages and portions in which it is available). Finally, we review the effects of the eating environment, including the availability, salience and convenience of food, the type, size and shape of serving containers, and the atmospherics of the purchase and consumption environment. We conclude with research and policy implications.

Download the paper for free here.

Related Situationist posts:

For more on the situation of eating, see Situationist contributors Adam Benforado, Jon Hanson, and David Yosfion’s law review article Broken Scales: Obesity and Justice in America.  For a listing of numerousSituaitonist posts on the situational sources of obesity, click here.

Posted in Abstracts, Choice Myth, Deep Capture, Education, Food and Drug Law, Marketing | Tagged: , , , | 1 Comment »

The Deep Capture of Financial Institutions

Posted by The Situationist Staff on December 31, 2011

Lawrence G. Baxter, at Duke Law School, recently wrote an excellent situationist article, titled “Capture in Financial Regulation: Can We Redirect It Toward the Common Good?” (forthcoming in 21 Cornell Journal of Law & Public Policy).  Here’s the abstract.

* * *

“Regulatory capture” is central to regulatory analysis yet is a troublesome concept. It is difficult to prove and sometimes seems refuted by outcomes unfavorable to powerful interests. Nevertheless, the process of bank regulation and supervision fosters a closeness between regulator and regulated that would seem to be conducive to “capture” or at least to fostering undue sympathy by regulators for the companies they oversee. The influence of very large financial institutions has also become so great that financial regulation appears to have become excessively distorted in favor of these entities and to the detriment of many other legitimate interests, including those of taxpayers, smaller financial institutions, and the promotion of general economic growth. So “deep capture” by the larger elements of the financial industry of the regulatory process might well have become a very significant problem. At the same time, it is unrealistic to assume that participants in the policy making and policy implementation process will not be trying to exert influence on the outcome of any regulation that impacts them. Attempts to maximize influence are surely an inevitable element of the ongoing regulatory process. And it is unrealistic to try to avoid extensive industry input altogether. Regulators and regulations depend on frequent and sometimes intense interaction with various sectors of the industry. To promote sound regulatory policy, we should renew efforts to shape the environmental conditions in which the competition for regulatory outcomes takes place, so that policy more favorable to the general public interest becomes more likely. This involves a combination of measures, many of which are quite traditional but some of which are too often neglected. Such measures might include: strengthening “tripartism,” advocated by Ayres and Braithwaite, by facilitating broader interest group participation in the regulatory process; limiting the influence of dominant participants by reducing their scale; properly structuring, resourcing and supporting regulatory agencies and regulators; “rotating” regulators so that they are less likely to develop unduly empathic relationships with the institutions they regulate; tightening the rules governing the “revolving door;” and making greater use of independent consultative and review bodies.

* * *

Download the paper here.

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You can review hundreds of Situationist posts related to the topic of “deep capture” here

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Can The Law Go Upstream?

Posted by The Situationist Staff on December 22, 2011

Roger Magnusson, Lawrence O. Gostin, and David  Studdert recently posted their paper, “Can Law Improve Prevention and Treatment of Cancer?” on SSRN:

The December 2011 issue of Public Health (the Journal of the Royal Society for Public Health) contains a symposium entitled: Legislate, Regulate, Litigate? Legal approaches to the prevention and treatment of cancer. This symposium explores the possibilities for using law and regulation – both internationally and at the national level – as the policy instrument for preventing and improving the treatment of cancer and other leading non-communicable diseases (NCDs). In this editorial, we argue that there is an urgent need for more legal scholarship on cancer and other leading NCDs, as well as greater dialogue between lawyers, public health practitioners and policy-makers about priorities for law reform, and feasible legal strategies for reducing the prevalence of leading risk factors. The editorial discusses two important challenges that frequently stand in the way of a more effective use of law in this area. The first is the tendency to dismiss risk factors for NCDs as purely a matter of individual ‘personal responsibility'; the second is the fact that effective regulatory responses to risks for cancer and NCDs will in many cases provoke conflict with the tobacco, alcohol and food industries. After briefly identifying some of the strategies that law can deploy in the prevention of NCDs, we briefly introduce each of the ten papers that make up the symposium.

You can download the paper for free here.

