Topic: Business & Public Policy
Going electric: California car mandate would hit mechanics hard
Norman Y. Mineta, BS 53, first Asian-American federal cabinet secretary, dies at 90
Norman Y. Mineta, BS 53, a 10-term Democratic congressman from California and the first Asian American to become a federal cabinet secretary under Presidents Bill Clinton and George W. Bush, died Tuesday at home in Edgewater, Md., at 90.
Mineta, who as a child was interned with his family and thousands of other Japanese Americans during World War II, died of a heart ailment, according to the The New York Times.
After graduating from Haas in 1953 with an undergraduate degree in business administration, Mineta joined the U.S. Army and served as an intelligence officer in Japan and Korea.
Mineta broke racial barriers for Asian Americans in becoming mayor of San Jose, Calif. in 1971, according to his AP obituary. Elected to Congress in 1974, he became popular with voters by supporting transportation projects and fostering public-private partnerships that created explosive growth in Silicon Valley.
After 9/11, Mineta guided the creation of the Transportation Security Administration.
In an interview about the aftermath of 9/11, recorded by The Japanese American National Museum, Mineta discussed concerns over some public calls for “putting Arab Americans and Muslims in camps.” Recalling a Sept. 12 cabinet meeting, he said a Michigan congressman shared that his Arab American constituents were concerned about fallout from the attacks. President Bush responded that he was also concerned. “We want to make sure what happened to Norm in 1942 doesn’t happen today,” Mineta recalled in the interview, adding that after the meeting he told his staff that “one of things we have to make sure we do is no racial profiling.”
After leaving public service, Mineta became vice chairman of Hill & Knowlton. San Jose’s airport was renamed Norman Y. Mineta San Jose International Airport in 2001; in 2007, Mineta was awarded the Presidential Medal of Freedom. In a statement, President Bush called Mineta “a wonderful American story about someone who overcame hardship and prejudice to serve in the United States Army, Congress, and the Cabinet of two Presidents.”
Read Mineta’s New York Times obituary.
Listen to a 2008 NPR interview with Mineta, who talked about his road to White House leadership and leading the nation through acts of terror on Sept. 11.
Democracies must coordinate industrial policies to rebuild economic security
Using Trump’s vaccine endorsement boosts COVID-19 shots
A video compiled from Fox News clips of former President Trump and his family urging his supporters to get vaccinated against COVID-19 proved to be a cheap and effective way to convince some vaccine skeptics to get their shots.
In a large-scale ad experiment published today, a team of researchers from UC Berkeley’s Haas School of Business, Stanford University, University of North Carolina at Chapel Hill, and North Carolina State University compiled a public service announcement from existing footage and aired it on YouTube channels—including Fox News’ channel—in more than 1,000 U.S. counties with low vaccination rates. Compared with similar counties where the ad wasn’t shown, those counties recorded 104,036 additional vaccinations, at a cost of less than $1 per new shot.
The randomized controlled trial proved the researchers’ hunch that a partisan message would be a potent way to overcome the entrenched partisan divide around COVID-19 vaccines, according to co-author Steven Tadelis, professor of business and public policy at the Haas School of Business. It was also relatively inexpensive.
“Creating an intervention that effectively costs about $1 per extra vaccine is remarkably cost-effective, and a small fraction of the cost of other interventions,” Tadelis said, noting that studies of U.S. state vaccine lotteries put the cost at $68 to $82 per vaccine. Offering people direct compensation for getting vaccinated in Sweden put that cost at $24.
“Creating an intervention that effectively costs about $1 per extra vaccine is remarkably cost-effective, and a small fraction of the cost of other interventions.” —Steven Tadelis, Berkeley Haas
Using politics to overcome the political divide
Data from the Kaiser Family Foundation found that among the 27% of American who remained unvaccinated as of October, 60% identify as Republicans and just 17% as Democrats. Counties that voted heavily for Trump experienced COVID-related death rates nearly three times higher than counties that voted heavily for Joe Biden, an NPR analysis found.
Although Trump spearheaded Operation Warp Speed and he and former First Lady Melania Trump got their shots as soon as the vaccine was available, Trump did little to encourage vaccine uptake. Meanwhile, messaging from the Centers for Disease Control and Prevention (CDC) and medical experts about the vaccine’s efficacy has been overshadowed by a drumbeat of skeptical Fox News personalities who are also among Trump’s biggest boosters.
“We felt like there should be a better way to send a message that would resonate with people on the right,” said Stanford economics professor Brad Larsen, lead author of the study, in a press release.
“We felt like there should be a better way to send a message that would resonate with people on the right.” —Brad Larsen, Stanford University
The National Bureau of Economic Research working paper was co-authored by political science professors Timothy Ryan, Marc Hetherington, and Rahsaan Maxwell from the University of North Carolina at Chapel Hill and Steven Greene from North Carolina State University.
