Goizueta Effect - How a Recession Changes Our Behavior

How a Recession Changes Our Behavior

07/30/20 • 23 min

In more individualistic societies, such as the United States, there is an emphasis on standing out from others, being different, and expressing one's uniqueness. In more interdependent or collectivistic societies, there's an emphasis on not standing out, on being part of a group, on attuning to the needs and interests and goals of the group, and on ensuring that the group is successful. Individualism is a core part of identity in the United States and that has increased over time. Over time, Americans have become increasingly individualistic and currently, the United States typically scores higher on individualism than any other country.

Associate Professor of Organization & Management Dr. Emily Bianchi's research into whether people become less individualistic in times economic hardship, reveals that when the economy is worse, people are more likely to embrace interdependence and collectivism. Examples include parents giving children more common names and articulating that they wanted their children to exhibit such behaviors as helping and getting along with other people, over being independent and standing out from others. Her research also revealed that during bad economic times, American music is less individualistic and more collective, as exemplified by more songs that had more first-person plural pronouns (we, us, ours) than singular first-person pronouns (I, me, mine).

In short, in better economic times, Americans, seem to be more self-focused and during worse economic times, they are more interdependent.

Interdependent behaviors and attitudes have limits and can result in derogation of others

Even when people are more interdependent or collectivistic, they are not more interdependent towards everyone in society. People are typically more interdependent towards people who are similar to them or are in their in-group. That often is associated with greater derogation of dissimilar others. In societies that are very collectivistic or very interdependent, there is often a great deal of wariness of outsiders.

Interdependence – leaning on and taking from other people – is one way people manage uncertainty, including economic and financial uncertainty. Another way is to look for perceptual order, which can involve seeing things in rigid terms, such as being more likely to see people who are not very different from them as being “other.”

Racism can be greater during difficult economic times

In examining state economies, Dr. Bianchi and her colleagues found that in states hit hardest by the Great Recession, there was a greater spike in Whites' negative attitudes towards Blacks. In states that were less hard hit, there wasn't as much of a change.

Racial wage gaps increase during recessions, making diversity efforts crucial

Dr. Bianchi has also conducted research that revealed that the racial wage gap increases during recessions, regardless of industry, education level, age, and other factors. Moreover, African American employees are more likely than White employees to be fired during a recession and take a greater hit in salary when they are hired or rehired. She concludes that its crucial for businesses to maintain their diversity efforts in recessions and other difficult economic times.

In short, in better economic times, Americans, seem to be more self-focused and during worse economic times, they are more interdependent.

Interdependent behaviors and attitudes have limits and can result in derogation of others

Racism can be greater during difficult economic times

Racial wage gaps increase during recessions, making diversity efforts crucial

Previous Episode

Big Data and the Future of Privacy

Commercial uses of personal data
The goal of marketers is to better understand their audience so they can offer the products and services that people are going to be interested in. That requires learning about the customer. Marketers used to rely on demographic information. They knew customers’ zip codes and could get census-tracked information and would rely on customer surveys. A lot of that information was gathered or being directly elicited from consumers themselves. That's not necessary anymore. Today, marketers learn what people are interested in by seeing what they’re posting on social media. People talk about brands they’ve bought and post photos with products in them. They interact with brands on social media. They also express opinions about brands and share experiences with them. For example, if someone posts online about a horrible customer service experience with their cell phone provider, that's a signal to other cell phone providers that this might be someone they can potentially poach. People provide signals of the strength of the relationship they have with brands and those conversations are potentially observable by other brands. This isn’t not necessarily just useful for competitors. If someone reports having a great experience at a retailer or reports they saw great show at a theater, that's information that those venues and brands can use to determine that someone has a good relationship with them and they should keep that in mind for subsequent interactions.