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The Fundamental(ist) Attribution Error

Posted by The Situationist Staff on December 4, 2011

Situationist Contributor Eric Knowles and his co-authors (Yexin Jessica Li, Kathryn Johnson, Adam Cohen, Melissa Williams, and Zhansheng) recently published a terrific situationist article, “Fundamental(ist) attribution error: Protestants are dispositionally focused, in the Journal of Personality and Social Psychology, Nov 14, 2011.  Here’s the abstract:

Attribution theory has long enjoyed a prominent role in social psychological research, yet religious influences on attribution have not been well studied. We theorized and tested the hypothesis that Protestants would endorse internal attributions to a greater extent than would Catholics, because Protestantism focuses on the inward condition of the soul. In Study 1, Protestants made more internal, but not external, attributions than did Catholics. This effect survived controlling for Protestant work ethic, need for structure, and intrinsic and extrinsic religiosity. Study 2 showed that the Protestant–Catholic difference in internal attributions was significantly mediated by Protestants’ greater belief in a soul. In Study 3, priming religion increased belief in a soul for Protestants but not for Catholics. Finally, Study 4 found that experimentally strengthening belief in a soul increased dispositional attributions among Protestants but did not change situational attributions. These studies expand the understanding of cultural differences in attributions by demonstrating a distinct effect of religion on dispositional attributions.

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Posted in Abstracts, Deep Capture, Ideology, Social Psychology | Tagged: , , | 2 Comments »

Miss Representation – Premieres Tonight on OWN

Posted by The Situationist Staff on October 20, 2011

The documentary explores how the media’s misrepresentation of women has led to the underrepresentation of women in positions of power and influence. It will premiere in the US tonight at 9pm ET.

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The Marketing Situation of Doritos (FTC Complaint)

Posted by The Situationist Staff on October 19, 2011

NPLAN filed a complaint today with the FTC today alleging that Frito-Lay has engaged in deceptive marketing to teens by disguising Doritos ads as entertainment; by collecting and using kids’ personal information in violation of its own privacy policy and without adequate disclosure about the extent and purpose of the data collection; and by engaging in viral marketing in violation of the FTC’s endorsement guidelines. Learn more about the complaint here.

These videos, which detail the advertising strategies and goals, speak for themselves.

Related Situationist posts:

For more on the situation of eating, see Situationist contributors Adam Benforado, Jon Hanson, and David Yosfion’s law review article Broken Scales: Obesity and Justice in AmericaFor a listing of numerous Situaitonist posts on the situational sources of obesity, click here.

Posted in Choice Myth, Deep Capture, Emotions, Entertainment, Food and Drug Law, Marketing, Video | Tagged: , , , | 2 Comments »

Fear and Threat in the Media

Posted by The Situationist Staff on October 3, 2011

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Big Tobacco still at it

Posted by The Situationist Staff on September 6, 2011

From The Independent:

The world’s largest tobacco company is attempting to gain access to confidential information about British teenagers’ smoking habits.

Philip Morris International, the maker of Marlboro cigarettes, is seeking to force a British university to reveal full details of its research involving confidential interviews with thousands of children aged between 11 and 16 about their attitudes towards smoking and cigarette packaging.

The demands from the tobacco company, made using the UK’s Freedom of Information law, have coincided with an internet hate campaign targeted at university researchers involved in smoking studies.

One of the academics has received anonymous abusive phone calls at her home at night. She believes they are prompted by an organised campaign by the tobacco industry to discredit her work, although there is no evidence that the cigarette companies are directly responsible. Philip Morris says it has a “legitimate interest” in the information, but researchers at Stirling University say that handing over highly sensitive data would be a gross breach of confidence that could jeopardise future studies.

The researchers also believe that the requests are having a chilling effect on co-operation with other academics who fear that sharing their own unpublished data with Stirling will lead to it being handed over to the tobacco industry.

Philip Morris International made its first Freedom of Information (FOI) request anonymously through a London law firm in September 2009. However, the Information Commissioner rejected the request on the grounds that that law firm, Clifford Chance, had to name its client.

Philip Morris then put in two further FOI requests under its own name seeking all of the raw data on which Stirling’s Institute for Social Marketing has based its many studies on smoking knowledge, attitudes and behaviour in children and adults.

“They wanted everything we had ever done on this,” said Professor Gerard Hastings, the institute’s director.