Creating the experiment
The researchers received funding for the experiment from the Vaccine Confidence Fund, and it was approved under the Institutional Review Board at Stanford University.
They hired a professional video editor to create a 27-second public service announcement with an upbeat soundtrack. It opens with the Fox 13 News Utah anchor declaring, “Donald Trump is urging all Americans to get the COVID-19 vaccine.” It then cuts to a phone interview in which Fox News anchor Maria Bartiromo nods in agreement while then-President Trump says, “I would recommend it, and I would recommend it to a lot of people that don’t want to get it, and a lot of those people voted for me, frankly.”
Next is another clip of the Fox 13 News Utah anchor explaining, “Both Trump and former First Lady Melania Trump did receive their vaccines privately in January at the White House.” The final shot shows a social media post Ivanka Trump shared when she got her jab. The ad closes with the statement, “Your vaccine is waiting for you.” It also includes a link back to the original broadcast.
The research team spent just under $100,000 on YouTube’s advertising platform, Google Ads, to air the video in counties with vaccination rates below 50%. The video was pushed out to 1,083 counties across the U.S. from Oct. 14 to 31, 2021. The study included a control group of 1,085 similar counties that did not receive the ad.
While the researchers had no control over which channels it would appear on, the Google Ads’ algorithms sent it most often to Fox News’ YouTube channels, where it was attached to segments hosted by Laura Ingraham, Tucker Carlson, Sean Hannity, and other Trump supporters and vaccine skeptics. It also appeared on some neutral channels and some not supportive of Trump, including Saturday Night Live, MSNBC, and NBC News.
Overall, the ad appeared on more than 150,000 YouTube channels and was delivered to more than 6 million viewers, resulting in 11.5 million impressions.
The researchers used data from the CDC on the number of vaccines administered in each county from one month before and month after the campaign to analyze the effect.
Their findings:
- The number of vaccinations in the average county where the ad was shown increased by 103, with a total of 104,036 additional vaccines in all (compared with counties where the ad was not shown).
- With an advertising budget just below $100,000, that amounted to about $1 for each additional vaccine.
- More intensive advertising made a difference: An increase of 1,000 ads led to 8.6 additional vaccines on average. Put differently, 116 ad impressions were required to yield one additional vaccine.
- While the ads moved some skeptics to action, they were only effective in counties with up to 70% Trump voters. The heaviest pro-Trump counties were unmoved.
Read the full paper:
“Using Donald Trump’s COVID-19 Vaccine Endorsement to Give Public Health a Shot in the Arm: A Large-Scale Ad Experiment”
By Bradley J. Larsen, Timothy J. Ryan, Steven Greene, Marc J. Hetherington, Rahsaan Maxwell, and Steven Tadelis
National Bureau of Economic Research, April 4, 2022
Minority voting power dropped after court weakened Voting Rights Act, study finds
Since the Supreme Court struck down a key provision of the Voting Rights Act in 2013, minority voter underrepresentation has intensified—especially in places where Black, Asian, and Latino voters are on the brink of being electoral majorities, according to a new Berkeley Haas study.
The study found sharp drops in minority voter registration and representation in cities that had new freedom to change their voting rules following the Shelby County v. Holder decision, which effectively lifted “preclearance” rules requiring federal approval for election changes in states and counties with a history of voter discrimination.
This suggests organized and concerted efforts to limit minorities’ voting power, says co-author Francesco Trebbi, professor of business and public policy at the Haas School of Business.
“Something is deeply skewed in terms of the electoral playing field here, and it’s surgical,” Trebbi says. “If you just look overall, everything may look okay. But if you dig deeper and look at the areas where minority voting share is on the brink of being pivotal, you see that something bad is happening.”
“Something is deeply skewed in terms of the electoral playing field here, and it’s surgical.” —Francesco Trebbi
Along with co-author Federico Ricca, a PhD candidate at the University of British Columbia, Trebbi used U.S. Census data to analyze patterns of minority representation and voter registration in more than 7,600 cities, paying particular attention to how these patterns shifted in areas that had been covered by preclearance rules. They found compelling evidence that voter disenfranchisement is not a relic of American history, but is now on the rise.
Removing federal gatekeepers
The Voting Rights Act of 1965 deemed some states and counties in need of a federal gatekeeper of sorts: Before these jurisdictions could change any law related to voting, they had to obtain federal permission.
To determine which places would require this oversight, the Voting Rights Act implemented a formula: Any jurisdiction that required a test or other prerequisite—such as a poll tax or document requirements—in order to vote, and in which less than half the eligible voters were registered or turned out in the 1964 election, would be covered by the preclearance rule. The Voting Rights Act’s coverage was later updated to include jurisdictions that met the same criteria in 1968 and 1972. The rules covered nine states, mostly in the Southeast plus Alaska and Arizona, as well as specific counties and townships in six other states, including California, New York, South Dakota, and Michigan.
