What your credit-card offers say about you–Antoinette Schoar

MIT Sloan Professor Antoinette Schoar

From The Wall Street Journal 

Do the credit-card offers you receive in the mail have photos of enticing holiday destinations and reward miles? If so, you should be flattered, since this means that credit-

card issuers believe you to be highly educated and financially sophisticated. But if you are receiving card offers with low teaser rates for introductory APR, you might take offense, since card issuers most likely do not view you as savvy.

As more and more personal data becomes available, businesses are now able to target customers in a personalized and sophisticated way.  On the bright side, that means you can get products and services that are tailored to your needs. As a result, you are much less likely to get catalogs featuring dresses your grandmother might wear. But, according to our research, the downside is that companies can also more effectively target your behavioral weaknesses, self-control issues or lack of attention to the fine print. We find that credit-card companies tend to offer those customers who are least able to manage the complexity of credit-card contracts, the most complex features and hidden charges.

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Why tech firms can’t ignore seniors–Dennis Lally

From Fortune Insiders

When it comes to technology, the mass market for the most part ignores senior citizens. This is a mistake. Despite the common misconception, today’s senior citizens have a greater familiarity with technology and own more devices than ever before.

With over 46 million people aged 65 or older in the U.S. as of 2014, seniors comprise nearly 15% of the total population. According to a study conducted by the Pew Research Center, as of 2013, 59% of seniors reported using the Internet, while 47% had broadband access in their homes. And the senior technology market is expected to exceed $42 billion by 2020.

Despite this rapidly growing and untapped market opportunity, building technology products for older adults isn’t easy. Companies face design and monetization challenges. But if they can overcome these obstacles and start targeting tech products and services to seniors, it will be worth the effort.

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Tech could soon take over all of the sports you watch – Ben Shields

MIT Sloan Lecturer Ben Shields

From Fortune

The sports industry is engaged in a grand digital experiment with technology platforms. The latest test was announced last week, when the National Football League (NFL) sold its 10-game Thursday Night Football digital package to Amazon. As when Twitter held it last year, the games will be simulcast on network (CBS or NBC) and cable (NFL Network) television. However, unlike the free access Twitter offered, only Amazon Prime members will be able to watch Thursday night games this year. Given Prime’s non-exclusivity and pay wall, if Thursday Night Football on Amazon leads to increases in year-over-year viewership and contributes to the growth of Prime subscribers, the NFL and Amazon executives could call it a win.

As encouraging as that result would be, this experiment is really about the early 2020s, which is when the NFL will be making major decisions about distributors for its most valuable rights packages. How can tech companies like Amazon, Facebook, Google, Apple, Netflix, and Twitter become big rights winners at that point? And what can traditional broadcasters do now to avoid being left behind? This long-term sports rights game will be won through reach and revenue.

When sports leagues sell their live distribution rights, they want to maximize both reach and revenue. If technology companies can help leagues achieve these goals more effectively than their existing television partners, the sports media landscape will look dramatically different a decade from now.

Tech firms must prove their reach

There’s never been any doubt as to whether technology companies have the resources to invest in sports rights. The question has been whether such moves made long-term strategic sense for both parties. As technology platforms launch and grow competitive video businesses, they are beginning to put to rest concerns about their suitability as distribution partners, as they now have clear incentives to make rights deals successful over the long term.

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Stock market’s real driver is not what you think – Daniel Greenwald

Daniel Greenwald

MIT Sloan Assistant Professor Daniel Greenwald

From MarketWatch

What makes the stock market move over the long term? While stocks have historically delivered positive returns year-over-year on average, it is not clear why stock prices rise more rapidly in one period than in any other.

With my colleagues, Martin Lettau of the U.C. Berkeley Haas School of Business and Sydney Ludvigson of New York University, I set out to investigate what makes stocks move over time. What we found was surprising.

Despite the widespread belief that firm productivity is a key driver of stock market returns, our results indicate that fluctuations in productivity play only a small role. Far more influential over long periods is the economic redistribution between workers and shareholders — meaning how a company’s profits are divided between employees and investors.

Our first step in this research was to consider which factors might be responsible for movement in the stock market in aggregate. Each firm that is represented in the stock market index produces a stream of revenues. After paying a portion to workers, the rest is left over as profits that can be distributed to shareholders as dividends. The stock price will rise whenever the rewards to the shareholders increase, which can be caused by one of three separate forces:

  • Productivity: The firm becomes more productive, increasing its stream of revenues. This increases the size of both slices, including the shareholders’ slice.
  • Redistribution: The size of the pie remains fixed, but the firm pays a smaller share to the workers, increasing the shareholders’ slice.
  • Market confidence: Neither the size nor the division of the pie changes, but more risk-tolerant investors demand more stock despite there being no change in their current dividends.

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How speeding up payments to small businesses creates jobs — Jean-Noel Barrot

MIT Sloan Asst. Professor Jean-Noël Barrot

MIT Sloan Asst. Prof. Jean-Noël Barrot

From The Conversation

Operating a small business, the backbone of the U.S. economy, has always been tough.

But they’ve also been disproportionately hurt by the Great Recession, losing 40 percent more jobs than the rest of the private sector combined.

Interestingly, as my research with Harvard’s Ramana Nanda shows there’s a fairly straightforward way to support small businesses, make them more profitable and hire more: pay them faster.

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