2024 Ripple Rewind (Part 1)

Dan Loney: Hello and welcome to a special edition of the Ripple Effect — “Rewind.” We’re doing something a little different. We’ve hand-picked some of the most impactful, thought-provoking moments from our episodes over the past year and compiled them into this Year in Review episode. Let’s dive into these memorable moments and relive the insights and inspirations together.

Marissa Sharif on Cheat Days

Marissa Sharif: There’s just going to be days you can’t make it to the gym. There’s going to be weeks where you’re just not going to be able to save that amount of money you wanted to. And the problem is that these small failures really derail people. It’s so common for them to derail us that there’s actually a phenomenon that’s been termed to describe this, called the “What the Hell” effect. Basically, when we miss going to the gym one day, or miss that weekly budget goal, we kind of completely abandoned the goal.

Rebecca Schaumberg on Leadership for Women

Loney: Part of the research you had done a few years ago looked at specifically how self-reliance in women is perceived in the office setting, and the potential impact.

Rebecca Schaumberg: When you think about self-reliance and what that means, I always say it sort of conveyed this inability to ask for help. This resistance to others. I’m from Oregon. It’s kind of like the man in the woods who doesn’t want to talk to anybody else. But that just did not align with the examples, and historical examples in my own life, of women who I thought of as being highly self-reliant. It wasn’t at all a resistance to community, but it was like a capacity or an agency.

David Musto on Financial Literacy in High School

Loney: Financial literacy is receiving greater attention these days as educators look at new and innovative ways to improve the knowledge, especially for younger individuals. Pleasure to be joined in studio by David Musto, professor of finance here at the Wharton School, who is involved in a lot of these areas right now. David, let’s start with your general thoughts about where financial literacy stands at the moment in our culture. What it’s missing, where we need to go moving forward?

David Musto: When you think about today’s high school student, they haven’t had a lot of opportunities to make financial decisions. They haven’t had to think, to some extent, about things that you and I had to think about a lot when we were kids, like inflation, until recently. It didn’t even come up. Yet they have so many big financial decisions ahead of them. Not just student loans that loom very soon in their lives, but also responsibility for their own retirement, election campaigns that hinge on financial issues that are hard to understand. The demands on them to understand finance are greater than ever. Maybe literacy might not be lower than it was 40, 50, 100 years ago, but the demands to be adept are much higher than they used to be.

Loney: It seems like, in many cases, the resources to be able to provide that information are not there as much as they probably should be. Hopefully, they will increase in the years ahead, but still a ways to go.

Musto: I’ve been involved in developing a financial literacy course for high school students, and it has been an education to see how little they’ve already seen and how little is already out there. It’s been a great opportunity for us to go in, really be helpful, and add some value to their lives. At a key moment, too, when all these decisions are just about to come up with their lives.

The course is “Essentials of Personal Finance.” Penn calls it Finance 2, and that’s important. It’s actually a Penn class. Five hundred students are taking this class right now at schools all around the country, and they are getting Penn course credit. They get a transcript from Penn showing this course on it. It covers the whole range of financial issues that are relevant in their lives right now. Like, if you are working checkout at a store, what’s coming out of your paycheck and why? What does that get you? Where’s that going? And then student loans, which are coming up for a lot of these students right away. How do those work?

It also covers some topics that really are about being an educated voter. When people say the Social Security Trust Fund is running out, what exactly is that? It’s not a stack of dollars somewhere that’s running out, but it does mean something. And it is running out soon. What does that mean? Different candidates say different things about that. What do you like? What does that mean for you? A lot of low-hanging fruit that we are going out there and providing.

What’s really made this work for us is a partnership between my center, the Stevens Center, our Global Youth Program that reaches out to high school students, and a nonprofit in New York called the National Education Equity Lab, which has a lot of that last-mile outreach to these Title I high schools around the country. That teamwork between the two centers here at Wharton and this New York nonprofit is what’s made this work. We have students thousands of miles away from each other taking the same course now.

Lu Liu on the U.S. Housing Market

Lu Liu: The fact that an individual does not put their house up for sale basically causes these ripple effects for other people who depend on the market being liquid. That certainly can affect people’s ability to move to a certain place, to find the right house. Single family housing may be particularly difficult to obtain, and that’s what you certainly need if you want to relocate for a job far away. We think of that as an important externality, which is why policy should look into it in the first place. These are not individual decisions that the individual can resolve. They may actually affect lots of other sellers and buyers.

Witold Henisz on Geostrategy

Witold Henisz: Companies need a geostrategy more than ever today, because they acknowledge that economic efficiency alone doesn’t drive global operations and global strategy. It could be a lesson from COVID, it could be a lesson from supply chain disruptions that have occurred. But they know that other factors come in. One of those factors, clearly, is the increase in populism, nationalism, that we’re seeing.

Jeremy Siegel on Stocks for the Long Run

Jeremy Siegel: I’ve expanded a couple of things [in the new edition of Stocks for the Long Run]. I expanded the whole section on interest rates, the zero-interest rate period. Why? You know, interest rates have jumped dramatically. I emphasize that interest rates, especially long-term interest rates, are not just determined by the Federal Reserve. Everyone thinks the beginning and the end of interest rates is the Fed. That’s true on the short side, but on the long side, there are so many factors like inflation, growth and something else that my research uncovered, and that is how good a hedge are bonds to other forms of financial risk. Bonds are often bought as a hedge. And I stress that that’s an important component in interest rates and returns.