The Shelby County v. Holder ruling’s specific move was to strike down this preclearance formula as unconstitutional. Though it upheld the preclearance requirement itself, the protections are, in effect, removed until Congress passes legislation describing a new formula.
“The removal of the Voting Rights Act protection could be particularly damaging going forward in a period of increasing diversity in the U.S., with the growing number of minorities deserving a fair shot at representation” —Federico Ricca
In his majority opinion, Justice John Roberts hinged his argument on how much voting access has improved in the nearly half century since the Voting Rights Act was passed, arguing that the coverage criteria were outdated.
“Voter registration and turnout numbers in the covered States have risen dramatically in the years since,” Justice Roberts wrote. “Racial disparity in those numbers was compelling evidence justifying” the Voting Rights Act’s preclearance rules. “There is no longer such a disparity.”
Analyzing new data
The study’s findings undermine Justice Roberts’ words. Since the ruling, Trebbi says, he’s been eager to investigate its impact on minority voting. He has previously published research on strategic minority disenfranchisement in the U.S., and he needed to wait for Census data to accumulate before he could dive into his questions around Shelby.
Racial and ethnic minorities are underrepresented at all levels of government. For example, they account for 40% of the U.S. population but are still only 23% of Congress. In 2018, Latinos made up 18.1% of the U.S. population, but only 1.2% of all national and local elected officials.
Trebbi and Ricca chose to focus on local politics because the elections are nonpartisan, yet often sharply divided by race and ethnicity. City councils are important because they often serve as a launching point for careers in higher office, and they make decisions on policies and services that directly impact the average voter. So the researchers’ first step was to analyze the relationship between shares of minority voters and shares of minority city council members.
Focusing on cities also gave them a large sample to work with. They used data on municipalities and their council composition, forms of government, and electoral rules from surveys managed by the International City/County Management Association (ICMA), complemented by sociodemographic data from the U.S. Census. Their sample covered 7,687 cities between 1981 and 2020.
Pivotal groups = more underrepresentation
What the researchers found when they looked into minority representation on city councils echoed throughout their other findings. As Trebbi puts it: “Every minority racial and ethnic group is underrepresented, but they are especially underrepresented when they start to become electorally important.”
Specifically, city council underrepresentation is the highest when minorities account for 55% to 60% of the total voting age population.
“Already this tells you that there is something going on here that is not just explained by minorities voting less or participating less in elections,” Trebbi says. If that were the case, underrepresentation would be roughly the same across cities with different percentages of minority populations—not so predictably most-pronounced in cities with pivotal shares of these voters.
The researchers also examined patterns in voter registration and found that, again, under-registration rates were highest at a similar sweet spot—when levels of minority population shares were between 45% and 50%.
Evidence of strategic rule changes
Next, Trebbi and Ricca sought to determine whether electoral rules tended to change when minority voters crossed a particular population threshold. In Trebbi’s previous research, he showed that “at-large” systems—where all voters vote for city-wide representatives—dilute minority votes more than systems where smaller districts elect their own council members, because minorities tend to be concentrated in certain neighborhoods. Consistent with this finding, the researchers found that at-large systems were most likely to be used in places where minorities represented about 25% of a population—not a large enough share to threaten a white majority in a citywide election. But as a city’s minority population grew, it was less and less likely to employ an at-large election system.
Shifts between at-large and district representative systems were the type of change that had required federal preclearance under the Voting Rights Act’s Section 4(b). In the third part of their research, Trebbi and Ricca analyzed data on the Act’s coverage collected directly from the U.S. Department of Justice.
“For some, the first two sets of results would be sufficient to identify a strategic component to this, but we also have the Shelby results that double down on intent,” Trebbi says. “You see that the moment the coverage restriction was lifted, minority representation declined.”
Specifically, minority voter underrepresentation increased by up to 6.3 percentage points in municipalities previously covered by the preclearance rule. In general, representation had been lower in non-covered jurisdictions before the ruling, but after the ruling, covered and non-covered jurisdictions’ representation numbers have converged.
“Throwing away your umbrella”
In her dissenting opinion in Shelby County v. Holder, Justice Ruth Bader Ginsburg wrote, “Throwing out preclearance when it has worked and is continuing to work to stop discriminatory changes is like throwing away your umbrella in a rainstorm because you are not getting wet.”
The researchers drew a similar conclusion, writing that the Voting Rights Act’s preclearance rule was an “an imperfect, but effective, tool in limiting the representation gap.” In January, the U.S. House of Representatives passed the John R. Lewis Voting Rights Advancement Act, which would restore the preclearance rule. It now awaits a vote in the Senate.
“The removal of the Voting Rights Act protection could be particularly damaging going forward in a period of increasing diversity in the U.S., with the growing number of minorities deserving a fair shot at representation,” Ricca said.
