Fifth Annual PLMS Conference – Save the Date

The Fifth  Conference on Law and Mind Sciences, tentatively titled “The Psychology of Inequality,” is now being planned for Febuary 26, 2011 at Harvard Law School.  More details will be announced soon.

You can learn more about our previous conferences here.

The Corporate Situation of Universities

The Utne Reader recently had a post summarizing and linking to a “spate of recent stories that reveal how a trio of heavies—Big Oil, Big Agriculture, and Big Pharma—are pulling strings at U.S. universities.”  Here’s a sample:

* * *

• The Chronicle of Higher Education reports on “The Secret Lives of Big Pharma’s ‘Thought Leaders,’” also known as key opinion leaders, or KOLs: the influential academic physician-researchers who are paid by drug companies to basically shill for their brands—but not overtly, of course. That would be unseemly. Instead, they deftly blend their conflicting roles and realize substantial payouts for their credibility-lending efforts. “The KOL is a combination of celebrity spokesperson, neighborhood gossip, and the popular kid in high school,” writes Carl Elliott for The Chronicle. The piece makes me want to read Elliot’s new book, White Coat, Black Hat: Adventures on the Dark Side of Medicine (Beacon Press).

• . . . [A] recent blowup at the University of Minnesota carried another strong whiff of Big Ag influence. An environmental documentary film, Troubled Waters, that ascribed water pollution in part to farming practices was pulled from a public television broadcast amid criticism from a university dean that it “vilified agriculture.” Ultimately, the film was reinstated after a public backlash to the move—and the university vice president who canceled it publicly apologized. . . .

* * *

To read the entire post, click here.  For a sample of related Situationist posts, see “The Greasy Situation of University Research,” “The Deeply Captured Situation of Spilling Oil,” “Tushnet on Teles and The Situation of Ideas – Abstract,” “The Situation of Policy Research and Policy Outcomes,” “Industry-Funded Research,” “The Situation of Medical Research,” “The company ‘had no control or influence over the research’ . . . .,” “The Situation of University Research,” “Captured Science.”  Thanks to Situationist friend Susannah Knox for sending us the link.

Winning the Food Fight

Back at the end of August, I wrote a post about the benefits of “nudging” people towards heath, in particular, by resetting food defaults.  I argued that we could combat obesity without unduly infringing on individual choice or autonomy by changing the food situation so that when a person ordered “a latte,” for example, she was given skim milk unless she specified that she wanted whole milk.

Thus, I was extremely excited to see Brian Wansink, David R. Just, and Joe McKendry’s great “Lunch Line Redesign” op-chart in the New York Times a few days ago.  For decades, experts have been working hard to design supermarkets and fast food restaurants to maximize sales; it sure is nice to see scientists taking a similar approach to maximize nutrition.  As they explain,

Experiments that we and other researchers have done in cafeterias at high schools, middle schools and summer camp programs, as well as in laboratories, have revealed many ways to use behavioral psychology to coax children to eat better. Here are a dozen such strategies that work without requiring drastic or expensive changes in school menus.

I highly encourage you to check out their interactive proposal here.

* * *

To review a sample of related Situationist posts, see “Situationism’s Improving Situation,” “Dr. David Kessler Waxes Situationist,” “The Situation of Eating – Part II,” “The Situation of Eating,” “The Situation of the Dreaded ‘Freshman 15′,” “Our Situation Is What We Eat,” “Social Networks,” “The Situation of Fatness = Our ‘Obesogenic’ Society,” “Innovative Policy: Zoning for Health,” “McDonalds tastes better than McDonalds, if it’s packaged right,” and “The Situation of Repackaging.”

To access Adam Benforado’s article, entitled “Broken Scales: Obesity and Justice in America” (co-written with Situationist contributors Jon Hanson and David Yosifon), on the situationist causes of the American obesity epidemic, click here.

The Stressful Situation of Disease

Here is a synopsis of a recent article, titled “Do neighbourhoods matter? Neighbourhood disorder and long-term trends in serum cortisol levels (published in the Journal of Epidemiology and Community Health), by Patrick H. Ryan (for Environmental Health News):

* * *

Children – especially African Americans – who live in disadvantaged neighborhoods have consistently low levels of the stress hormone cortisol, according to a study that examined children in Alabama.

Cortisol is an important stress hormone associated with good physical and mental health and well-being. The low levels of cortisol measured in the study were in children living in neighborhoods with high unemployment, poverty, female heads of households and vacant housing.

The study’s findings are significant because extended exposure to low cortisol levels may increase immune responses, leading to inflammation and the risk for some chronic childhood diseases. The results add more details to a growing number of reports that link exposure to chronic stressors – including noise, violence and poverty – to negative health effects, such as asthma.

The body’s mechanism for dealing with stress is one explanation for the links. When exposed to a stressful event, a hormonal signaling system called the hypothalamic-pituitary-adrenal axis – or HPA axis – causes cortisol hormone to be released into the bloodstream. However, long-term chronic exposure to stress can disrupt the normal functioning of the HPA axis and result in an opposite reaction – lower than normal levels of cortisol.

In this study, researchers at the University of Alabama at Birmingham recruited 148 African and European-America children about eight years of age. Children were seen up to five times during a period of nine years. At each study visit, cortisol was measured in the children’s blood samples. Unemployment, poverty, female-headed households with children and vacant houses were used to determine neighborhood environments. Researchers adjusted for differences, including age, weight, gender and other personal factors.

Overall, children who lived in disadvantaged neighborhoods had lower levels of cortisol. When the researchers looked closer at the role of race on the results, they found that the association between neighborhood and decreased cortisol was greatest in African-American children. The trend between disadvantaged neighborhoods and decreased cortisol was evident in European-American children, but was not as strong and could be due to chance. Gender did not appear to play a role in the levels of cortisol.

The results demonstrate that the physical environment in which children are raised plays an important role in their well-being. In addition, the measure of cortisol provides objective evidence of the body’s physiologic response to chronic stress, which has previously been shown to be associated with health effects including childhood asthma.

