Focus On: Katherine Milkman

Why Social Networks Unwittingly Worsen Job Opportunities for Black Workers

Posted on May 10, 2013

Social-Media-Job-Referral-FeaturedAfrican Americans are getting the short end in employment opportunities due to their lack of access to networking groups dominated by whites, according to a New York Times article published this week.

The article notes that white Americans tend to get the edge in seeking certain jobs by accessing social networks that black Americans are not part of. Disturbing as this trend is, it stems from referrals that may seem innocuous to the people making them, say Wharton professors Janice Bellace and Katherine L. Milkman.

One stark fact: The U.S. civilian unemployment rate as of April 2013 is 6.7% among whites and 13.2% among blacks, according to the U.S. Department of Labor. Even as the economy improves, African American workers continue to be worse off than the country as a whole, writes Rutgers professor Nancy DiTomaso in the Times. She sees the culprit as favoritism with a strong racial component, arguing that whites are more likely to help other whites and that the social connections that could give someone an “in” to good, high-paying professional jobs are concentrated among whites. DiTomaso bases her findings on interviews she conducted with candidates for 1,463 jobs.

“Most Americans do not think of themselves as living in segregated communities, but they do,” says Bellace, a Wharton professor of legal studies and business ethics. She notes that much of this segregation resulted from zoning laws dating to the early 20th century that sought to keep suburbs free of the diverse mix of residences, commerce and people found in cities. “The result was diverse cities — in terms of race, ethnicity and household income — surrounded by white suburbs with income homogeneity,” she says. That housing pattern persists today, in part because public transportation in the suburbs is poor, she adds.

Bellace notes that similar forces have contributed to social networks that unwittingly worsen opportunities for black workers. Today’s college students know that the best way to land a coveted job is to obtain an unpaid internship, and the best route to doing that is to know someone. “White, upper middle class students are much more likely to be included in the social circles that will help them,” she says.

How Bias Hurts Businesses

Businesses hurt themselves with favoritism or discrimination in hiring, notes Milkman. When company leadership does not hire the best-qualified candidates because they fail to recruit minorities, they hurt themselves by not getting the best talent and fail to reach their “full potential,” she adds. “Teams that lack a diversity of perspectives also tend to be less creative,” she says, citing academic research on the subject.

Companies could overcome those problems in many ways, according to Milkman. Managers could be “more systematic about highlighting some of the uglier implications of what most employees view as a good deed — helping a friend make a connection.” She also calls for a “crackdown” on nepotism, which she describes as “an extreme form of the type of social networking that can harm minorities.”

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It’s January 7: Are You Sticking to Your New Year’s Resolution?

Posted on January 7, 2013

scaleNearly half of Americans make New Year’s resolutions each year. Of those, only 8% are likely to succeed.

That’s according to a study conducted by the University of Scranton and published in December in the Journal of Clinical Psychology. Losing weight was the number-one commitment reported, followed by getting organized and spending less (or saving more). Others in the top 10 include “enjoying life to the fullest,” quitting smoking and spending more time with family. (You can see the top-10 list and a summary of the statistics from the report here.)

The dismal success rate might lead some to conclude that making New Year’s resolutions is actually counter-productive. After all, who wants to begin the year in defeat? (In fact, the report notes, 38% of Americans refuse to make any resolution at all.) However, according to Wharton operations and information management professor Maurice Schweitzer, New Year’s resolutions do have some value. The new year provides a “salient reference point” for setting a goal — How much did I weigh at the beginning of the year? — and forming resolutions “helps us identify important issues. If we spend time, reflect and work to identify a key issue, this itself can be very helpful.”

Wharton operations and information management professor Katherine Milkman agrees. “I would argue that setting goals — regardless of whether your motivation is the passage of a new year — is worthwhile. Considerable past research shows that goal setting can be a useful and valuable tool, [leading] us to clearly specify and achieve our objectives at a higher rate. My [interpretation of the statistics in the Journal of Clinical Psychology report] is that at least some New Year’s resolutions are achieved, which means some benefits are being realized — albeit not every single desired benefit — and this is consistent with research showing that goal setting adds value.”

Does success depend on what kinds of resolutions we make? Milkman notes that research suggests “the most valuable goals are those that challenge us but are not so difficult as to be entirely out-of-reach. Further, more specific goals such as ‘I plan to take steps to become a better public speaker’ are much more valuable than vague goals like ‘I plan to improve my job performance.’ Finally, resolutions or goals that are accompanied by a specific plan of action are the most likely to be achieved. For instance, someone who hopes to become a better public speaker would be well-served by enumerating steps that could lead to the achievement of that objective, [such as] signing up for a public speaking workshop or giving practice talks once a week.” Sites like Stickk.com — which allows users to enter into binding monetary contracts based on their goals, including preferences for where their money will go if they succeed — can help, she adds.