“These are confidential comments about how youngsters feel about tobacco marketing. This is the sort of research that would get a tobacco company into trouble if it did it itself.” Professor Hastings added: “What is more, these kids have been reassured that only bona fide researchers will have access to their data. No way can Philip Morris fit into that definition.”

* * *

Cancer Research UK funded the Stirling research into the smoking behaviour of British teenagers in order to answer basic questions about why 85 per cent of adult smokers started smoking when they were children. The researchers at Stirling have built up an extensive database of interviews with 5,500 teenagers to analyse their attitudes to cigarette marketing, packaging and shop displays. “It is a big dataset now because we’ve been in the field several times talking to between 1,000 and 2,000 young people each time – going down to the age of 11 and up to the age of 16,” Professor Hastings said. “These kids are often saying things they don’t want their parents to know. It’s very sensitive.”

Asked what would happen if he lost the fight against Philip Morris, Professor Hastings said: “It would be catastrophic. I don’t think that’s an outcome I would like to contemplate. It is morally repugnant to give data confidentially shared with us by children to an industry that is so rapacious.”

Linda Bauld, professor of socio-management at Stirling, said that other universities in Britain and abroad are following the case with trepidation: “Our colleagues in the community… will not be willing necessarily to hand over information.”

Stirling’s Institute for Social Marketing consists of 15 full-time researchers and operates with an annual staff budget of £650,000. Philip Morris International employs 78,000 people and has an annual turnover of £27.2bn.

Professor Hastings said that Philip Morris’s demands have taken up large amounts of time and resources, diverting his department’s attention from its primary role of investigating smoking behaviour. “We have spent a lot of time on this. A research unit like ours simply can’t afford this,” he said. “But for me the crux is the trust we have with young people. How easy will it be for us to get co-operation from young people in the future?

“Our funders will have to think carefully about the further funding of our research. I don’t think for one moment a cancer charity is going to take kindly to paying us hundreds of thousands of pounds to give aid and succour to a multinational tobacco corporation.”

* * *

Academics studying the smoking behaviour of British teenagers and adults have found themselves to be the targets of vitriolic attacks by the pro-smoking lobby.

University researchers have been sent hate emails and some have even received anonymous phone calls, which usually come after a series of blogs posted on pro-smoking websites, including at least one which is linked to the tobacco industry.

Linda Bauld, professor of socio-management at Stirling University’s Institute for Social Marketing, says she was unprepared for the scale of the personal attacks aimed at discrediting her work on smoking behaviour and anti-smoking legislation.

“I’ve had a series of anonymous calls starting about a year ago,” Professor Bauld said. “These are phone calls in the evening when I’m at home with my children. It’s an unpleasant experience.

“It’s happened six or seven times and it’s always an unknown number. It’s usually after stuff has been posted on one of the main smokers’ websites.

“They don’t leave their name, they just say things like ‘Keep taking the money’, and ‘Who are you to try to intervene in other peoples’ lives’, using a couple of profanities.”

. . . . There is no evidence to suggest that tobacco companies are directly responsible for the anonymous phone calls. However, Professor Bauld has been identified as a legitimate target for criticism by Big Tobacco following her high-profile work on cigarettes and the impact of smoking bans. Her report for the Department of Health last March on the smoking ban in England found that there had been positive benefits to health and no evidence of any obvious negative impact on the hospitality industry, as the tobacco industry has repeatedly claimed.

Imperial Tobacco, the biggest cigarette company in Britain and makers of the best-selling Lambert & Butler brand, responded to Professor Bauld’s report with its own review, called The Bauld Truth. This report, which took just a few weeks to write, claimed that Professor Bauld’s study, conducted over three years, was “lazy and deliberately selective”. It claimed that she used “flawed evidence and failed to validate her findings”.

Professor Bauld said such personalised attacks were nothing new. Big Tobacco has a long history of aggressively dismissing scientific evidence linking smoking to ill health, she said. “These… are heavily peer-reviewed at every stage. Their methods are robust, whereas the evidence [the tobacco companies] draw on are not well-conducted studies,” Professor Bauld said.

More.

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Posted in Deep Capture, Marketing, Public Relations | Tagged: , | 1 Comment »

The Situation of the Energy Efficiency Gap

Posted by The Situationist Staff on July 25, 2011

Brandon Hofmeister just posted his fascinating paper, “Bridging the Gap: Using Social Psychology to Design Market Interventions to Overcome the Energy Efficiency Gap in Residential Energy Markets” (forthcoming  19 Southeastern Environmental Law Journal 1 (2010) on SSRN.  Here’s the abstract.