* * *

For a sample of related Situationist posts, see “The Situation of Depression,” “The Stressful Situation of Religious Zealotry,” “The Situational Consequences of Poverty on Brain,” “The Interior Situation of Intergenerational Poverty,” “Some Situational Effects of the BP Gulf Disaster,” “The Situation of Mental Illness,” “Inequality and the Unequal Situation of Mental and Physical Health,” “The Situational Consequences of Uncertainty,” “The Disturbing Mental Health Situation of Returning Soldiers,” “The Toll of Discrimination on Black Women,” “The Physical Pains of Discrimination,” “The Depressing Effects of Racial Discrimination,” and “The Cognitive Costs of Interracial Interactions.”

A new blog and website, Upstream, provides daily posts and regular interviews with scientists about environmental causes of disease.

Situationist Phil Zimbardo Takes Over the Dr. Phil Show

Here is a brief promotional piece to highlight the Heroic Imagination Project and Situationist Contributor Phil Zimbardo’s upcoming appearances on Dr. Phil.

Vodpod videos no longer available.

Visit www.heroicimagination.org to learn more. www.drphil.com for show times.

You can watch video clips from today’s show here.

Situationism in the Blogosphere – September

Below, we’ve posted titles and a brief quotation from some of our favorite non-Situationist situationist blogging during September 2010 (they are listed in alphabetical order by source).

* * *

From BPS Research Digest: “Power leads us to dehumanise others”

“Think how terrible you’d feel if a decision you made led to the death of another person. How then does a political leader cope with the burden of making decisions which lead to the deaths of hundreds of thousands? According to a new journal article, they cope through dehumanising those over whom they have power. By this account, dehumanising – seeing others as less than human – isn’t always a bad thing. It serves a function, allowing leaders and certain professionals, such as doctors, to cope with the decisions they have to make.” Read more . . .

From Jury Room: “When identifying punishment—will jurors focus on intent or outcome?”

“Back in October of 2009, we blogged about some new research from Harvard University showing that when we know someone has hurt us intentionally, it makes us furious. We talked about using that knowledge strategically to light the fire of moral indignation in jurors.” Read more . . .

From Mind Matters: “The Hidden Rules of Blame”

“People like to use categories for people (race, religion, nation, class, gender) as explanations for others’ behavior (for example, I was late because there was traffic and I have a lot on my plate right now, but you were late because you’re a Gen X slacker). Yet all categories are not equal. Instead, each one seems to be licensed to explain only certain kinds of behavior.” Read more . . .

From Neuromarketing: “Wear a Fake Rolex, Turn Into O.J.”

“You can find fake designer and luxury products just about anywhere these days, and most people consider owning one a harmless transgression. After all, if you were never going to pay $12,000 for a real Rolex, who is really hurt if you wear a fake that cost you $30? Rolex didn’t really lose a sale, right? It turns out that the victim of the “crime” may be none other than YOU!” Read more . . .

From We’re Only Humans: “Color blind? Or blind to injustice?”

“In 1896, the U.S. Supreme Court dealt a devastating blow to the cause of racial equality, ruling 7 to 1 in Plessy v. Ferguson that “separate but equal” was the law of the land. The lone dissenter in that landmark case was Justice John Marshall Harlan, a former slave owner, who bitterly predicted an era of inequality and racial intolerance in America. History proved Harlan right, and we now know what followed as the Jim Crow era. Indeed it took almost 60 more years for the Court to begin setting things right by discarding the “separate but equal” doctrine.” Read more . . .

For previous installments of “Situationism on the Blogosphere,” click here.

The Situation of Precision-Targeted Ads

Robert Wright posted an interesting commentary on the New York Times Opinionator last night in which he argued that the arrival of HTML 5, which “will allow sites you visit to know your physical location and will make it easier for them to keep track of your browsing and shopping history,” may be “the salvation of journalism.”

As he explains, “The willingness of advertisers to spend the money that sustains journalists has always depended on having information about the reader.”  And modern technology, with its ability to track individual consumer behavior, has made it possible to tailor and target ads towards specific individuals.  In Wright’s words,

What if God [or Google or Yahoo], knowing exactly who every Slate reader is, and what kinds of products and services he’s after, shared that information with advertisers?  And what if advertisers, rather than buy ads for a particular section of Slate, served ads to the subset of Slate readers — and Salon readers and New York Times readers — who meet criteria like “single guy making more than $100,000 a year who is attracted to S.U.V.’s but is eco-conscious.”

For Wright, the answer is that online journalists would suddenly be flush with cash – and, thus, he finds it ironic that some journalists are concerned about the privacy implications.

Personally, I’m deeply skeptical of Wright’s argument, aside from the privacy implications, because I think that he ignores the core mission of journalists to educate, to broaden our horizons, and to provide us with not just what we want to hear, but with what we need to hear.  As I argued in an op-ed in the Baltimore Sun last year, consumer tracking and targeted advertizing technology is dangerous because it has a tendency to create and reinforce insular communities.  The article is reprinted below . . .

Segregating Markets — And People

What do people interested in recent conservative attacks on federal appellate Judge Sonia Sotomayor buy? Portable pet carriers, moisturizing liquid hand soap, and flat screen televisions. The fact that I know this is not something I find comforting.

Let me explain. After I wrote a recent op-ed, a friend drew my attention to something at the bottom of the online version of the article. I have grown used to advertisements with my news and links to “most read articles,” but this seemed to raise the stakes. Alongside the helpful recommendation of other articles the newspaper imagined the reader might like based on her decision to read an op-ed on Supreme Court nominations was a list of “paired” products that other readers of the piece had purportedly purchased.

The list ought to be reassuring, I suppose: I would hate to think that readers were only purchasing catamarans and caviar. Still, I am not sure that this is an encouraging development.

True, the various technologies that make product linkage possible are not particularly mysterious or menacing. In a typical scenario, when you visit a Web site, a tracking “cookie” may be placed on your computer. These cookies store data about the places you have visited on the Internet. By collecting such information for millions of people, advertisers know what individuals with an identical browsing history subsequently looked at and can direct you to the same page.

I wonder if it is good to assist individuals in this way – and, more specifically, for newspapers to be involved in this process.