We must offer Putin an offramp from his war in Ukraine ASAP
David I. Levine is the Eugene E. and Catherine M. Trefethen professor of business administration at the Haas School of Business. Reposted from the Berkeley Blog
The risks of escalation between NATO and Russia—a nuclear superpower with a potentially unstable leader—are clear. These risks imply that citizens of every nation have an interest in ending Russia’s invasion of Ukraine.
To do that, it is crucial that we negotiate with our foe, no matter how distasteful. We must give Russia an attractive path to leave Ukraine as soon as possible. A concern is that any concessions from NATO reward Putin’s misbehavior.
In fact, if Ukraine and NATO offer Putin a deal they would have agreed to prior to the invasion, Russia has gained nothing from its costly war.
Furthermore, Russia’s invasion has strengthened NATO, devastated Russia’s economy, and demonstrated Russia’s military weakness.
Thus, Russian misbehavior has already been punished. Prior to its unprovoked invasion of Ukraine, Russia demanded the removal of all troops from NATO members that were once in the Soviet Union.
This week, Putin insisted on the lesser demand of Ukraine putting non-NATO membership in its constitution. The West must understand Putin’s true interests, not just his (shifting) public demands.
At the same time, the West should identify which of these interests are least costly to Ukraine and NATO. Then Ukraine and NATO can identify a deal they would have accepted prior to the invasion—and offer it today to Russia.
At a minimum, this approach means making clear to Russia that sanctions end when its troops leave Ukraine.
This approach may also mean making promises about delaying Ukraine’s membership in NATO, and a referendum (with international oversight) on autonomy for the parts of Ukraine that Russia already controlled prior to the war.
NATO may also address Russian fears of invasion by limiting its offensive weapons and large exercises near Russia—presumably in exchange for Russia agreeing to similar limits near its own borders. These are just examples, as a well-designed offer requires deep insight into the true interests of Putin, Ukraine, and NATO.
Finally, this approach may also mean promising Putin that he will not be prosecuted for war crimes if Russian generals and oligarchs pressure him to leave. While he deserves to be held to account, it does not make sense to risk nuclear war to preserve a slim chance to prosecute one war criminal.
A quagmire
At a deeper level, it is unfair that Russia annexed Crimea eight years ago, and then supported separatists who carved autonomous regions out of easter Ukraine. It is even more unfair to reach a peace deal that acknowledges those pre-war facts on the ground.
But while the deal I outlined may be unfair, it is even less ethical to prolong the war. To see why, consider the long conflict that will follow if we do not give Russia a quick exit.
Unless Ukraine can somehow defeat the massive Russian military, Russia will presumably install a puppet government in Kyiv. Assuming that most Ukrainians will continue to oppose a Russian-backed regime, Russia will have to continue to station troops in Ukraine.
Russia’s economy will continue to suffer from sanctions, and Russia’s military will be tied down in a European “Afghanistan.”
Some anti-Russian commentators are delighted at the prospect of Russia’s military stuck in this quagmire. This “optimistic” scenario ignores the misery of Ukrainians and the suffering of Russian citizens, few of whom had any idea this war was coming.
Accepting this scenario also ignores the known costs of ongoing conflict on the West—and also the less quantifiable risks.
The known costs include higher energy and food prices, the disruption of several million refugees moving into the EU, the costs of permanently higher defense spending, a possible financial crisis in the West due to Russian defaults on its debts, and the end of cooperation with Russia on everything from the International Space Station to fighting global terrorism and climate change.
The political costs may include the need to support imperfect democracies such as Poland and to start cooperating with dictatorships such as Venezuela as we seek new supplies of oil.
The fog of war
The military risks are even greater.
Russia has many strategists searching for ways Russia can retaliate for Western sanctions and for arming Ukraine. The most predictable means include increasing Russia’s current misbehavior: more cyberattacks, more election meddling, and more support for separatist and terrorist groups around the globe.
More generally, Russia can exploit any instability caused by high energy prices, the refugee crisis it has caused, and any other instability it can foment or find.
Beyond what Russia plans, there are dozens of paths to unintended escalation and retaliation. Some examples:
- A military plane accidentally crosses an international border
- One side attributes hostile acts by hackers, terrorists, or foreign fighters to the other side: for example, an attack on a NATO convoy while it is still in Poland, or a Russian military supply convoy in Russia.
- Russia may feel justified using force in NATO nations due to NATO support for Ukrainian resistance fighters that Russia calls “terrorists,” or to support ethnic Russians who protest in a Baltic state.
Given the many parties that can engage in violence—from terrorists Russia may plant among the millions of Ukrainian refugees to freelance hackers Ukraine recruits into its “IT army”— attributing blame for attacks will always include the risk of misunderstanding.
The risks of escalation are too great to imagine. Even if it requires some sacrifice, we must find a way for Russia to get out now.
