The amazing story of Karfunkel Brothers


The Mitzvah Factory

Imagine you and your younger brother are poor Jewish kids in mid-1950s Hungary. Unlike so many, you managed to avoid the Holocaust only to be swept up in a bitter revolt against the cruel Soviet occupation government. The revolt fails, and like tens of thousands of your countrymen you leave your homeland and its bloodshed, and manage to make your way to New York and a new future. Your name is Michael Karfunkel, your younger brother is George and, fast forwarding nearly 60 years, your future is something even Horatio Alger wouldn’t have thought possible. Quiet careers in business at the periphery of Wall Street, New York, real estate and the insurance industry, with an aversion to publicity that is rarely seen, have made both men billionaires, according to Forbes magazine. Like so many rich people, the Karfunkels opened non-profit foundations to share their good fortune. ….[READ]

Are financial markets flying from reality?


The Psychodynamics of the Stock Market

We think of stock market as an indicator of economic activity. But it is also an indicator of the emotions associating with investing, and more broadly with our shared images of the future. If the market signals our collective “greed and fear, these feelings only highlight that our experience of an unknowable future leaves us vulnerable to primitive emotions. This was the basis after all for Allan Greenspan’s, the chair of the Federal Reserve Bank, famous speech in which he worried that the stock market, responding to the dotcom boom of the 1990s, was expressing “irrational exuberance.” If we take this point of view, one presenting question is what emotional meanings can we glean from the stock market today? What might it tell us more broadly about the emotional current that underlies our hopes and fears about the future, not just of the market or the economy, but also of society more broadly? ….[READ]

Economic forecasts are just guesses


Ever felt that financial forecasters are making it up as they go along?

What do you suppose is the most important statistical measure for those in charge of setting economic policy? GDP growth? The inflation rate? Unemployment? Guess again. The figure is the level of slack in the economy, also known as the “output gap”, or “spare capacity”. Presented as a percentage of GDP, it represents the gap between the level of output and the economy’s non-inflationary potential. When the figure is positive the economy can grow strongly without setting off an inflationary spiral. When the figure is negative, the economy is overheating and a damaging surge in prices is a danger. Earlier this month the Governor of the Bank of England, Mark Carney, said the level of slack in the economy was greater than previously believed. ….[READ]

Choice Architecture vs. Nudge

Designing Decisions

Irrational Markets Or Irrational Individuals? Designing ‘Smart’ Environments Improve Decision-Making and Make Markets More Efficient

How can markets be made efficient when people aren’t? Apparent market failures are often attributed to individuals making apparent ‘irrational’ decisions. However, I argue that markets can be made more efficient when creating environments for individuals that aid their decision-making. When such ‘choice architecture’ is executed well, individuals can make decisions that more accurately reflect their intentions, ultimately making markets more efficient. Every day news headlines are filled with yet another decision-making failure, spurred by cognitive biases individuals exhibit. We are too fat, too lazy, don’t take our medication, and are emotionally driven in our decision-making. All of these decisions reflect actions that are not optimal for the individual. Many failures of decision-making stem from innate decision-making rules called ‘heuristics’, simple efficient rules used to form judgements. ….[READ]

Fairness rewards your brain


The Neuroscience of Fairness and Injustice

Humans are inherently social beings. We care not only about material and financial rewards, but also about social status, belonging, and respect. Research studies show that our brains automatically evaluate the fairness of how financial rewards are distributed. We seem to have a happiness response to fair treatment and a disgust or protest response to unfairness. This brain wiring has implications for life happiness, relationship satisfaction, raising kids, and organizational leadership. This article will examine how we define fairness, how your brain processes experiences of fairness and unfairness, and how to cope with life’s unfair moments. What Is Fairness? Your perception of fairness may differ, depending on your culture, the situation, or our personal values and preferences. ….[READ]

Marketing for charities


Why does cold water on our heads increase charitable giving?

Silly, narcissistic, irresponsible are some of the adjectives that the “ice-bucket challenge” has received from its critics. This is an initiative that was created to raise money for charities and consists of someone pouring a bucket of ice-cold water over their head, making a video of it and posting it on social networks (e.g. Facebook, Twitter). After that, they challenge some friends in the video to do the same within 24 hours or donate a given amount of money to a charity (most people do both). Many people are wondering why the theatre with the bucket is necessary in order to donate? Is it not enough for people to just give the money if they feel like supporting a given cause? Is it really worth wasting all that water? ….[READ]


How to feel in control as food consumers

Doughnut in Danger

Emotions and Eating: A Marketer’s Dream?

Both research and popular media tell us that emotions and eating are intrinsically related. How many times have we seen a character in a TV show reaching for the ice-cream tub when feeling particularly down or after a breakup? What is it about sadness that leads to such behaviour? Feelings of loss and helplessness spurred on by sadness are what drives the unhealthy behaviours, whether it’s overeating or overspending. Research has shown sad people consume significantly more fatty, tasty food products such as chocolate or buttery popcorn, than those who are feeling happy. They are also willing to pay a higher price for ordinary products such as a bottle of water. This tendency to compensate and reward by engaging in unhealthy albeit pleasurable behaviours in the short run, has serious consequences in the long run especially with rising concerns about obesity in most developed countries. ….[READ]