Indeed, the trickiest part may be finding ways to stick to those goals once they are articulated. Schweitzer suggests that individuals write their resolutions down, post them where they will see them every day (“mirror, fridge, car or computer screen”) and work with others to achieve them — perhaps partnering with someone to achieve the same goal. The Journal of Clinical Psychology report notes that people who make explicit New Year’s resolutions are 10 times more likely to succeed than those who don’t. For that reason, both Schweitzer and Milkman say that individuals should be sure to tell others what their resolutions are. “One thing we know is that people are more likely to stick to public commitments,” Milkman says. “If you tell others your goals, you will have friends/family/colleagues to answer to if you fail to achieve those goals, and you will also have a cheering squad to help you on your way.”

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The Link between Smaller Sodas and Shrinking Waistlines

Posted on June 4, 2012

Taking away New York City consumers’ option to buy large-size sugary sodas may not cure the city’s — much less the nation’s — obesity problems, but University of Pennsylvania experts note there is research to support that shrinking a container size can help shrink a person’s waistline.

New York Mayor Michael Bloomberg last week proposed a ban on restaurants, movie theaters and sports arenas selling sweetened drinks in sizes larger than 16 ounces. The ban — which would shrink permitted drink sizes down to what is currently considered a medium — would include soda, energy drinks and iced tea, though not juice, diet drinks or alcoholic beverages. In a post on KnowledgeToday, Wharton statistics professor Jean Lemaire expressed skepticism about the effectiveness of such a ban, noting that people find ways around laws regulating such vices as alcohol and cigarettes. “We can tax it; we can make it more expensive; we can reduce opening hours of the stores that sell it, but people find ways to get around that,” he said.

Although nothing in Bloomberg’s plan would preclude consumers from ordering multiple drinks, or buying large-size beverages at grocery or convenience stores, Penn epidemiology and nursing professor Karen Glanz predicts that it could have a “modest” effect on lowering rates of obesity in the city.

Glanz, who studies theories of health behavior, notes that most people order large-size drinks without giving much thought to how many calories or how much sugar the beverage contains. “Since people tend to drink what is in the container they purchase, many people will drink less sugary soda” as a result of the ban, she says. “Some people object to this ban because they say it is telling people what they can or cannot choose to drink. Actually, it will make them stop and think, and will probably increase the price of a large quantity of soda.”

In a similar vein, Wharton operations and information management professor Katherine Milkman cites research by Cornell marketing professor Brian Wansink demonstrating that smaller containers cause people to consume less. “Other research … has showed that when you divide the same amount of food into two small containers, rather than one large container, it reduces consumption [because] people notice their progress more when consuming from smaller containers,” she says. The soda ban “uses what we know about the impact of serving size to help ‘nudge’ people in the direction of consuming less soda.”

And Glanz points out that restrictions on drink size are not the only force trying to push consumers toward a particular choice — beverage firms are also aggressively marketing the options that benefit their interests the most. “The idea that people decide what to eat without outside influence is a fallacy,” she says. “Marketing especially targets children and minorities. Highly health-motivated consumers can ignore the marketing of junk food and sugary drinks, but for much of the public, ‘free choice’ is already compromised in our market economy.”

She adds that the “stop and think” aspect of a large-size soda ban is similar to the hoped-for result of publishing calorie counts on restaurant menus. “It’s a good example of where both policy and promotion/persuasion are needed to make education effective,” Glanz says. “It’s also a consumer right-to-know issue, since there is no way to know what you’re getting in prepared foods without this information.”

Even if the soda ban isn’t the be-all- and end-all in lowering rates of obesity, Glanz notes that it will be important to evaluate any impact it does have on sugary drink consumption and weight. “If it is found to work, it could make it easier to put other policies in place to curb the obesity epidemic,” she says. “This type of evaluation was important in putting smoking bans in place — showing that they both reduced health risks and didn’t hurt business.”

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The Psychology of Holiday Gift Giving: The Good, the Bad, the Irrational

Posted on December 22, 2011

It’s that time of year again, when online and bricks-and-mortar retailers are bombarded with shoppers in a frenzy to find that perfect gift for family, friends and colleagues. Is it worth the effort? A waste of time? A misguided, inefficient allocation of resources?