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‘Mr. Nordic’ Robert Strand discusses new book, new center, case award
It’s no secret that Robert Strand, executive director of the Center for Responsible Business at Berkeley Haas, believes the Nordics hold the key to the future of American capitalism. Strand, who came to Haas in 2014 after earning a PhD and becoming a sustainability professor at the Copenhagen Business School in Denmark, is finishing a book called “Sustainable Vikings: What the Nordics Can Teach Us about Reimagining American Capitalism.” He has been using drafts of the book to teach in his undergraduate and MBA course, Sustainable Capitalism in the Nordics. Strand is also now the executive director of the new UC Berkeley Nordic Center.
We spoke with Strand about the future of capitalism and his award-winning case Patagonia’s path to carbon neutrality by 2025, along with his Nordic Center role.
The Financial Times recently honored the Berkeley Haas Patagonia case in its special report on Responsible Business Education. (The case was co-written in 2018 with CRB’s former associate director, Seren Pendleton-Knoll, UC Berkeley Professor Daniel Kammen, and Patagonia employees, including Vincent Stanley.) What was your goal with the case?
The goal was to help frame this wicked problem of climate change and provide inspiration for other companies to take action. There’s real strength in acknowledging that a problem exists, that business is part of the problem, and that even a sustainability-leading company like Patagonia does not know exactly what to do. Patagonia is leveraging every resource at its disposal, including the Center for Responsible Business, to help frame the issues at hand. Within that case, we wanted to highlight tensions involved when you talk about running a for-profit business and you also desire to address a great issue like climate change.
There’s real strength in acknowledging that a problem exists, that business is part of the problem, and that even a sustainability-leading company like Patagonia does not know exactly what to do.
What did Patagonia do differently to address these challenges?
Patagonia is engaging in open innovation, drawing from a concept from our Berkeley Haas colleague Henry Chesbrough, to tackle its challenges. Through the authoring of a case and its use in the Patagonia Case Competition that we run through the Center for Responsible Business, Patagonia is opening its challenges up to the world for help. The likelihood that the best ideas and best solutions to tackle climate change exist within the walls of Patagonia are next to none. We can help Patagonia find solutions to its problems and facilitate cooperation with a variety of new stakeholders that Patagonia may have otherwise never encountered.
What can companies and our students learn from Patagonia?
Wicked problems like climate change demand cooperation. They demand us coming together and addressing a problem that affects us all. We must go beyond ourselves to address this. American business students need to get comfortable with cooperation and working beyond the walls of their companies to address our greatest sustainability challenges. This often includes engaging with industry peers. I deliberately use the expression industry peers as opposed to competitors because language matters and a peer is someone with whom you collaborate.
American business students need to get comfortable with cooperation and working beyond the walls of their companies to address our greatest sustainability challenges.
Your views on capitalism were deeply influenced by the time you spent living in Norway. How?
When I came from the Copenhagen Business School to Haas in 2014, my Trojan Horse agenda was the Nordics. My American mind was revolutionized by my experiences living and working in the Nordic countries for the better part of a decade. As a PhD-student-turned-professor in Denmark, I saw first-hand the policies and practices that were working really well there to better ensure the well-being of every member of society. These were policies and practices that I was told in the United States couldn’t work—including access to childcare, paid parental leaves, universal access to health care and education—because they were called socialism and had to be a drag on efficiency. However, I saw that the Nordic countries are market-based economies and exemplars of capitalism, but just a different variety of capitalism than what we know in the U.S. I saw how Nordic societies were more efficiently and equitably handling their challenges. I began to realize maybe the problem lies with us Americans. That set me on the path of questioning the status quo of American capitalism, and what better place to do such a thing than Berkeley Haas.
Let’s shift gears and discuss what you are working on now.
I’m finishing my book “Sustainable Vikings,” which is about what the Nordics can teach us about reimagining American capitalism. I use drafts of it in all the classes that I teach at Berkeley Haas and have just loved the discussions with our bright and wonderful Haas students over these past years. They are now a part of this book. I want to be part of normalizing the approach I saw in the Nordic societies where business leaders saw themselves as stewards of the company and society. I fear too many companies and too many prominent business figures in the United States have adopted an extractive approach. We need to fight this extractive approach head on because it is leading us all to a very bad place. But, I should stress there is nothing that says somebody needs to be from a place like Denmark to be a steward. I am talking about the need for a mindset shift where we discard the old assumptions that do not serve us well.
We need more American business leaders like Rose Marcario, former CEO of Patagonia, and Chip Bergh, CEO of Levi’s, and a partner of the Center for Responsible Business, who is leveraging his platform to elevate the risks to our democratic institutions and the need to strengthen our American democracy.
UC Berkeley recently launched the new Nordic Center and named you director. What has the center been up to?