Desire can be manufactured. Hummers can be sold to Manhattan housewives. Water that is by all measures inferior to that flowing out of the tap for free can be bottled and priced at $4 a pop.

Maybe readers of my op-ed do not really need or want a new flat screen TV, but what is the problem with a newspaper encouraging them to buy one? The paper makes a little revenue; Sam’s Club sells a TV; and the reader gets a fun status symbol.

The answer is that although “funneling” might be fairly harmless when it comes to being guided to other albums while shopping for a CD, the same may not be true on the broader scale. What does it mean for society when individuals who read the same articles are, as a result, encouraged to go to the same movies, wear the same clothes, drive the same cars, vacation in the same resorts and eat in the same restaurants?

Creating and reinforcing insular communities is likely to hurt us in the long run. Humans may gravitate toward those most like them, but we should resist the impulse to help the process along.

If I am going to be swayed into buying a product or watching a show, I would like to think that, at least, everyone else is being moved in the same way. In a country still deeply divided along racial, religious, economic, and ideological lines, wouldn’t it be nice if the liberal, black teenager in L.A. was encouraged to read the same book as the conservative, white soccer mom in Nashville?

How will we ever close the gaps, if we are constantly steered to opposite sides of the lunch counter?

* * *

For a sample of related Situationist posts, see “Us & Them Politics,” “Without the Filter.” “A Convenient Fiction,” and “The Situation of Swift-Boating.”

Joseph LeDoux on the Neural Situation of Emotion and Memory

Joseph LeDoux is a professor and a member of the Center for Neural Science and Department of Psychology at NYU. His work is focused on the brain mechanisms of emotion and memory. In addition to articles in scholarly journals, he is author of “The Emotional Brain: The Mysterious Underpinnings of Emotional Life” and “Synaptic Self: How Our Brains Become Who We Are.” He is a fellow of the American Association for the Advancement of Science, a fellow of the New York Academy of Science, a fellow of the American Academy of Arts and Science, and the recipient of the 2005 Fyssen International Prize in Cognitive Science. LeDoux is also a singer and songwriter in the rock band, The Amygdaloids.

* * *

For a sample of related Situationist posts, see “The Situation of Neuroeconomics and Situationist Economics,” “The Interior Situation of Complex Human Feelings,” “The Situation of Memory,” “Accidentally Us,” “The Affective Situation of Ethics and Mediation,” and “Situating Emotion.”

Dan Kahan at Harvard Law School

On Monday, October 18th, the HLS Student Association for Law and Mind Sciences (SALMS) and the American Constitution Society (ACS) are hosting a talk by Yale professor Dan Kahan entitled “The Laws of Cultural Cognition, and the Cultural Cognition of Law.

Professor Kahan is the Elizabeth K. Dollard Professor of Law at Yale Law School.  A graduate of Harvard Law School, Professor Kahan clerked for both for Justice Thurgood Marshall and Judge Harry T. Edwards of the District of Columbia Circuit United States Court of Appeals.

Professor Kahan is well-known for his work in the area of cultural cognition, or the study of how people assess the degree of risk in a given situation based on their culturally engrained concepts of good behavior.  He leads the Cultural Cognition Project, which researches the history and impact of this phenomenon along with its mechanistic underpinnings.  His work has had a profound impact upon criminal legal scholarship, particularly in relation to his theory that shame-based penalties should be implemented in criminal law.

Professor Kahan will be speaking in Austin North. Lunch will be provided!

For more information, e-mail salms@law.harvard.edu.

To review a collection of Situationist posts about cultural cognition, click here.

The Greasy Situation of University Research

A new report, “Big Oil Goes to College,” by the Center for American Progress examines how research universities that accept millions of dollars from oil companies have failed to shield themselves from corporate influence.  Here is an excerpt from the report’s introduction.

* * *

The world’s largest oil companies are showing surprising interest in financing alternative energy research at U.S. universities. Over the past decade, five of the world’s top 10 oil companies—ExxonMobil Corp., Chevron Corp., BP PLC, Royal Dutch Shell Group, and ConocoPhillips Co.—and other large traditional energy companies with a direct commercial stake in future energy markets have forged dozens of multi-year, multi-million-dollar alliances with top U.S. universities and scientists to carry out energy-related research. Much of this funding by “Big Oil” is being used for research into new sources of alternative energy and renewable energy, mostly biofuels.

Why are highly profitable oil and other large corporations increasingly turning to U.S. universities to perform their commercial research and development instead of conducting this work in-house? Why, in turn, are U.S. universities opening their doors to Big Oil? And when they do, how well are U.S. universities balancing the needs of their commercial sponsors with their own academic missions and public-interest obligations, given their heavy reliance on government research funding and other forms of taxpayer support?

The answers to these three questions are critical to energy-related research and development in our country, given the current global-warming crisis and the role that academic experts have traditionally played in providing the public with impartial research, analysis, and advice. To unpack these questions and help find answers, this report provides a detailed examination of 10 university-industry agreements that together total $833 million in confirmed corporate funding (over 10 years) for energy research funding on campus. Copies of these contractual agreements were obtained largely through state-level public record act requests (see the table on pages 13 and 14 for a list of these 10 agreements, and see page 15 for the methodology used for obtaining and analyzing them). Each agreement spells out the precise legal terms, conditions, and intellectualproperty provisions that govern how this sponsored research is carried out by the faculty and students on campus. (See methodology on page 15 for a discussion of how practices that are not required in these conflicts fit into the analysis.)

Independent, outside legal experts then performed a detailed analysis of each agreement. These experts’ detailed contract reviews may be found in Appendices 1 through 10 beginning on page 75 of this report, and include responses from a number of the universities that entered into these agreements. It should be noted that our external reviewers’ rankings for several of the “Contract Review Questions” are subjective because interpretations of law and other intellectual property terms cannot be strictly quantified. Also, the provisions in these contracts have not to our knowledge been tested in a court of law, so their “legal” meaning has not been definitively established.