* * *

For decades, economists and energy policy analysts have noticed the existence of an “energy efficiency gap” – a significant underinvestment in energy efficiency measures whose benefits outweigh their costs – among residential consumers. Promoting energy efficiency is generally the most cost-effective manner to reduce greenhouse gas emissions and to meet future energy demand, while simultaneously promoting economic growth and reducing poverty. Economists have attempted to explain the energy efficiency gap by applying theories of market failures that retain the underlying assumption that consumers generally act as economically rational actors. These theories partly explain the energy efficiency gap, but because they fundamentally misconstrue the reality of human behavior, traditional economic theories alone fail to adequately account for the energy efficiency gap. Social psychologists have discovered a number of predictable behavioral tendencies that contradict the rational actor assumption of economists. Many of these behavioral tendencies serve as significant cognitive barriers to investments in energy efficiency. Because traditional economists’ explanations for the energy efficiency gap are incomplete, their public policy solutions to close the gap are likewise insufficient. Specifically, most traditional economists reject forms of public policy they deem paternalistic. The article describes a number of general factors that should be considered when determining whether a market intervention is justified and applies these factors to some specific policies designed to promote residential energy efficiency. The article finds that a suite of market interventions – such as financial subsidies and mandatory minimum energy efficiency standards for buildings, appliances, and electronic devices – is justified to address the energy efficiency gap.

* * *

You can download the paper for free here.

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Posted in Deep Capture, Environment, Social Psychology | Tagged: , | 1 Comment »

The Regulatory Situation of Smoking

Posted by The Situationist Staff on June 1, 2011

From The Independent:

More than half a century after scientists uncovered the link between smoking and cancer – triggering a war between health campaigners and the cigarette industry – big tobacco is thriving.

Despite the known catastrophic effects on health of smoking, profits from tobacco continue to soar and sales of cigarettes have increased: they have risen from 5,000 billion sticks a year in the 1990s to 5,900 billion a year in 2009. They now kill more people annually than alcohol, Aids, car accidents, illegal drugs, murders and suicides combined.

* * *

The West now consumes fewer and fewer of the world’s cigarettes: richer countries have changed – from smoking 38 per cent of the world total in 1990, they cut down to 24 per cent in 2009. Meanwhile, the developing world’s share in global cigarette sales has increased sharply, rising to 76 per cent in 2009.

An investigation by The Independent on Sunday reveals that tobacco firms have taken advantage of lax marketing rules in developing countries by aggressively promoting cigarettes to new, young consumers, while using lawyers, lobby groups and carefully selected statistics to bully governments that attempt to quash the industry in the West.

In 2010, the big four tobacco companies – Philip Morris International, British American Tobacco, Japan Tobacco and Imperial Tobacco – made more than £27bn profit, up from £26bn in 2009.

The price of their profits will be measured in human lives. In the 20th century, some 100 million people were killed by tobacco use. If current trends continue, tobacco will kill a billion people in the 21st century.

* * *

Anna Gilmore, professor of public health at the University of Bath, said: “What most people don’t realise is that, although sales are falling in the West, industry profits are increasing. These companies remain some of the most profitable in the world. This is thanks in part to their endless inventive ways of undermining and circumventing regulation. They’re trying to reinvent their image to ingratiate themselves with governments, but behind the scenes it’s business as usual.”

* * *

In Indonesia alone there are 21 million child smokers. There is little to stop companies promoting cigarettes to young people. In countries such as Nigeria, Ukraine and Brazil, tobacco companies have sponsored club nights or parties aimed at attracting new young users. In Russia, attempts to entice women smokers have included packaging made to look like jewel-encrusted perfume bottles and even selling cigarettes branded by the fashion house Yves Saint Laurent.

Dr Armando Peruga, programme manager for the WHO’s tobacco free initiative, said: “We need to do more. We need to stop the tobacco industry promoting themselves as normal corporate citizens when they are killing people every day. We are lagging behind in establishing comprehensive bans on advertising, marketing, promotion and sponsorship.”

* * *

Laurent Huber, director of the Framework Convention Alliance on tobacco control, said: “In countries like Uruguay, the tobacco industry uses its vast wealth to tie up public health measures in court battles. Win or lose, this has a chilling effect on other governments.”