The gathering of personal data is widespread. Everyday actions taken on cell phones and computers share data; people share data through apps when they just carry their cell phones around over the course of the day. When people search for something on Google, listen to Spotify, or watch something on Netflix they leave digital traces behind. Some of those are proprietary, such as what people watch on Netflix, and others can be captured by a broader range of firms. For example, mobile location data from cell phones, is packaged, aggregated, and resold to brands and organizations.
Data isn’t just for commercial use
In the current pandemic, Google and Apple are collaborating on ways to use mobile location data to do contact tracing, and software developers all over the world are developing contact tracing apps that will run in the background on phones. That will provide the public health community a with great weapon to combat pandemic situations going forward. Social media activity can provide insights into whether people are in the midst of a potential mental health crisis, based on what they're posting online and the type of language they use. This does raise questions about where responsibility lies if a social media platform, such as Facebook, uses this information to determine what ads to show people and whether they should intervene if it seems someone is experiencing depression.
The trade-off with privacy
On the one hand, we value privacy, on the other, we value the convenience and features of our internet and mobile-driven lives. This balance is addressed in a book on surveillance capitalism by historian Shoshana Zuboff that provides insight into how we ended up where we are today. One factor was that the dot com boom, when a lot of today's behemoth companies like Google were in their growth stages, happened in the wake of 911. Zuboff argues that there was a shift in mentality that you could attribute to that event. Before 911 people believed that privacy was essential and could not be infringed upon; after 911, the mentality shifted to believing that we couldn’t allow something like that to ever happen again, even if it meant sacrificing some of our values with respect to privacy. The TV show Person of Interest takes that perspective. The premise is built on the government building a massive surveillance system In the wake of 911. It’s interesting to explore the ramifications being under surveillance 24/7 and whether that’s a society that we want to be a part of. Now companies are collecting as much data as possible and thinking about how they can turn it into something useful. In return, many tech companies have developed many tools whose usefulness may outweigh privacy concerns, such as Google search engines, Gmail, recommendation engines for shopping, and predictive text for messaging and email communications -- all of which require data collection. A New York Times article examined location data and the question of how it needs to be regulated because of how personally identifiable and sensitive the information is. Now that we’re going through a pan...

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Bonus Episode: Silver Linings for Students Graduating Into a Recession

Impact of Economic Downturns on Young Adults

College students who graduate into a recession certainly experience obstacles according to Dr. Bianchi, Associate Professor of Organization & Management at Emory University’s Goizueta Business School. Young adults are often the last to be hired during a recession and this can be quite challenging because they have very few work experience and skills and the entry-level jobs they go after are usually the first to go. As a result, unemployment for young adults usually jumps significantly during recessions, much higher than the unemployment rate for others.

Professor Bianchi became interested in how this shapes young adults for a long period to come. During the Great Recession, there were many stories about the 2009 graduation season and how students were doomed. There have been studies to show that young people graduating during a recession earn less for decades. Other studies have shown that people who graduate in recessions tend to have lower levels of occupational prestige. Even if they do become chief executive officers, they tend to become CEOs of smaller, less prestigious firms. There's no question that, economically, the effects are real, that people who graduate in a recession do earn less, and you see that for a long time to come. But the effects are also pretty small.

Given all the worry and all the difficulty of finding their first job could graduates be happier once they are hired by an employer? Dr. Bianchi found that people who graduated in worse economic times reported greater job satisfaction than people who graduated in better economic times. There are hardships and challenges. The difficulties are serious, but there are some long-lasting positive implications down the road.

Recessions Long-term Impact on Young Adults

There has been a fair amount of work on people's attitudes towards money, right? Economists have found that people who come of age in recessions tend to be more risk-averse with money and tend to choose less financially-risky strategies. Even as CEOs, they tend to be more risk-averse in how they invest their company's money. Using the metric of narcissism, Dr. Bianchi studied how people who come of age during a recession view themselves compared to other people. Narcissism is a sense of entitlement, a sense of grandiosity, a sense that one deserves better outcomes than other people. She looked at the characteristics heightened optimism, and individualism and wondered if people who came of age in that time are more narcissistic than people who came into age in a time where there was more uncertainty. Dr. Bianchi found that people who come of age in recessions score lower in narcissism, clinical narcissism, and sub-clinical narcissism.

According to Dr. Bianchi, young adulthood is a very transformational time in people's lives. Most are leaving their childhood homes, communities, and families and begin to develop an adult identity. They are figuring out who they are, who they want to be, what they believe in, and what they don't believe in. People overwhelmingly mention things that happened when they were young adults. All of these seem to suggest that what's going on in the greater environment, in the greater kind of cultural landscape or economic landscape, helps formulate those identities, helps shape those identities in ways that last throughout adulthood.

Dr. Bianchi says this will be an interesting generation to watch over the next couple decades.