The results of this report’s analysis of these 10 large-scale university-industry contracts raise troubling questions about the ability of U.S. universities to adequately safeguard their core academic and public-interest functions when negotiating research contracts with large corporate funders. This report identifies eight major areas where these contracts leave the door open to serious limitations on academic freedom and research independence. Here are just a few brief highlights:

• In nine of the 10 energy-research agreements we analyzed, the university partners failed to retain majority academic control over the central governing body charged with directing the university-industry alliance. Four of the 10 alliances actually give the industry sponsors full governance control.
• Eight of the 10 agreements permit the corporate sponsor or sponsors to fully control both the evaluation and selection of faculty research proposals in each new grant cycle.
• None of the 10 agreements requires faculty research proposals to be evaluated and awarded funding based on independent expert peer review, the traditional method for awarding academic and scientific research grants fairly and impartially based on scientific merit.
• Eight of the 10 alliance agreements fail to specify transparently, in advance, how faculty may apply for alliance funding, and what the specific evaluation and selection criteria will be.
• Nine of the 10 agreements call for no specific management of financial conflicts of interest related to the alliance and its research functions. None of these agreements, for example, specifies that committee members charged with evaluating and selecting faculty research proposals must be impartial, and may not award corporate funding to themselves. (See summary of main findings for details, pages 52-59, and the Appendices beginning on page 75.)

To our knowledge, this report represents the first time independent analysts have systematically examined a set of written university-industry agreements within a specific research area—in this case, the energy R&D sector—to evaluate how well they balance the goals of the corporate sponsors to produce commercial research that advances business profits with the missions of American universities to perform high-quality, disinterested academic research that advances public knowledge for the betterment of society.

* * *

You can read or download the entire report here. For a sample of related Situationist posts, see “The Deeply Captured Situation of Spilling Oil,” “The Deeply Captured Situation of the Economic Crisis,” “Our Stake in Corporate Behavior,” “Tushnet on Teles and The Situation of Ideas – Abstract,” “Larry Lessig’s Situationism,” “The Situation of Policy Research and Policy Outcomes,” “Reclaiming Corporate Law in a New Gilded Age – Abstract,” “The Illusion of Wall Street Reform,” “Industry-Funded Research,” “The Situation of Medical Research,” “The Situation of Talk Radio,” “The company ‘had no control or influence over the research’ . . . .,” “The Situation of University Research,” “Captured Science.”

The Situation of False Confessions

Deborah Davis and Richard Leo recently posted their paper, “Three Prongs of the Confession Problem: Issues and Proposed Solutions” on SSRN.  (forthcoming in The Future of Evidence (Epstein, Jules, ed.) on SSRN.  Here’s the abstract.

* * *

Many cases could not be successfully prosecuted without a confession, and, in the absence of a confession, many would be much more costly to investigate and to develop other evidence sufficient to convict. Responding to this pressure to reliably elicit confessions from their suspects, the police have developed sophisticated psychological techniques to accomplish two goals: to induce suspects to submit to questioning without an attorney, and to induce them to confess. Unfortunately, these methods are sufficiently powerful to induce false as well as true confessions and to render them involuntary. Further, because they are based upon often subtle, yet sophisticated weapons of influence, their coercive power sometimes goes unrecognized by those who must judge their voluntariness or validity. This yields a crucially important yet often unrecognized three-pronged problem with confession evidence – voluntariness, validity, and prejudicial impact. In this chapter, the authors first briefly review the nature of modern interrogation tactics, and then turn to consideration of the three-pronged confession problem, systemic barriers to recognizing and addressing the problem, and some proposed solutions.

* * *

You can download the paper for free here.  To review a sample of related Situationist posts, see”The Situation of False Confessions,” “The Painful Situation of Guilt,” “A Situationist View of Criminal Prosecutors,”  “The Justice Department, Milgram, & Torture,” “Why Torture? Because It Feels Good (at least to “Us”),” “The Situation of Solitary Confinement,” “The Situation of Punishment (and Forgiveness),” “Clarence Darrow on the Situation of Crime and Criminals,” and “Lessons Learned from the Abu Ghraib Horrors.”

Jim Sidanius “Terror, Intergroup Violence, and the Law.”

In his fascinating presentation at Harvard Law School on September 12, 2010, Professor Sidanius discussed ways in which the legal system has been, and continues to be, used as a means to effectuate intergroup violence, particularly through the criminal justice system.  Here is a video of that that talk [Duration: 54:10].

Vodpod videos no longer available.

Professor Sidanius, a Harvard University professor in the departments of Psychology and African and African American Studies, focuses his research on the political psychology of gender, group conflict, and institutional discrimination, as well as the evolutionary psychology of intergroup prejudice. He runs the Sidanius Lab in Intergroup Relations, which conducts research regarding intergroup relations, social inequality, hierarchy, stereotyping, ideology, and prejudice.

You can review previous Situationist posts discussing Jim Sidanius’s work here.

The Recovery Within Us: The Human and Legal Situation of “Wall Street 2”

The financial markets may fail, and personal lives may be wrecked, but as Gordon Gekko (Michael Douglas) says in Wall Street 2: Money Never Sleeps: “nobody likes a cry-baby.” Oliver Stone’s new film is a rally for the old American strategy of overcoming calamity through love, capital, and labor productively employed.

As the film opens in 2008 the world is on the edge of economic meltdown, but the kids are alright.  In the first Wall Street we watched a young stockbroker, Bud Fox (Charlie Sheen), back-slide from the straight path of his union-leader father, into a reckless life of corporate raiding and insider trading.  The sequel’s up-and-comer, Jacob Moore (Shia LaBeouf), has a more serious name and a truer purpose.  This twenty-something is smart, energetic, and idealistic.  From his post at a prestigious investment house he seeks out capital for an under-funded alternative-energy firm that maybe can change the world.  In the 1980’s Bud Fox was all too eager to snort cocaine with the first stranger he finds removing her blouse in a limo made available to him under uncertain terms.  Jacob Moore enjoys the nightclub scene, and likes his whiskey, but he loves Winnie Gekko (Carey Mulligan), has marriage on his mind, and faces down the temptations of money and flesh.