These tricks are by no means confined to the less-regulated emerging countries. In Australia, which will become the first country to introduce plain packaging for cigarettes by law, the industry has been accused of scaremongering against the measures by threatening to flood the market with cheap fags.

In Britain, the industry is also prone to taking any measures necessary to keep regulation at bay. This autumn a group of tobacco companies is taking the Government to court over its proposals to ban cigarette displays in all shops.

More often in the UK, though, Big Tobacco’s attempts to alter public opinion are more subtle. A study from Action on Smoking and Health (ASH), out this week, scrutinises the credibility of economic arguments used by the industry to fight back against legislation. For example, when Christopher Ogden, chief executive of the Tobacco Manufacturers Association, said in 2010 that the smoking ban had severely threatened the pub and bingo industry because of lost jobs and livelihoods, the reality was a little different. Data from the Office for National Statistics shows a net increase in the number of people visiting pubs since the smoking ban. When England went smoke-free in 2007, the number of premises licensed for alcohol increased by 5 per cent, and it has continued to grow every year since.

Deborah Arnott, chief executive of ASH, said: “In line with our international treaty obligations, the UK government has not only banned advertising and put health warnings on packs, but also committed to protect public health policies from the commercial and vested interests of the tobacco industry. To get round this, the industry uses front groups to covertly lobby politicians, arguing that smoke-free legislation has destroyed the pub trade, and that putting tobacco out of sight in shops will both be ineffective and put corner shops out of business.

More.

Related Situationist posts.

Posted in Choice Myth, Deep Capture, Education, Law, Politics | Tagged: , , , | Leave a Comment »

Marjorie Kelly Speaks at Harvard Law

Posted by The Situationist Staff on April 6, 2011

Marjorie Kelly, Senior Associate at the Tellus Institute, speaks today at Harvard Law School.  The event is sponsored by SICKLE (Jon Hanson’s Corporate Law Class),

Title: “What Comes Next? The demise of shareholder primacy and the seeds of new corporate design.”
When: Wednesday, April 6, 12:15-1:15 PM
Where: Langdell South

Here’s a bio of Marjorie Kelly:

Marjorie Kelly is a modern revolutionary who wants to democratize economics. She argues that our current economic system is an aristocracy run by corporations that pay shareholders as much as possible and employees as little as possible—while ignoring the public good. CEOs aren’t all bad guys, Kelly says, they’re just operating in a system that forces them to put profits above everything else. That’s what she aims to change with her groundbreaking book, The Divine Right of Capital, which offers ideas on how to move toward a more humane, democratic corporate design.

Kelly’s book is already a modern classic that reveals the mechanisms that lead capitalism to create social ills. She shows how the wealth gap, corporate welfare, and industrial pollution are merely symptoms; the real illness is shareholder primacy—the corporate drive to create more wealth for the rich, regardless of the cost. She says that 99 percent of “investing” is speculation benefiting the financial elite, not small investors.

Ordinary citizens can spur change, Kelly says, by pushing for reform on laws that govern the way corporations operate. “We must design a corporate system in which all economic rights are equally protected, not only the rights of shareholders,” Kelly says. To that end, she advocates two key areas of reform: requiring corporations to be responsible to the public good, and putting more wealth into the hands of those who generated it—the employees.

Kelly isn’t a dreamy-eyed idealist. She is the co-founder and editor of Business Ethics, a leading publication on socially responsible business, and a Missouri-born, third-generation entrepreneur (her grandfather started Anderson Tool & Die in his basement during the Depression). David Korten, author of When Corporations Rule the World, calls Kelly “our Thomas Paine for the new millennium.”

Related Situationist Posts:

Posted in Deep Capture, Distribution, Events, Law | Tagged: | 1 Comment »

Sending the Wrong Message

Posted by Adam Benforado on March 23, 2011

Joe D’Amico probably had the best of intentions when he set out to eat an all-McDonald’s diet for thirty days leading up to the L.A. Marathon. And, in fact, as a result of internet buzz, his “food challenge” ended up raising $26,000 for Ronald McDonald charities.

At the race a few days ago, D’Amico set a personal record and improved his cholesterol levels in the process!

So a clear win-win-win!

But isn’t there some Grinch out there to point out the dark side of all of this?

Not at the Huffington Post, which has been nothing but complementary (see here and here), . . . leaving it to the Situationist to rain on everyone’s parade.