Indeed, a Wall Street Journal article this weekend noted that many economists see the holidays “not as an occasion for joy but as a festival of irrationality, an orgy of wealth-destruction.” And Joel Waldfogel, a former Wharton professor now at the Carlson School of Management at the University of Minnesota, has written a book – Scroogenomics – plus many articles arguing that Christmas gift giving is a “deadweight material loss.” Many people buy gifts that cost far more than the value the recipients assign to them, he suggests. The perfect gift? Cash, says Waldfogel, because the giver and the receiver value it in exactly the same way.

And yet Waldfogel is the first to admit that many people regard cash gifts as “lazy and even inconsiderate. They are offended by the idea that the giver didn’t make any effort to shop for them,” he notes in an earlier article for Knowledge@Wharton.

And thus enters those intangible aspects of gift giving that trip up rational economists and explain why consumers continue to spend so much time and money on the gift giving tradition. One reason, says Wharton operations and information professor Katherine Milkman, is “reciprocity. There is lots of evidence that people behave reciprocally towards one another, so gift giving can be seen as ‘rational’ even in the context of economics if you view it as a way of strengthening a tie to someone and generating the promise of future ‘gifts’ — in the form of friendship, social networking or other things of value — from them to you.”

In addition, says Milkman, “altruistic gift giving without any hope of reciprocity has been shown to make people happy: It generates what behavioral economists call a ‘warm glow.’  To the extent that giving to others brings us happiness in observing, or imagining, their reactions, it is certainly not irrational.” 

Wharton marketing professor Barbara Mellers points to several findings that she and fellow authors Philip Tetlock, a Wharton management professor, and Ilana Ritov are presenting in a paper currently under review titled, “Surprise and the Value of Gifts: Why Christmas Is Not a Deadweight Loss.”

Mellers and her co-authors suggest that Waldfogel’s analysis “sidesteps the issue of sentimental gains,” which, the researchers say, “overcome material losses.” Their paper includes a survey method that measures the total value of Christmas gifts, including “both sentimental and material benefits. We found no evidence of aggregate value squandering.” They did find that women got greater total value than men from gift giving, and that “givers who were more intimately tied to the recipient were, on average, able to add more value.”

What increases “sentimental value is surprise,” Mellers says, pointing to other conclusions from their paper. “Pleasure was greater for unexpected gifts. Surprising gifts amplified enjoyment for both large and small items.” In addition, sentimental value is increased by effort: “Recipients also felt positively toward givers who worked hard to find the right gift, even when that gift was off the mark.” Givers who make the effort, but don’t quite succeed, “should be heartened by the fact that recipients recognize the difference between process and outcome,” the researchers note. 

In their paper, Mellers and her co-authors note that people spend billions of dollars on gifts each year, especially at Christmas, “but it wasn’t always this way. The tradition of Christmas gift giving started in the Victorian era. Gifts were simple and modest expressions of kindness or charity. Gradually, the tradition transformed into the buying frenzy of today fueled, in part, by the firms and merchants who stood to benefit. Many Americans now view the holiday tradition as out of control.”

Critics of holiday gift giving certainly have a point. Along those lines, the Journal article offers some suggestions. Among them: Assuming your goal is to maximize a social connection, avoid “perishable gifts like flowers or chocolates.… For a durable impression, better to give a vase or a painting.” Perhaps best of all, the article says, give a gift that announces its existence every now and then, such as “an electric mixer which, when used, gets noticed.”

Worried that a painting may blow your holiday budget? If so, it might help to remember O’Henry’s short story, “The Gift of the Maji,” says Mellers. As described in her paper, it involves “a poor couple who give up their most treasured possessions to buy each other Christmas gifts. Della sells her long beautiful hair to buy Jim a chain for his watch, and Jim sells his gold watch to buy tortoise combs for Della’s hair. The gifts are complete deadweight economic losses with no material value to the recipients. But the sentimental gains are priceless. It is psychology — perhaps more than economics — that explains why the tradition has lasted so long. But it is economics — perhaps more than psychology — that explains why the message and the reality of deadweight losses resonate so clearly today.”

 

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How the New Sunscreen Rules Will Affect Marketers — and Consumers

Posted on June 16, 2011

A sample image from the FDA for its new sunscreen labeling rules.

The next time you hit up a drugstore, take a close look at the sunscreen aisle. The products there now may look markedly different this time next year.