The Nordic Center is institutionally tied to the Center for Responsible Business, the Scandinavian Department, and the Institute for European Studies, so we straddle the campus to bring the best of Berkeley to the Nordic agenda. Our first big event was the Nordic Sustainable Food Summit this fall, drawing upon our competency in sustainable food with Will Rosenzweig and courses like Edible Education, and the Plant Futures Lab. We showcased our Nordic connections, including Björn Öste, founder of Oatly, an oat milk company out of Sweden. We’ll make it an annual event and next year we will beef up ladder faculty participation, including our great researchers like Professor Paul Gertler, who’s interested in things like sugar taxes that Norway has implemented to compare with efforts here in the U.S. Our students are connecting with these Nordic-based firms and startups and next year we hope to be in- person at Haas, sharing some great Nordic food!
A primary driver behind the Nordic Center is Barbro Osher, a good friend to UC Berkeley and a good friend of mine. Without her, none of this would have been possible. Barbro gave me the nickname “Mr. Nordic,” and what a pleasure it has been to get the Nordic Center established in partnership with her and our friends and colleagues across UC Berkeley.
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Chain of Command
How chain stores influenced small businesses during COVID
Since the pandemic began, local shops, restaurants, and other small businesses have struggled with how best to respond to the ever-changing crisis.
Haas researchers have found that when it came to daily closures, big chains set the tone: In the pandemic’s first few weeks, local businesses not affiliated with a chain were more likely to close their doors if competing chain outlets in the same ZIP code shut theirs.
The study, published in Management Science, focused on service-oriented businesses, such as retail shops, restaurants, movie theaters, and gyms, and excluded essential industries, such as grocery stores and gas stations.
The researchers—Assistant Professors Mathijs de Vaan and Abhishek Nagaraj; Associate Professor Sameer Srivastava, the Ewald T. Grether Chair in Business Administration and Public Policy; and PhD student Saqib Mumtaz— used anonymized cellphone-tracking data to determine whether 230,403 local businesses in the same ZIP codes as 319 national chain establishments were open or closed each day between March 1, 2020, just before local governments began issuing stay-at-home orders, and April 15, 2020.
Nationwide, if a chain store closed one day, a competing community business in the same ZIP code was, on average, 3.5% more likely to close the next day. That may not sound like a lot, but that’s just the daily level. “If you accumulate 3.5% across days and establishments and places, it adds up to be a fairly consequential effect in a town that may have hundreds of businesses,” Srivastava says.
While the focus was on closures, the researchers say the lessons are applicable to more current questions, such as whether to impose mask or vaccine mandates or let employees work from home.
Under the Influence
Strategic corporate donations can sway nonprofits and public policy
In 2003, the Coca-Cola Foundation announced a $1 million donation to the American Association of Pediatric Dentistry, supposedly to improve child dental health. Shortly after receiving the philanthropic gift, the kids’ dental group changed its stance on sugary beverages, no longer calling them a “significant factor” in causing cavities but instead saying the scientific evidence was “not clear.”
Coincidence? According to new Berkeley Haas research, back-door corporate influence peddling through nonprofit donations is both common and effective.
In work for the Quarterly Journal of Economics, Associate Professor Matilde Bombardini; Professor Francesco Trebbi, the B. T. Rocca Jr. Chair in International Trade; and others provide the first systematic evidence that nonprofits change their stances in response to corporate donations, and government agencies change their rules alongside them.
Comparing data for rules posted by the federal government since 2003 with donations filed with the Internal Revenue Service, they found nonprofits are 76% more likely to comment on a proposed rule in the year after receiving a donation from a corporation that commented on the same rule. Using natural language processing, they found that the comment by the nonprofit was significantly closer to the corporation’s language after receiving a donation—and, even more alarmingly, that the language the government used in changing its proposed rule also became more similar.
“They are distorting the information policy makers receive,” says Bombardini. Nonprofits are often seen as speaking up for citizens or the environment, so “if the message from the nonprofit and the firm are the same, policy makers might weight that position more heavily.” To counteract that distortion, the researchers suggest that nonprofits commenting on a rule be required to disclose any donations from corporations potentially affected by that rule.
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‘A giant of a person’: Economist John Morgan dies at 53
Professor John Morgan, an economist who found elegant new ways to analyze the world through the lens of game theory, and whose popular classes and sage mentorship made a deep impression on his students, passed away Oct. 6 at age 53. He died peacefully at his Walnut Creek home.
During his nearly two decades at Berkeley Haas, Morgan left his mark through his prolific and wide-ranging research, his unconventional teaching that drew on strategy games he invented, and his generous leadership. He had been struggling with a painful autoimmune disease that put him on medical leave, but he continued with his research and had planned to resume teaching in the spring.
“It’s impossible to over-express what a force John was in this school, and it didn’t take long for anyone who met him to realize that his small physical stature was a disguise for the giant of a person he was,” said Prof. Steve Tadelis, a close colleague in the Economic Analysis & Policy Group. “We have great researchers, we have great teachers, and we have people who give freely of themselves. But I cannot think of a single person who embodies all three of these at the extreme levels that John did.”