Why am I skeptical about this stunt?

Well, for starters it fits in quite neatly with previous strategies by big tobacco and big food to employ salient counterexamples to show that cigarettes don’t cause cancer and eating copious amounts of fast food has no ill effects on a person’s health.

As Situationist contributors Jon Hanson, David Yosifon, and I chronicled in the 2004 article, “Broken Scales: Obesity and Justice in America,” Don Gorske, the six foot tall, 170-pound world record holder for eating Big Macs (over 20,000 as of July 2004), has been repeatedly cited as proof that plentiful fast food doesn’t cause weight gain. The problem, in part, is that “we use positive-test theories to analyze the evidence we confront. If we want proof that fast food does not make people fat, and that it is, in fact, a matter of genes or watching too many Friends reruns, all we have to do is go into any McDonald’s and our eyes and minds will fix on the one or two skinny people wolfing down Big Macs.”

D’Amico may not know it, but he’s just a tool in McDonald’s box of strategies aimed at fighting the science on obesity that links the high calorie, sweet and salty foods that the fast food company sells with serious health problems.

In interviews, D’Amico hems so closely to the company line that it’s hard to believe he’s not an official spokesman: “If you make good choices and better choices more often than not, you’re going to have good results . . . . There’s diet, there’s exercise, there’s stress. There’s a lot of things. That’s something I try to tell people to keep in mind. Don’t focus on one aspect look at things as a whole.”

Ronald himself couldn’t have said it better: go ahead order that Angus Bacon and Cheese, large fries, and Chocolate Triple Thick Shake.  What’s a 2400 calorie lunch (with 91 grams of fat) going to do?  Probably lower your cholesterol!

* * *

Related Situationist Posts:

Posted in Deep Capture, Food and Drug Law, Marketing, Public Relations, Situationist Contributors | Tagged: , , | 2 Comments »

Capture (Animated)

Posted by The Situationist Staff on March 5, 2011

From :

The Story of Citizens United v. FEC, an exploration of the inordinate power that corporations exercise in our democracy.

For a sample of related Situationist posts, see

Posted in Deep Capture, Politics, Video | Tagged: , , | 1 Comment »

Legal Socialization and the News

Posted by The Situationist Staff on February 27, 2011

Over at the new Law & Mind Blog, several Harvard Law students have been blogging about a chapter (forthcoming inIdeology, Psychology, and Law, edited by Situationist Contributor Jon Hanson) by Mitchell Callan and Situationist Contributor Aaron Kay. In the second post on the topic (copied below), LLM candidate David Simon discusses legal socialization.

* * *

Imagine you and your neighbor share a fence along a common border, part of which demarcates the boundary between both properties and “the wilderness.” The fence benefits both of you because it keeps out the livestock-killing coyotes. One day, a shared and critical part of the fence collapses onto your property, leaving your yard open to coyotes, who may eat your livestock. Without legal recourse, how might you resolve that dispute. Would you work with your neighbor to help reconstruct the fence? Would the solution be cooperative or adversarial? (For more on the resolution of land disputes without the aid of law, see Robert Ellickson, Order Without Law: How Neighbors Settle Disputes.)

Did Jack McCoy's role on Law & Order influence your perception of people as self-interested?

If we introduce law into the equation–say, by inventing a right that allowed you to sue your neighbor–how would the resolution of that dispute change? Might you claim that your neighbor ought to fix the fence herself, even if an unrepaired fence might harm you?

Mitchell J. Callan & Aaron Kay think that the answer to that last question may be “yes”: the law may in fact alter how we think about situations and how we interact (cooperatively or not) with others. This occurs, they argue, through a process called legal socialization: the process by which exposure to law can reinforce conceptions of individuals as self-interested and competitive. (This occurs, for example, by exposure to popular depictions of the legal system, such as those on Law & Order, as Beth describes in her post.) If you’re curious about how they reach this hypothesis, Becky’s blog post explains it for you. But the basic idea is this: if exposure to certain ideas influences how one thinks and acts, exposure to systems embedded with latent ideas might do the same. Because the U.S. legal system conceptualizes people as self-interested and competitive, exposure to it can reinforce notions of people as competitive and self-interested.