Loney: How do you view the state of the bond market and using it as a tool for investment right now?

Siegel: We had a period of extraordinary low interest rates. Everyone sort of blames it, if they don’t like it, on the Fed. But my research actually found that a lot of it was because during the period from the great financial crisis until the pandemic, bonds were the best hedge you could buy against stock market risk. In other words, when it was a crisis or whatever, your bonds went up when your stocks went down. But there is one sort of risk that bonds can’t deal with, and that’s inflation risk. Of course, that’s what has exploded over the last two, three years since the pandemic. And what’s happened is bonds have not become as good a hedge. And that’s the major reason why bond rates are going back to the levels that we had pre-financial crisis.

Ken Shropshire on Compensation for Student Athletes

Loney: We’re going to spend some time today exploring the dynamic world of athletic endorsements. Pleasure to be joined here in studio by Ken Shropshire, professor emeritus of legal studies and business ethics here at the Wharton School. Ken, this topic of endorsements and NIL has taken the world of college athletics by storm the last couple of years. We’re about three years from when we first started to hear NIL really hit our our language. What kind of impact do you think it’s had?

Ken Shropshire: It has had a huge disruptive impact, which I don’t know if we gauge as positive or negative yet. It’s an appropriate disruptive change to have dollars that are coming into the system to the labor that’s produced it. In some sense, you’re not giving these student athletes something new. It’s something they really had the right to that the NCAA had taken away. This right to make money off of your name, image, and likeness, which is sort of the beginning of what this thing was. It’s evolved into something a little bit different than what we think about. You referenced endorsements. It’s turned out to be something a little different than what we contemplated it was going to be when these conversations first came into effect.

Loney: I wanted to talk about the expectation of what student athletes coming from high school, going into college should start to think about. Because it’s a very uneven system where high-level football players, high-level basketball players are getting a lot of the attention and the resources from that. And some of the other athletes in other sports are not getting it. I think the perception of what a student or what a parent should expect for their student going into this situation is important to talk about.

Shropshire: That’s right. And it’s going to vary, to some degree, institution by institution. How important are some of these Olympic sports to a school? Like swimming, gymnastics, whatever, which are not revenue-generating sports, for the most part, anywhere. But they may be part of the cache of the school, and there may be a special interest in getting some elite athletes and providing some extra dollars to those recruits in that space.

Britta Glennon on Immigration and the Economy

Loney: The topic of immigration is on the minds of many people here in the United States right now, but it is also a very important economic topic as well. Pleased to be joined here in studio by Britta Glennon of the Wharton School, who has researched this topic. Britta, I think we almost forget how important immigration can be from an economic perspective.

Britta Glennon: Absolutely. I think a lot of the rhetoric is often around taking jobs or something like that. What’s often missed is how much they actually contribute to the economy, right? In terms of investment, in terms of innovation, in terms of entrepreneurship, there’s so many dimensions on which they’re playing a really positive role in the economy that just doesn’t get talked about in the news.

Loney: You have done research about how immigration and firms connect. Take us through a little bit of what you’ve done.

Glennon: I really wanted to emphasize the importance of the role of the firm in immigration, so I focus on skilled immigration. Skilled immigration visas are almost entirely sponsored by firms. Firms are actually the ones who select the individuals who get the visas. They’re the ones who apply, and they’re the ones that immigrant is then tied to for the length of their visa. So just from that perspective, they’re playing a really important role.

But there’s also other ways in which the firm really matters. Immigrants are 80% more likely than natives to start firms, for example. So, it’s not just the case that they are coming in and taking jobs. They’re actually creating jobs through creating new startups.

They also attract a lot of foreign direct investment. When you have an influx of immigrants, what often follows is companies from their country of origin will follow. They’ll start setting up their own subsidiaries there. And that, of course, also creates jobs. When immigrants join firms, you can see within firms, there’s this complementary relationship with Americans where, when they come together, they’re actually more innovative. You get more patents when immigrants and natives are coming together. And that makes the firms that hire them actually perform a lot better, become more innovative, etc. There are all these different ways in which firms and immigrants are interacting that are really positive for the economy.

Jonah Berger on Boosting Donations

Loney: Charitable giving can have a variety of reasons behind it. But research by author and Wharton School marketing professor Jonah Berger says that when there are dueling preferences at play, there’s a potential for a higher level of pro-social giving. Jonah, talk about this component of dueling preferences?

Berger: Nonprofits and even individuals often ask others for help. We say, “Hey, will you donate money? Will you donate time? Please help us out.” Obviously, helping these organizations, helping these causes, is really important. But people don’t always do it. One question we had is, could there be a way to encourage individuals to give more, whether it’s donating their time or their money.

We were inspired a little bit by something that you may have seen in your own life a lot more recently. Walk into a coffee shop. Rather than simply asking you for tips, the coffee shop might say, “Hey, vote with your tips. Do you like Star Wars or Star Trek? Do you like dogs or cats? Which ice cream do you like better, vanilla or chocolate?” While in that situation it can seem a little trivial, a little bit silly, we wondered if similar approaches might be helpful to getting people to donate.

What these approaches do is, they don’t only ask people money, they give people an opportunity to express their preferences. “Hey, you’re not just asking me to pay you for doing a good job, but you’re asking me which thing I like better.” We were wondering, would people be more likely to donate if doing so was an opportunity to express their preferences to others and the world?