It’s impossible to over-express what a force John was in this school… —Prof. Steve Tadelis
Morgan was the Oliver E. and Dolores W. Williamson Chair of the Economics of Organizations; co-director of the Fisher Information Technology Center; founding director of the Experimental Social Sciences Laboratory (XLab); a member of the California Management Review editorial board; and faculty director and tireless advocate for Berkeley Executive Education. In 2013, he was the inaugural winner of the Williamson Award, given to faculty who embody the school’s four Defining Leadership Principles. He also won the Cheit Award for Excellence in Teaching in 2006.
Pennsylvania native
Born on November 11, 1967, in Wilkes-Barre, Pa., Morgan was raised in Ashley, Pa. He met his future wife, Heather Evans, when they were teenagers working at the Osterhout Free Library in Wilkes-Barre. They went to different high schools but both attended the University of Pennsylvania, where Morgan graduated summa cum laude in economics from the Wharton School in 1989. The couple was married in 1991, and celebrated their 30th anniversary in August.
Morgan earned a PhD in economics from Pennsylvania State University in 1996 and landed an assistant professorship in economics and public affairs at Princeton University. Following stints as a visiting professor at Penn and New York University, and a visiting fellow at Nuffield College, University of Oxford, he joined Berkeley Haas in 2002. During his career at Berkeley, he also spent time as a visiting fellow, Trinity College, and an eternal fellow, Judge Business School, both at the University of Cambridge, U.K.
His doctoral thesis was an early example of his elegant reasoning, colleagues said. “Financing Public Goods by Means of Lottery” showed why, despite their reputation as regressive, lotteries are a very effective method of raising funds for public benefit: Unlike taxes, they are voluntary, and those who are paying have the chance to get some of the benefit distributed back to them.
Academic derring-do
Among the areas Morgan delved into were pricing and competition in online markets, auctions, expertise, reputations, and voting. He looked at why prices can vary so widely on the internet when it’s so easy to shop around; showed that people aren’t very good at accounting for hidden fees like shipping costs; and even had a paper on the economics of psych-outs, or why showing off can make competitive sense, despite being frowned upon.
No matter the topic, Morgan had an exceptional ability to dispassionately analyze problems, colleagues said. And while his brilliance with economic models stood out, he also loved experimental work, co-founding the Haas Xlab to allow researchers to see if their theories held up in practice.
“I wished we could bottle John, and give every economist a dose of his clear thinking,” said Prof. David Levine, chair of the Economic Analysis & Policy Group, who had been working with Morgan to return to the classroom in the spring. “He thought about ethics. He took the perspectives of other people. He was smarter than me—in fact, he was smarter than just about everyone.”
According to Tadelis, Morgan’s “rate of publication was second to none” before his illness took a toll. Levine was among several colleagues who commented on Morgan’s academic derring-do, which stood out even at an elite institution. “Sometimes his brilliance was intimidating—for example, the time he had two different articles in the same issue of the preeminent economics journal, the American Economic Review,” Levine said.
Prof. Ernesto Dal Bó, a political economist, often discussed voting theories with Morgan. “I enjoyed a front-row seat as he wrote really clever models investigating the informational and welfare properties of important voting institutions,” Dal Bó said. “John’s mathematical models of voting often delivered surprise, and always delivered significant truth and beauty. He was a uniquely gifted researcher who made those around him think much harder, while cheering us up with his wit.”
Mentor and father figure
Those qualities also made an impression on the doctoral students who sought him out for his attentive mentorship and unique approach to life and work.
“Conversing with him was like being on an adventure. He would throw himself at intellectual challenges and follow them wherever they went, and he was willing to challenge convention and be controversial on certain topics.” said Bo Cowgill, PhD 15, now an assistant professor at Columbia University. “On top of that he was hilarious—he could bring down the house with his mixture of humor and insights and game theory and economics.”
He was devoted to his students, a number of whom became good friends and repeated co-authors after they graduated.
“He would generously give his time to PhD students. He put in the hard work to make them better—and they did quite well on the job market,” Cowgill said. “Yet he also cared about things outside of academic success and climbing the career ladder. He would encourage students to take time for their mental health and their lives outside of their careers. He was like a father figure, or a mentor for questions about life.”
“Survivor” at Haas
Morgan taught strategy, leadership, microeconomics and policy, and his long-running game theory class was one of the most popular at Haas. He blasted rock music to welcome students to class and energize them for competition in his signature strategy games, which he eventually incorporated into a semester-long game based on the reality TV show Survivor. He said his goal was to teach students to be “outward thinkers,” by which he meant they would need to be able to relate to others to succeed in business.
“You don’t really learn how to empathize by having some professor tell you about the need to empathize. It’s like reading a self-help book. It doesn’t work. You actually have to do it,” he said.
He received awards from the National Science Foundation, and was selected as a visiting scholar at the Hoover Institution and the International Monetary Fund. He consulted on auctions and dynamic pricing for Google, was a research scientist at Yahoo!, and served as a consultant to the Federal Trade Commission.