Identifying this phenomenon in everyday events is a bit more difficult than it sounds–largely because legal socialization seems to be gradual rather than punctuated. Nevertheless, there are instances where we can view the law as reinforcing certain conceptions of the individual.

SB-1070

Take, for example, Arizona’s recent enactment of SB-1070, one of the strictest immigration laws in recent history. Among other

Humor is one way to diffuse conceptions of people as self-interested and competitive.

things, the law criminalized both attempts by illegal immigrants to work, and attempts by others to solicit work from illegal immigrants (Sec. 13-2928). That provision alone seems to have “competitive” or “self-interest” overtones. In some ways, though, the law might be a product–rather than example–of legal socialization. I.e., the law represents how people perceive others are likely to act. In this case, the law conceptualizes an “outgroup” (immigrants) as a competitive threat, and seeks to neutralize that threat by preserving the “ingroup’s” (Arizona residents) interest. The law is both shaped by, and an embodiment of, visions of individuals as competitive and pursuing selfish aims.

What’s troubling is not so much the characterization of the individual, but the effect it has on social behavior and thinking. It may, for example, engender actual competitiveness where none existed before; that is, it may decompose social relations, rather than strengthen them. Interestingly, some groups have seemed to pick up on this dynamic already. When Arizona signed the law into law,

the Mexican American Legal Defense and Educational Fund . . . predict[ed] that the law would create “a spiral of pervasive fear, community distrust, increased crime and costly litigation, with nationwide repercussions.”

Though potentially exaggerated, those are the kinds of results we would expect given Callan & Kay’s findings. A law that reinforces stereotypes of the individual as competitive and self-interested will strengthen and propagate that stereotype. That, in turn, can have anti-social effects: less cooperation, more stratification, and enhanced hostility between “groups.”

School Board Meetings & the Open Access Law

For those unfamiliar with school board meetings, they can be nasty affairs. Disputes between the board and superintendents often are bitter–the board is an “outsider” to the superintendent, who “runs the school.” Disputes also can arise between the public–which wants to know what the board is discussing–and the board, which wants to run the meeting in a particular way.The latter dispute recently arose in a school board meeting in Oklahoma. The superintendent of schools in the district apparently has a knack for “poor behavior,” such as yelling. But beyond incivility, the author of the hyperlinked editorial is concerned with the law:

No one can force the grown-ups to act as such. But they can and should be compelled to follow the law.

Krushchev would have fit in well with some members of a recent Oklahoma school board meeting.

What law, you ask? Laws ensuring public access to meetings of public bodies–so called “open access laws.” The overarching purpose of such laws is to prevent secrecy among public bodies. Because public schools are accountable to, well, the public, most states have open access laws that govern their board meetings. In Illinois, for example, the Open Meetings Act requires most public school board meetings to be open to the public. When the board conducts closed or private meetings, it must videotape or record them.

Back to the author’s request: “follow the law.” Now, requiring people to follow the law is not an unreasonable request–and, indeed, it may be just the right thing to do. But notice how, in this case, the law itself is being used to quell what the author sees as the school board’s self-interested behavior. What, exactly, was that behavior? The author thinks it was a deliberate attempt to avoid disclosing issues to the public:

Much of the initial ruckus at the meeting involved three potential employees Barresi recommended for hire. But none of the names nor the positions they were to fill were listed on the agenda. Instead, the meeting’s posted agenda listed a “Report on Department personnel changes” as an item on the consent agenda.

I don’t know the board’s motives for issuing such a vague description. Maybe it was trying to be sneaky, or maybe it was just issuing a general topic to be discussed at the meeting. That’s not the point. What matters here is that the author’s sense of the activity (some kind of impropriety) is shaped by the law–more specifically, the author sees a person whose acts conform to the image the law projects.

Let’s see exactly how that is so. The law here is a mechanism to prevent the board from pursuing self-interested ends. Indeed, the law “sets up” this conclusion. The law assumes school boards and administrators as likely to meet in secret–as pursuing self-interest. By trying to prevent certain behavior, the law makes assumptions about how people will behave; in this case, it assumes they will behave in a self-interested fashion.

That assumption may or may not be accurate, but it certainly colors the author’s analysis of the issue. The author assumes–as does the law–that the board was providing vague descriptions because it had self-interested ends. Why? Because that is exactly what the law assumes. The author’s assessment may be correct, but the law’s conception of the individual certainly influences how one thinks about the situation. One might say, “Well, if the law says you have to do X because, if you don’t, your probably pursing self-interested aims, then you likely are pursing self-interested aims when you fail to do X.”