Earlier this week, the U.S. Food and Drug Administration issued new requirements for the way makers of sunscreen can label and market their products. When the rules take effect in 2012, the term “broad spectrum” can only be used to describe products that protect against both ultraviolet A (UVA) and ultraviolet B (UVB) light. Sunburn is primarily caused by UVB, but UVA (which is not addressed by current “sun protection factor”, or SPF, labels) is a major cause of skin aging and contributes to skin cancer. In addition, any sunscreen that is not broad spectrum, or one that has an SPF between 2 and 14, must carry a warning that the product has not been shown to protect against skin cancer or early skin aging.

The FDA is also telling manufacturers to do away with popular guarantees like “waterproof” or “sweatproof,” and with the term “sunblock.” The agency says there are no such things, and is calling for sunscreen bottles to instead note how long they are water or sweat “resistant.” Finally, the FDA wants to set a maximum SPF value of 50-plus because it says anything higher doesn’t provide a significant amount of additional protection.

So how do the rules change the game for manufacturers? What about consumers? Karen Glanz, a University of Pennsylvania professor of epidemiology and nursing who has conducted research on skin cancer prevention, says the guidelines have the potential to “eliminate a certain amount of noise from the marketplace,” for sunscreen. Over time, she adds, it’s likely that manufacturers may devote fewer resources to making tanning oils or low-SPF products that now must carry a warning about their limited protection.

But she notes that when consumers are choosing a sunscreen, effectiveness is only part of the equation. As an example, Glanz points to a project she worked on that involved offering free sunscreen to swimming pools, and lifeguards in particular. “We found a company that made a [generic] product that they also sold to a branded company. It was an identical product, but the lifeguards wanted the one that said “Iron Man” on it. Even though the products were absolutely identical, they said, ‘We prefer that one.’”

Wharton operations and information management professor Katherine Milkman notes that having too many choices can be “paralyzing” for consumers. “The benefit of the new labeling is that it may help us segment and understand the products available, and hopefully make it easier for consumers to select one.”

But she also says that while consumers may have fewer products to choose from, they also have to think about more than just SPF when trying to choose an effective sunscreen.  Research shows that “we can hold about seven units of information in our brain at any given time,” Milkman notes. “We’re making everything more comparable and that’s good. But on the other hand, we’re also highlighting more dimensions that we say matter.”

Milkman thinks the FDA’s new rules are still in the range of what a consumer could easily digest, but she could foresee more considerations being added in the future as marketers try to distinguish their products, or if scientists find other sunscreen formulations that could better protect against sunburn and skin cancer. “I think there is some risk when you add more information to labels; it can be overwhelming and consumers don’t know how to trade off these factors against each other,” Milkman says. “Helping people understand how to make sense of all this new information being thrown at them is a big part of any labeling initiative.”

But she adds that “star systems” for nutrition labels or other easier-to-understand grading systems are typically unpopular with many product manufacturers — nobody wants to advertise that they failed to make the grade.

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When Fat Is No Longer Free

Posted on April 4, 2011

When Arizona governor Jan Brewer proposed that certain participants in the state’s Medicaid program — specifically obese people and smokers who don’t take steps to change their unhealthy behaviors — should pay a fine of $50 a year, it didn’t take long for the reactions to come rolling in.

Those in favor state that people who eat to the point of obesity or who smoke should have to contribute to covering the costs of that behavior. In addition, they note that any money collected through these fees will help the state’s financially strapped Medicaid program and allow it to expand current coverage. Opponents of the proposal say that for some individuals, obesity is the result of occurrences beyond their control, such as accident or illness.

An article in The Wall Street Journal notes that 25.5% of Arizona residents were considered obese as of 2009, and about 46% of the state’s Medicaid participants smoke daily, according to a 2006 survey. Moreover, the Journal added, “Unlike private insurers, which often charge different premiums based on customers’ health status, Medicaid must enroll all those who meet its eligibility requirements.”

Knowledge@Wharton asked two Wharton professors — Katherine Milkman, professor of operations and information management, and Kevin Volpp, professor of health care management — for their thoughts on three issues raised by the Republican governor’s proposal.

First: Is this proposal fair?

Volpp: Many of the people in question likely have a BMI (body mass index) far above 30, the cutoff for being considered obese. It is unlikely that people with BMIs much above 30 would be able to successfully lose enough weight to avoid this penalty.

Differential premiums based on weight are tricky from an ethical standpoint; to the extent that weight is based on genetic factors or larger social/environmental factors that individuals can’t control, adjusting premiums based on weight undermines the concept of risk pooling that is the basis for insurance. To the extent that weight is based on behaviors that an individual can control, it is arguably fairer to adjust premiums than not to do so, since otherwise, people with healthy lifestyles subsidize unhealthy behaviors of others. We don’t really know, for a given individual, how much of their obesity is due to their behaviors vs. genetics/environmental factors.