This is not to say that Jacob does not falter.  He meets secretly with the infamous Gordon Gekko, the estranged father of his fiancé, because he believes they need to repair their relationship before she can be fully happy.  This well meant scheme puts an unforeseen and potentially catastrophic strain on the lives of all involved.  Stone’s movie thus takes humanity in all its comprehensive frailty.  In life, as well as in economics, even where corruption does not get us, we are still vulnerable to stupidity (limited cognitive capacity) and over-confidence (motivated reasoning).

In the first film the social stakes in the wheeling-and-dealing balance were the jobs of the men and women who worked with Bud Fox’s father (played by Martin Sheen) at Blue Star Airlines.   After Bud helped Gekko acquire Blue Star, Gekko wanted to break it up and sell off its parts at a profit.  The heart-attack that Bud’s father suffers when he hears the news symbolized the devastation that the 1980’s take-over and bust-up market brought to the lives of American workers.  Gekko and Fox both end up in prison at the end of the first movie, convicted of insider trading.  But insider trading had little to do with the corporate dynamics behind the bust-up of companies like Blue Star.  In the real world nothing was done in the 1980’s or since to change state corporate law or federal securities laws to ensure greater protections for workers or consumers in corporate decision-making.  The failure to make such reforms is in part what made the more recent financial devastation chronicled in Wall Street 2 possible.

After eight lonely years in prison, Gekko emerges in the second film with profound insights about both himself and the market.  Having finally understood that it was greed that cost him everything — money, family, and freedom — it becomes easy for Gekko to see from the sidelines the madness going on in the debt markets all around him.  Everyone from the investment banks to Jacob’s real estate agent mom (Susan Sarandon) got swept up in the fantasy that investments in housing – through securitized sub-prime mortgages or just a couple of “spec” houses – could never go wrong.  Diagnosing this madness, Gekko knows that he can make billions by shorting the debt market (if he “only had the first million.”).

While some of Stone’s characters echo popular political sentiment and sneer at the idea of “making money on losses,” most scholars are agreed that short-selling (betting that a stock will go down) can aid the healthy functioning of the market.  After all, if the world knew that someone as savvy as a Gordan Gekko was betting against the housing market, they might begin to doubt their own certainty that housing will only go up.  For that matter, active short-trading might give us a better sense of just how confident we should be in the viability of Jacob Moore’s favored alternative-energy start-up.  As Gekko himself puts it in this film, “Bulls win, Bears win.  Pigs get slaughtered.”  It turns out that there were some savvy investors who were short on housing prior to the recent meltdown, but the short positions were structured in such a way as to avoid the federal securities laws, and were thus hidden from public scrutiny.  The signaling value of such short-positions was thus lost, as investors and consumers kept on marching towards the slaughter.  Some of the most important reforms to come out of the recent crisis are aimed at ensuring that sophisticated shorting is publicly visible so that it can serve this crucial informational function.

The human stakes of the recent economic collapse are said in the film to be dire.  But Stone’s picture is more interested in showing our capacity for renewal than dwelling on our failure. The film is an ode to human resiliency.  At the heart of the meltdown Stone’s camera follows Jacob to the ruins of the World Trade Center, but only for a reflective moment.  Far more screen-time here is given to the Empire State Building, proudly standing in for the Twin Towers, whose grandeur visually anchored the first film.  Confidence and hard honest work will never be enough if our laws and institutions are out of whack.  But Stone’s film seems to argue that if we can stay on this side of corruption, our other frailties will not do us in.

At one point in Wall Street 2 Gekko and Jacob find themselves in the back of a cab careening recklessly through mid-day traffic.  Gekko tells the cabbie that he will pay more if the driver will go slower.  This may be the best lesson we can take from the bursting of the housing bubble and the subsequent economic crisis.  We all might consider ourselves better off, and we might be willing to pay for it in forgone speed, if our rides up and down Wall Street were a bit more cautious.

* * *

David Yosifon is a Situationist Contributor and Assistant Professor at Santa Clara University School of Law.

For a sample of related Situationist posts, see “Our Stake in Corporate Behavior,” “The Problem of Old Fears and New Dangers,”The Illusion of Wall Street Reform,” “The Situation of Mortgage Defaults,” “Posner on Keynes and the Economic Depression,”The Situation of the American Middle Class,” “The Situation of the Mortgage Crisis,” and “The Financial Squeeze: Bad Choices or Bad Situations?.”

Drazen Prelect at Harvard Law

On Tuesday, October 12th, the HLS Student Association for Law and Mind Sciences (SALMS) is hosting a talk by MIT professor Drazen Prelec entitled Neuroeconomics.

Professor Prelec works in the departments of Economics and Brain and Cognitive Sciences at MIT.  His research and publications have explored the insights that cognitive science can offer into the ways that the human mind makes economic decisions.  His influential work has helped to found the nascent field of neuroeconomics.

Professor Drelec will be speaking in Pound 107. Free snacks will be provided!

For more information, e-mail salms@law.harvard.edu.

You Spoke. We Ignored It.

A couple of weeks ago, I wrote a post in which I questioned the practice of corporations (1) selling a narrative that the American public is made up of rational actors, exercising free choice, in an open market, while, at the same time, (2) working hard to “limit choice and confuse or reduce the knowledge of potential buyers.”

This morning, while cleaning up my office, I came across the following excerpt that I’d clipped from an article by Barry Berman, the Walter H. “Bud” Miller distinguished professor of business and director of the Executive M.B.A. program at Hofstra University’s Zarb School of Business:

If you ask customers whether they want more variety, I can tell you right now what they’re going to say: Yes.  After all, who doesn’t think they want a lot of choices?  And it’s common for consumers to be both sad and angry when a product they like is discontinued.

So don’t bother asking.  It’s better to depend on data, rather than what is often a mistaken emotional response.

Gather information from point-of-sale systems and loyalty programs, analyze product data such as sales per square foot, and conduct field experiments to determine what effect offering a wide selection of similar goods—say, 16 similar black-and-white laser printers—really has on total sales in certain product categories.

Use the findings to identify products that don’t sell well, products with high revenue but low profitability and/or high inventory carrying costs, and products plagued by production problems. Consider targeting them for elimination.