Pushing for people to follow “the law” may not be a bad thing, but when the law leads to perceptions about people’s nature, it can have unintended and potentially harmful consequences. The law presumes the school board will act in self-interested ways–and that may have socialized the author to view the board’s actions as violating the law (i.e., as self-interested) when they are not. Might the situation have been different if no law had existed? Would different norms have developed? Would the situation been viewed the same way?

Callan & Kay aren’t just concerned with cognition, though. Recall that they hypothesize that our conception of the law can actually influence our behavior. Maybe this is just such an instance. Instead of working with the board in a cooperative way, the author seeks legal recourse simply because the law leads the author to see the board’s behavior as self-interested.

A Question

I want to close with some thoughts on the legal socialization hypothesis, which I find interesting. I can’t help but wonder whether the law’s default preference in many cases is necessitated by actual self-interested or competitive behavior. Many times it’s difficult to separate what laws are merely socializing people to competitive and self-interest conceptions of human behavior from those that actually protect people from such behavior. Callan & Kay do note that the influence of the law on cognition and social relations is likely individual-relative–more research needs to be done. Even when controlling for such individual differences, though, I find the distinction a bit fuzzy. Do securities laws (false advertising laws, trademark laws, etc.), for example, protect people from actual (anti)competitive and self-interested behavior or merely reinforce such conceptions of human nature? The answer in that case is probably both, which is not particularly satisfying.

Posted in Cultural Cognition, Deep Capture, Education, Entertainment, Ideology, Life, Marketing, Situationist Contributors | Leave a Comment »

Secondhand Smoking

Posted by The Situationist Staff on January 20, 2011

From EurekaAlert:

Seeing actors smoke in a movie activated the brain areas of smokers that are known to interpret and plan hand movements, as though they too were about to light a cigarette, according to a new study in the Jan. 19 issue of The Journal of Neuroscience.

Habitual smokers repeat the same hand motions, sometimes dozens of times a day. In this study, researchers led by senior investigator Todd Heatherton, PhD, and graduate student Dylan Wagner of Dartmouth College set out to determine whether the parts of the brain that control that routine gesture could be triggered by simply seeing someone else smoke.

The authors found that seeing this familiar action — even when embedded in a Hollywood movie — evoked the same brain responses as planning to actually make that movement. These results may provide additional insight for people trying to overcome nicotine addiction, a condition that leads to one in five U.S. deaths each year.

“Our findings support prior studies that show smokers who exit a movie that had images of smoking are more likely to crave a cigarette, compared with ones who watched a movie without them,” Wagner said. “More work is needed to show whether brain activity in response to movie smoking predicts relapse for a smoker trying to quit.”

During the study, 17 smokers and 17 non-smokers watched the first 30 minutes of the movie “Matchstick Men” while undergoing functional magnetic resonance imaging (fMRI). The researchers chose the movie because it prominently features smoking scenes but otherwise lacks alcohol use, violence, and sexual content.

The volunteers were unaware that the study was about smoking. When they viewed smoking scenes, smokers showed greater brain activity in a part of the parietal lobe called the intraparietal sulcus, as well as other areas involved in the perception and coordination of actions. In the smokers’ brains specifically, the activity corresponded to the hand they use to smoke.

“Smokers trying to quit are frequently advised to avoid other smokers and remove smoking paraphernalia from their homes, but they might not think to avoid a movie with smoking content,” Wagner said. The U.S. Centers for Disease Control and Prevention has warned that exposure to onscreen smoking in movies makes adolescents more likely to smoke. According to their 2010 report, tobacco use in films has decreased in recent years, but about half of popular movies still contained tobacco imagery in 2009, including 54 percent of those rated PG-13.

Scott Huettel, PhD, of Duke University, an expert in the neuroscience of decision-making who was unaffiliated with the study, said scientists have long known that visual cues often induce drug cravings. “This finding builds upon the growing body of evidence that addiction may be reinforced not just by drugs themselves, but by images and other experiences associated with those drugs,” Huettel said.

* * *

For a sample of related Situationist posts, see

Posted in Choice Myth, Deep Capture, Entertainment, Food and Drug Law, Marketing, Neuroscience | Tagged: , | Leave a Comment »

 
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