Faculty & Research
Willingness to Spend May Exceed Ability
After nudging upward last quarter, the American Customer Satisfaction
Index rose to 74.1 in the first quarter 2006, its largest jump in three
consumer spending and Gross Domestic Product had significant increases
in the first quarter, and ACSI data predict that trend may continue to
defy expectations despite slow wage and salary growth and a negative savings
rate. Customer satisfaction data show that rising satisfaction as measured
by the ACSI is correlated with increased inclination to spend, even if
consumers' ability to spend is uncertain.
"Even with climbing energy prices, higher interest rates, a soft
dollar, a low approval ratings for the president, satisfied American consumers
will likely continue to spend only if they can find the money to do so,
and that is certainly unclear," said Claes Fornell, head of the ACSI
and professor of marketing at the Ross School. "But as consumers
feel a bigger economic pinch, companies will be competing for fewer and
fewer dollars, making customer satisfaction increasingly important."
In the first quarter of every year, the ACSI measures customer satisfaction
with the quality of products and services in energy utilities, airlines,
express delivery, U.S. Postal Service, hospitals, hotels, fast food restaurants,
cable and satellite television, and telecommunications. More...
Takes a "Village" to Reduce African-American Infant Mortality
federal, state and local efforts to improve the quality and access to
prenatal care among African Americans, race-based disparities in infant
mortality—driven by poverty, poor access to medical care, environmental
hazards, stress and racism—persist in the United States.
Leaders at the community, family and individual levels must mount a concerted
effort to address the high mortality rate among African-American infants
and to develop and implement creative solutions.
"It takes a 'village' to alleviate the infant-mortality gap between
whites and African Americans," said Lynn Perry Wooten, clinical assistant
professor of strategy and of management and organizations. "Public-policy
makers, health-care executives and community leaders must adopt a new
approach that increases synergies between traditional disciplines and
goes beyond simplistic solutions to this complex problem. Their strategy
should involve multiple stakeholders and incorporate a diversity of intervention
programs aimed at preventing pre-term deliveries and reducing infant deaths."
Taxed Stocks Get Higher Returns
who own stocks with higher tax rates also get higher returns, says finance
professor Clemens Sialm.
Using new data covering tax burdens on a cross-section of equity securities
between 1927 and 2004, Sialm found a strong link between risk-adjusted
stock returns and effective personal tax rates (total tax paid divided
by net taxable income before taxes).
Specifically, a one percentage point increase in the effective tax of
an equity portfolio increases the average return of the portfolio by 1.54
"Consistent with tax capitalization, stocks facing higher effective
tax rates tend to compensate taxable investors by generating higher before-tax
returns," Sialm said. "The average returns of highly taxed securities
tend to be high because their valuation levels are relatively low. Thus,
taxes tend to depress asset valuations, resulting in higher average before-tax
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