Why Americans are unhappier than ever – and how to fix it – George Ward

George Ward, MIT Sloan PhD student

From The Conversation

March 20 is International Day of Happiness and, as they’ve done every year, the United Nations has published the World Happiness Report. The U.S. ranks 18th among the world’s countries, with an average life satisfaction of around 6.88 on a scale of 10.

While that may be relatively near the top, America’s happiness figures have actually declined every year since the reports began in 2012, and this year’s are the lowest yet. The question, then, is whether the government has a role to play in improving the happiness of its citizens. And if so, how might policymakers go about it?

Fortunately, a growing body of work by economists and psychologists can give governments access to the kind of data that can inform the way they think about policy and happiness.

In our new book, “The Origins of Happiness: The Science of Well-Being Over the Life Course,” my colleagues and I provide a systematic account of what makes for a satisfying life.

The role of government

The idea that government ought to focus attention on the well-being of its citizens goes back centuries. Thomas Jefferson himself said, “The care of human life and happiness … is the only legitimate object of good government.”

Historically, this has meant increasing economic productivity and growth to increase personal happiness. But as the data suggest, and many countries are beginning to realize, this isn’t likely to be sufficient. As a result, many governments around the world are now taking steps to broaden their policy goals beyond GDP. Read More »

A revolutionary model to optimize promotion pricing – Georgia Perakis

MIT Sloan Prof. Georgia Perakis

MIT Sloan Prof. Georgia Perakis

From The Huffington Post.

Grocery stores run price promotions all the time. You see them when a particular brand of spaghetti sauce is $1 off or your favorite coffee is buy one get one free. Promotions are used for a variety of reasons from increasing traffic in stores to boosting sales of a particular brand. They are responsible for a lot of revenue, as a 2009 A.C. Nielsen study found that 42.8% of grocery store sales in the U.S. are made during promotions. This raises an important question: How much money does a retailer leave on the table by using current pricing practices as opposed to a more scientific, data-driven approach in order to determine optimal promotional prices?

The promotion planning tools currently available in the industry are mostly manual and based on “what-if” scenarios. In other words, supermarkets tend to use intuition and habit to decide when, how deep, and how often to promote products. Yet promotion pricing is very complicated. Product managers have to solve problems like whether or not to promote an item in a particular week, whether or not to promote two items together, and how to order upcoming discounts ― not to mention incorporating seasonality issues in their decision-making process.

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The coal habit is hard to kick – Valerie Karplus

MIT Sloan Asst. Prof. Valerie Karplus

MIT Sloan Asst. Prof. Valerie Karplus

From The Hill

Much has been made of the fact that growth in coal use around the world is stalling, but coal will not disappear anytime soon. While a wave of firms is exiting the coal-fired electricity sector across the global, coal is still poised to contribute to the fuel mix for a long time to come. This means that careful management of its remaining uses is more important than ever. Coal will remain important for two reasons.

First, it is still in high demand. The International Energy Agency projects that coal in power generation may drop to 36 percent by 2021, down from 41 percent in 2014, largely due to renewables and energy efficiency in China and the United States. However, this amounts to at best a flatlining, not a reduction, in demand. Second, coal has a role outside the power sector, in industrial and household demand. In developing countries, power and heat account for only 50 percent of coal use. The other 50 percent is directly burned by households or industries.

Statistics from the World Coal Association paint a clear picture of coal’s role in industrial activities, especially in construction industries that support infrastructure development. According to that group, the cement industry uses 200 kilograms of coal to produce one ton of cement, with 300 kilograms to 400 kilograms of cement needed to produce one cubic meter of concrete. Coal is also used in as an input to production of 70 percent of the world’s steel, as a raw material to make chemicals, and to make liquid fuel for transportation.

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Financial regulation calls for 20/20 vision – Antonio Weiss and Simon Johnson

MIT Sloan Professor Simon Johnson

Harvard Kennedy School Senior Fellow Antonio Weiss

From Bloomberg

One of the central pillars of financial reform, the Financial Stability Oversight Council (FSOC), is under political attack and at risk of coming undone.

In the past, the balkanized U.S. financial regulatory system has consistently failed to address risks that took root in its jurisdictional gaps. The FSOC was created to solve that problem, bringing regulators together to make sure they have the tools to protect the economy from financial crises. It is already making an important difference.

Unfortunately, earlier this month the House Financial Services Committee passed the Financial Choice Act (CHOICE Act), which threatens to reverse that progress. It would, for example, all but eliminate the FSOC’s ability to prevent the regrowth of an unsupervised shadow banking sector that might once again threaten our financial stability and economic resiliency. At the same time, the administration of President Donald Trump has signaled that it may use the council to pursue deregulation, rather than its core mandate of financial stability, and to reverse or limit its ability to designate systemically important non-banks for enhanced supervision. Meanwhile, MetLife Inc., the largest U.S. life insurer, recently asked the courts to delay ruling on an appeal filed by the Obama administration seeking to reinstate the firm’s designation as a systemically important institution requiring prudential oversight by the Federal Reserve.  The Trump administration has agreed to put the appeal on hold.

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Why GoPro needs to pick a model–John Carrier

MIT Sloan Sr. Lecturer John Carrier

MIT Sloan Senior Lecturer John Carrier

From Huffington Post

GoPro’s recent loss of $107.5 million is certainly dramatic. After all, last year it announced a profit of $16.8 million. However, it’s also a cautionary tale for all new companies that find themselves in a similarly precarious financial position after enjoying rapid financial success. When this happens, it’s time to take a hard look at the business model.

The big question the company should ask is whether it aspires to be more like Crocs, Chrysler, or Apple. These three companies have all found varying degrees of success through very different models. Each offers substantial pros and cons so it is important for GoPro to know its vision and find the right fit.

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