Another important factor is that reasonable accommodation should be made to those who can’t meet a particular incentive; for example, those who are in wheelchairs.

Milkman: It is no surprise to me that people are concerned about the fairness of this proposal. Classic judgment and decision making research about what people perceive as fair shows that any loss relative to our current reference point is viewed as extremely unfair. In this case, the reference point is no surcharge (in spite of higher medical costs) for obesity and smoking, and the change relative to that reference point (a $50 fee) is experienced as a loss. 

We know from prospect theory (a Nobel-prize winning theory describing human behavior) that losses loom larger than gains, so in spite of the gains associated with this new program (coverage of more people, etc.), it is no surprise that the losses are getting more attention. I do think it’s wise that those who are obese or who  smoke will be offered actionable steps (and hopefully realistically achievable ones) to avoid the fee. 

2. Would this proposal be effective? Is $50 enough of an incentive?

Volpp: It is unlikely that this will be effective in making people lose weight. Losing weight and maintaining weight loss is extremely difficult for most people, and a one-time $50 penalty, once paid, will not provide sufficient motivation throughout the year. Most people are very focused on the present; a once-a-year incentive will not likely be effective in sustaining weight loss.

Milkman: $50 may not be enough to make a significant dent in the problem, but it should affect some people meaningfully. The question is, how many? It would be very interesting to calculate that percentage if the program is implemented.

3. Do you think this proposal will be passed, given its controversial nature?

Volpp: A similar provision is part of the Affordable Care Act (Section 2705), which stipulates that starting in 2014 employers can adjust health insurance premiums based on outcome-based wellness incentives using measures such as BMI by up to 30% of the total employer/employee premium. Employers currently are allowed to adjust premiums by up to 20% using outcome-based wellness incentives. Few use this full amount but clearly there is precedent for these types of approaches to be used more widely.

Milkman: I think it is likely that proposals like this will become increasingly common. I think that could be a good thing to the extent that these incentives help educate people about the risks associated with obesity and smoking and help motivate them to take steps to lose weight or quit smoking. However, there is also the risk that these types of programs will simply function as regressive taxes.

 From Incentives to Penalties: How Far Should Employers Go to Reduce Workplace Obesity? Knowledge@Wharton

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Marketing Lessons from ‘The Man With the Golden Voice’

Posted on January 10, 2011

If the baritone extolling the virtues of Kraft’s “homestyle” macaroni and cheese in a new commercial sounds familiar, that’s because it belongs to Ted Williams — aka “the man with the golden voice.”

A former radio announcer who fell on hard times and became homeless due to problems with drugs and alcohol, Williams was panhandling on the side of a highway in Columbus, Ohio when his talent was discovered by a local newspaper reporter. The video in which Willliams demonstrated what he called his “God-given gift of voice” quickly went viral.

Millions of YouTube views later, Williams was featured on the Today show and Late Night with Jimmy Fallon. He also got job offers from the Cleveland Cavaliers, MSNBC and Kraft. The mac & cheese commercial showcasing Williams’ deep baritone aired for the first time during the Kraft Hunger Bowl on Sunday:

The rags to riches story is spawning plenty of spin-offs, including pieces on whether the sudden onslaught of fame could be damaging for Williams.

What made Williams’ story go viral? Recent research by Wharton professors Jonah Berger and Katherine Milkman may provide some answers. Using data from nearly 7,000 New York Times articles published on the paper’s website in a three-month period, they looked at how emotion plays into sharing content and the types of stories that are more likely to make the Times‘ “most e-mailed” list.

“Transmission is about more than simply sharing positive things and avoiding sharing negative ones,” Berger and Milkman write. They say content that stirs up a stimulating emotion in people, such as awe, anger or anxiety,  is more viral. Content that prompts what the researchers term a “low arousal” emotion — like sadness  — is less viral. This emotional connection to virality existed even after the professors accounted for other factors, like the usefulness of the information presented or the story’s prominence in the paper or on the Times website.

Longer stories, stories penned by well-known writers and stories authored by women were also more likely to make the most e-mailed list. Even in sections more likely to contain articles that provoked a strong emotion — such as the health or opinion pages — highly surprising and awe-inspiring stories stood out to readers and consequently were more likely to go viral. The odds of making the most e-mailed list increased the most when a story generated feelings of anger or awe.

Overall, Berger and Milkman say that positive content — like the rags-to-riches story of Williams — is more likely to be shared. “Together these findings shed light on why people share content, provide insight into designing effective viral marketing campaigns and underscore the importance of individual-level psychological processes in shaping collective outcomes.”

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