As various posts on the Situationist have chronicled, the evidence provided by psychologists and others who study “choice” suggests that Professor Berman is right.  And, if your goal is solely to increase the profitability of your company, you’d do well to heed his advice.

However, as a consumer, I think that the broader message in Professor Berman’s comments is troubling primarily because corporations go to such lengths to convince us that they are listening to the wants, desires, and ideas that we voice.  Indeed, it’s a major part of many corporate strategies.

Think about all of the advertisements and marketing campaigns that you come across in your day-to-day routine that emphasize the theme of customers speaking out and corporations listening and responding.  As Best Buy explains, “You Spoke.  We Listened.  Thanks to your ideas, we’re continuing to create future technology designed just for you.”  Moss Adams LLP, one of the largest accounting and consulting firms in the United States, offers the identical statement on its website: “You Spoke.  We Listened.”  Whole Foods serves up a subtle variation: “You Talked, We Listened.”  It turns out, “Whole Foods Market has been listening to its customers for over 30 years.”

Why do all of these companies sing the same song?  The answer, in part, is because it’s music to our ears.  We like to feel in control.  And encouraging this perception allows companies to engrain the idea that corporate entities merely respond to our preferences.  That is, they do not create preferences, or steer individuals toward harmful, but profitable, products—actions that would make the case for significant regulation or legal liability.  They are our passive pals—dutifully hanging on our every word.

Perhaps I’m out to sea, but if corporations aren’t in fact listening to what I say—if they know, as Professor Berman suggests, that I exhibit “mistaken emotional responses” and am a situational character, rather than a rational actor—I don’t want them telling me how valuable my feedback is and how clever, smart, and capable a consumer I am.

I’d prefer the cold, hard truth.

* * *

For a sample of related Situationist posts, see “Deep Capture – Part VII,” “Market Manipulation – Assuaging Cognitive Dissonance,” “Tamara Piety on Market Manipulation,” and Taking Behavioralism Seriously (Part I) – Abstract and Top Ten List.

A couple of weeks ago, I wrote a post in which I questioned the practice of corporations (1) selling a narrative that the American public is made up of rational actors, exercising free choice, in an open market, while, at the same time, (2) working hard to “limit choice and confuse or reduce the knowledge of potential buyers.”

This morning, while cleaning up my office, I came across the following excerpt that I’d clipped from an article by Barry Berman, the Walter H. “Bud” Miller distinguished professor of business and director of the Executive M.B.A. program at Hofstra University’s Zarb School of Business:

If you ask customers whether they want more variety, I can tell you right now what they’re going to say: Yes.  After all, who doesn’t think they want a lot of choices?  And it’s common for consumers to be both sad and angry when a product they like is discontinued.

So don’t bother asking.  It’s better to depend on data, rather than what is often a mistaken emotional response.

Gather information from point-of-sale systems and loyalty programs, analyze product data such as sales per square foot, and conduct field experiments to determine what effect offering a wide selection of similar goods—say, 16 similar black-and-white laser printers—really has on total sales in certain product categories.

Use the findings to identify products that don’t sell well, products with high revenue but low profitability and/or high inventory carrying costs, and products plagued by production problems. Consider targeting them for elimination.

As various posts on the Situationist have chronicled, the evidence provided by psychologists and others who study “choice” suggests that Professor Berman is right.  And, if your goal is solely to increase the profitability of your company, you’d do well to heed his advice.

However, as a consumer, I think that the broader message in Professor Berman’s comments is troubling primarily because corporations go to such lengths to convince us that they are listening to the wants, desires, and ideas that we voice.  Indeed, it’s a major part of many corporate strategies.

Think about all of the advertisements and marketing campaigns that you come across in your day-to-day routine that emphasize the theme of customers speaking out and corporations listening and responding.  As Best Buy explains, “You Spoke.  We Listened.  Thanks to your ideas, we’re continuing to create future technology designed just for you.”  Moss Adams LLP, one of the largest accounting and consulting firms in the United States, offers the identical statement on its website: “You Spoke.  We Listened.”  Whole Foods serves up a subtle variation: “You Talked, We Listened.”  It turns out, “Whole Foods Market has been listening to its customers for over 30 years.”

Why do all of these companies sing the same song? 

A couple of weeks ago, I wrote a post in which I questioned the practice of corporations (1) selling a narrative that the American public is made up of rational actors, exercising free choice, in an open market, while, at the same time, (2) working hard to “limit choice and confuse or reduce the knowledge of potential buyers.”

This morning, while cleaning up my office, I came across the following excerpt that I’d clipped from an article by Barry Berman, the Walter H. “Bud” Miller distinguished professor of business and director of the Executive M.B.A. program at Hofstra University’s Zarb School of Business:

If you ask customers whether they want more variety, I can tell you right now what they’re going to say: Yes.  After all, who doesn’t think they want a lot of choices?  And it’s common for consumers to be both sad and angry when a product they like is discontinued.

So don’t bother asking.  It’s better to depend on data, rather than what is often a mistaken emotional response.

Gather information from point-of-sale systems and loyalty programs, analyze product data such as sales per square foot, and conduct field experiments to determine what effect offering a wide selection of similar goods—say, 16 similar black-and-white laser printers—really has on total sales in certain product categories.

Use the findings to identify products that don’t sell well, products with high revenue but low profitability and/or high inventory carrying costs, and products plagued by production problems. Consider targeting them for elimination.

As various posts on the Situationist have chronicled, the evidence provided by psychologists and others who study “choice” suggests that Professor Berman is right.  And, if your goal is solely to increase the profitability of your company, you’d do well to heed his advice.

However, as a consumer, I think that the broader message in Professor Berman’s comments is troubling primarily because corporations go to such lengths to convince us that they are listening to the wants, desires, and ideas that we voice.  Indeed, it’s a major part of many corporate strategies.