“We will dearly miss John’s sharp wit, brilliant intellect, and personal warmth,” said Dean Ann Harrison. “He was greatly beloved by colleagues and students alike.”
Devoted family man
Yet Morgan had another side, as a grounded and devoted husband to Heather, an enthusiastic father to his son. He also pursued many non-academic interests. “John was a brilliant, loving, quirky, wonderful man who never had just hobbies; they always became obsessions,” said Heather Morgan. He had a deep and wide-ranging knowledge of history, which he loved to share. He also loved golf, travel, and hiking, as well as fountain pen collecting, photography, drawing, watercolor, and painting miniatures for strategy board games and Dungeons & Dragons. (For many years, he ran a weekly D&D game for his son and friends.) He was also an enormous fan of the Boston Red Sox, and he shared a love of the Oakland A’s and fantasy sports with his son.
In addition to his wife and son, Aidan, Morgan is survived by his mother, Diana Williams Morgan, of Wilkes-Barre, Pa.; father, Roy J. Morgan, Zephyrhills, Fl.; brother, David W. Morgan (Julie), Longwood, Fl.; aunt, Maxine Williams, Ashley, Pa.; nieces and nephews, and brothers and sisters-in-law. Plans for a memorial are still being discussed. Donations in John’s memory may be made to the American Autoimmune Related Diseases Association (AARDA) or The Humane Society of the United States.
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Study shows how corporations influence policy through nonprofit donations
In 2003, the Coca-Cola Foundation announced a $1 million donation to the American Association of Pediatric Dentistry, supposedly to “improve child dental health.” Shortly after receiving the gift, the children’s dental group changed its stance on sugary beverages, no longer calling them a “significant factor” in causing cavities, but instead saying the scientific evidence was “not clear.”
Coincidence? A study co-authored by Berkeley Haas researchers provides the first convincing evidence that not only do nonprofits change their stances in response to corporate donations, but that government agencies change their rules alongside them.
“If it had no impact, why would corporations do it?” said study co-author Matilde Bombardini, associate professor of Business and Public Policy at the Haas School of Business. “The bigger question has been whether you have evidence showing that impact.”
Published in the Quarterly Journal of Economics, the paper shows that corporate influence peddling through nonprofit donations is effective in influencing policy. The authors include Francesco Trebbi of Berkeley Haas, Marianne Bertrand of Chicago Booth, Raymond Fisman of Boston University, and Brad Hackinen of Western University Ivey School of Business (Canada).
Influencing rules and regulations
The thousands of government rules and regulations governing corporate behavior may seem obscure at times, but they have direct impact on people’s lives, Bombardini says. “They cover the environment, highways, aviation, health—issues that are very, very close to consumers and workers.”
As policies are hashed out, nonprofits often play an important role, balancing corporate interests by speaking on behalf of citizens and the environment. But what happens when they start speaking on behalf of their corporate donors instead? The researchers scraped data for hundreds of thousands of rules, proposed rules, and comments posted by the federal government since 2003 and compared those rules with detailed data on corporate foundations grants filed with the Internal Revenue Service.
Similarities in language
They found a direct correlation between donations and the likelihood that nonprofits spoke up about a rule: A nonprofit was 76% more likely to comment on a proposed rule in the year after it received a donation from a corporation commenting on the same rule. And frequency wasn’t the only thing connected to money. The researchers used natural language processing to compare comments from the donor companies and the nonprofits, and found that after a nonprofit received a donation, the language it used in its comments was significantly closer to the language used by the company.
In addition, the language the government used in describing how and why the rule changed also became more similar to the corporate line—implying that regulators weighted the comments by the nonprofit more heavily in their deliberation process. “At a minimum, regulators are paying more attention to what the firm has to say, and devoting more time towards discussing the same kinds of issues the firm was discussing in their letters,” said Bombardini.
Adding transparency
While it certainly appears that companies are “buying” favorable comments to help their case, the researchers allow that it’s possible they are just funding nonprofits that already agree with them, allowing the nonprofits more resources for public advocacy. That distinction hardly matters in the outcome, however. “Either way, they are distorting the information policy makers receive,” said Bombardini. “If officials are looking for signals from different players in society, and the message from the nonprofit and the firm are the same, they might weight that position more heavily, not realizing that the two are linked.”
In order to counteract that distortion, the researchers propose a simple rule requiring all nonprofits to disclose any donations they receive from corporations that could be potentially affected by a rule on which they are commenting. Such a guideline wouldn’t necessarily lead regulators to discount the nonprofits’ points of view, but it might cause them to take it with a grain of salt, properly weighting its value. “We’re not saying all of these donations are nefarious—there might be a good reason why a nonprofit adopts a certain view,” said Bombardini. “We are advocating to make it all more transparent, so the public and the agencies know where the funding is coming from.”