Think about all of the advertisements and marketing campaigns that you come across in your day-to-day routine that emphasize the theme of customers speaking out and corporations listening and responding.  As Best Buy explains, “You Spoke.  We Listened.  Thanks to your ideas, we’re continuing to create future technology designed just for you.”  Moss Adams LLP, one of the largest accounting and consulting firms in the United States, offers the identical statement on its website: “You Spoke.  We Listened.”  Whole Foods serves up a subtle variation: “You Talked, We Listened.”  It turns out, “Whole Foods Market has been listening to its customers for over 30 years.”

Why do all of these companies sing the same song?  The answer, in part, is because it’s music to our ears.  We like to feel in control.  And encouraging this perception allows companies to engrain the idea that corporate entities merely respond to our preferences.  That is, they do not create preferences, or steer individuals toward harmful, but profitable, products—actions that would make the case for significant regulation or legal liability.  They are our passive pals—dutifully hanging on our every word.

Perhaps I’m out to sea, but if corporations aren’t in fact listening to what I say—if they know, as Professor Berman suggests, that I exhibit “mistaken emotional responses” and am a situational character, rather than a rational actor—I don’t want them telling me how valuable my feedback is and how clever, smart, and capable a consumer I am.

The answer, in part, is because it’s music to our ears.  We like to feel in control.  And encouraging this perception allows companies to engrain the idea that corporate entities merely respond to our preferences.  That is, they do not create preferences, or steer individuals toward harmful, but profitable, products—actions that would make the case for significant regulation or legal liability.  They are our passive pals—dutifully hanging on our every word.

Perhaps I’m out to sea, but if corporations aren’t in fact listening to what I say—if they know, as Professor Berman suggests, that I exhibit “mistaken emotional responses” and am a situational character, rather than a rational actor—I don’t want them telling me how valuable my feedback is and how clever, smart, and capable a consumer I am.

Robert Reich on the Unequal Situation of the Great Recession

From Youtube:

Robert Reich on the ideas in his new book, “Aftershock.” The economic recession we are in is a structural problem rooted in an economy where wealth is as unequal as any time since in the great depression. That inequality leaves us susceptible to political extremism unless we fix it.

* * *

In the following videos, Robert Reich discusses his book at length at Strand Bookstore.

* * *

* * *

* * *

* * *

For a sample of related Situationist posts, see “Even monkeys know when they’re being treated unfairly,” “Robert Reich on the Situation of Health Care Reform,” “Monkey Fairness,” “A Discussion about (In)Equality,” “The Interior Situational Reaction to Inequality,” “The Situation of Money and Happiness,” “Nicole Stephens on ‘Choice, Social Class, and Agency’,” “The Situation of Mortgage Defaults,” “Barbara Ehrenreich – a Situationist,” “Warren on the Situation of Credit,” “The Situation of the Mortgage Crisis,” and “Financial Squeeze: Bad Choices or Bad Situations?.”

The Embodied Situation of Power

From LiveScience:

* * *

When suiting up with that “power tie,” you may also want to strike a pose — a power pose, that is. New research indicates that holding a pose that opens up a person’s body and takes up space will alter hormone levels and make the person feel more powerful and more willing to take risks. “These poses actually make you more powerful,” said study researcher Amy C.J. Cuddy, a social psychologist at the Harvard Business School.

The opposite also proved true: Constrictive postures lowered a person’s sense of power and willingness to take risks. Cuddy teaches the results of the study to her students. . . .

* * *

In the study, researchers randomly assigned 42 participants, 26 of them women, to assume and hold a pair of either low- or high-power poses. The high-power posers spent one minute sitting in a chair in front of a desk, with feet resting on it and hands clasped behind the head, and, in the other pose, they stood, leaning forward over a table, with arms out and hands resting on the table. In both poses, the participants took up space, an expression of power not unique to the human world. For example, peacocks fan their tails to attract a mate and chimpanzees bulge their chests to assert their hierarchical rank, the researchers noted.

* * *

The low-power group sat for one minute with their hands clasped on their thighs, legs together, and also stood for one minute with arms folded and legs crossed.

After the subjects had finished their poses, they were given $2 with the option of keeping it or gambling it on the roll of a die. Depending on the outcome, the subjects could double their money or lose it.

Subjects also were asked to rate how “powerful” and “in charge” they felt. The researchers measured hormone levels before and after the poses.

Those who held the high-power poses saw their testosterone increase, while their levels of a stress hormone, cortisol, decreased. Testosterone is associated with dominance and tends to rise before a competition and after a win, but not after a defeat, according to prior research. People in power tend to have lower levels of cortisol. Although cortisol levels can fluctuate in response to challenges, chronically elevated cortisol levels seen among people with low status have been associated with health problems.

The high-power posers were more likely to risk their $2 for the chance to double it: Eighty-six percent took the gamble, compared with 60 percent of the low-power posers. They also reported feeling more powerful and in charge than did the low-power posers.

* * *

Read the whole story at LiveScience.  Image from Flickr.  For a sample of related Situationist posts, see “The Situational Power of Appearance and Posture,” “The Situational Effects of Hand-Washing,” “The Situation of Imitation and Mimickry,” “The Situation of Trust,” “Embodied Rationality,” “The Embodied Cognition Bonanza!,”  “The Situation of Body Image,” “The Magnetism of Beautiful People,” “Sam Gosling on the Meaning of the Stuff in our Situation,” “The Situation of Touch,” and “The Situation of Hair Color.”

The Situation of Painkillers and NFL Players

Situationist contributor Michael McCann recently wrote a column for Sports Illustrated on the prevalence of painkiller abuse by National Football League players and how it connects to situational pressures to play.  Here is an excerpt:

* * *

. . . [F]or the vast majority of players, unless there is reasonable cause, the collective bargaining agreement mandates no testing for the likes of cocaine, marijuana, amphetamine, opiates (morphine and codeine) and phencyclidine (PCP) until April. Over-the-counter pain medicines, such as Tylenol or Aleve, are not tested, nor are prescription pain medicines such as Vicodin, Demerol, Percocet or OxyContin. By contrast, testing for steroids and illegal performance enhancers occurs throughout the year.

* * *

Given that NFL players are tested for substances of abuse only during the offseason and for steroids throughout the year, while the other two “physical” pro leagues — the NBA and NHL — test for substances of abuse throughout their seasons, a cynic might infer that the NFL and NFLPA are more worried about players using steroids to get bigger and stronger than those same players using illegal drugs for treating pain or getting high.

* * *

Relief of pain, of course, is an understandable desire for any NFL player, just as it is for any person. To expect NFL players to completely refrain from pain relief would be unreasonable and counterproductive.

* * *

But as NFL players become bigger and stronger, and as their hits and tackles become harder and more injurious, do the NFLPA and the league have an increased responsibility to monitor pain relief? And how can the two determine if players are using painkillers to treat pain or merely to get high?

These won’t be easy questions to answer in a sport that requires physical collisions at high speeds and a league that cannot — and should not — monitor the lives of its players 24 hours a day, seven days a week. But they are important to ask because pain is a sensory response to bodily damage. If pain is muted, a person may not appreciate the damage inflicted. If that person endures the violence of NFL games week after week, not adequately comprehending bodily damage could cause serious and long-term health problems. These questions are also important to ask because NFL player contracts usually contain more non-guaranteed money than guaranteed, and NFL players are expected to “be tough” and “play hurt.” One could easily imagine them feeling pressured to use whatever it takes to stay on the field.

* * *

Dr. James Otis , a Boston University professor of neurology and director of the Pain Management Group at Boston Medical Center, also detects a potential link worthy of more attention, especially given the narrow dates of testing for substance abuse drugs. “Persons with impaired judgment due to multiple head injuries are more susceptible to dangerous behavior, including abuse of painkillers,” said Otis. “It is very peculiar that players would only be tested for opioids during the offseason, when they would most likely use painkillers during the season.”

* * *

To read the rest of the column, click here.  For related Situationist posts on painkillers, see Mark Lanier visits Professor Jon Hanson’s Tort Class (web cast) and  The Racial Situation of Pain Relief.

The Situation of High Marginal Income Tax Rates and Motivation

A leading rationale against progressively higher income tax rates for top-earners is that high taxes will dissuade them from working hard, being innovative, or trying to be the best at whatever they do. This rationale has seemingly prevented a return of the very high marginal income tax rates used between 1951 and 1963, when taxable personal income over $400,000 was taxed to the tune of 91% by the federal government.

Now-a-days, taxable personal income over $373,650 is taxed at 35% by the federal government (the percent will increase to 39.6% in 2011 if the Bush tax cuts are not extended or made permanent.  39.6% was used during the Clinton years.  When combining many states’ income taxes, the effective rate would–at least for those high-earners living in states with progressive state income taxes–jump to close to 50%, but still much lower than 91%).

Keep in mind, only about 1.5% of the U.S. population earns over $250,000 a year, so a marginal tax rate increase for those earning over $373,650 is not an increase that would directly impact the vast majority of Americans.  And yet such an increase is commonly viewed as harmful because it might, in the view of some, deter work ethic/innovation by those with entrepreneurial dreams and undermine a corresponding creation of jobs.

Is there any empirical or even anecdotal truth behind this rationale?  Over on Daily Kos, a writer unequivocally says no in his piece titled “No Country for Zuckerbergs.”  The piece details the extraordinary success of Facebook founder Mark Zuckerberg, the 26-year-old who is now worth close to $7 billion and whose company has made many of the 1,200 Facebook employees very well off.  The piece contends that innovative persons like Zuckerberg would not be dissuaded by higher taxes.  Here’s an excerpt:

* * *

Mr. Zuckerberg, for example, in 2004 was staring at a top marginal tax rate of 35 percent, the Bush rate. It seems to me he considered paying that rate of tax would be worth the cost of earning himself almost $7 billion. Does anyone really believe he would not have founded Facebook if the tax rate was 39.6 percent, the Clinton rate? Is that extra 4.6 percent such a huge obstacle to success, that Mr. Zuckerberg would have decided Facebook and its prospects weren’t worth the effort? How about Bill Gates of Microsoft staring at a top rate of 70 percent in 1979? Or perhaps Gordon Moore of Intel starting out with a top rate of 75 percent in 1968? Why did Bill Hewlett and Dave Packard start HP in a garage in 1939 with a top rate of 79 percent and then take the company public in 1957, during which time the top rate rose to 91 percent? 91 percent!

The fact is the idea that tax rates have anything to do with business creation is a myth. Nobody who has a great idea and good prospects is going to not go for it because of tax rates. Even if the tax rate was 100 percent over annual income of $1 billion, it isn’t going to stop someone who has some moxie for going for that $1 billion a year. Lets face it, a billion dollars is a good living. Furthermore, it has almost nothing to do with job creation. American Express surveyed small business this year and found only 18 percent cared about high taxes. Only 8 percent were worried about the federal deficit. When asked “Which of the following would most incent you to hire,” 67 percent of small businesses said more consumer demand or better economic outlook. Only 11 percent said tax credit.

* * *

An increase in the top marginal tax rate is going to have no effect whatsoever on job creation or business investment. Business success has nothing to do with income tax rates and everything to do with the old-fashioned things: passion, perseverance, inspiration, timing, moxie, and most of all luck.

* * *

To read the rest, click here.  To read other Situationist posts on taxes, click here.

The Situation of Illness

Situationist readers may want to check out a new website and blog devoted to the problem of environmental sources of illness.  The website is devoted primarily to video interviews of experts studying, and activists fighting, the effects of environmental toxins.  So far, the Upstream website has fascinating interviews of Columbia University’s Dr. Frederica Perera and of Drs. Carlos Sonnenschein and Ana M. Soto from Tufts University. The Upstram Blog contains regular updates of environmental-health news stories.

In a culture and policy regime that focuses on individual causes and cures of disease, the Upstream project seems like a promising and worthwhile resource for those interested in a more situationist perspective.

* * *

To review a sample of related Situationist posts, see “The Situation of Depression,” “The Toxic Situation of Cosmetics,” “Our Carcinogenic Situation,” “The Situation of Bottled Water,” “‘Flow’ and the Situation of Water,” “Denial,” and  “The Need for a Situationist Morality.”