Posts filed under 'economics'
Cautious consumers, building buffers
Andrew Curry writes:
We’ve just published our latest report on the post-recession consumer, and the headlines are that although people are still concerned about the state of the economy, and are behaving cautiously as a result, there is less panic about the economic outlook than was shown in our previous research. But this is partly because people have changed their behaviour – the UK savings rate is now 8% (it was close to zero for most of the last decade, and even negative in 2008). As Futures Company Director Fran Walton said at the client launch, “People are building a buffer for what might lay ahead for them.”
A couple of insights from particular sectors are striking. The first is that people seem to have changed their grocery shopping behaviour – the proportion agreeing that ‘I am shopping at several shops to get the best prices, rather than doing one big shop at the supermarket’ increased from 22% to 36% between January 2009 and November, when the field research was done for the latest report. And there’s evidence that people are looking to spend less when they go out. There’s a more detailed summary of the data in WARC (subscription required).
News of the client launch event turned up in an unlikely place – Claire Myerscough’s Media Week in Brand Republic. She works for News International, and this was her take on the research:
Learn that consumers are still less trusting, with 53% worried about the price of petrol and 43% planning to spend less over the next 12 months. The mood of uncertainty is in line with our research: things have improved since this time last year but we are not out of the woods yet.
The Reconstructed Consumer is available as a paid-for report. For more information please contact Jennifer Childs on 020 7966 1824.
Add comment 19 February 2010
Taxing pollution not people
Andrew Curry writes:
I was fortunate enough to be invited earlier this week to the launch of the UK Green Fiscal Commission’s report in London, on shifting to taxes on pollution – and in particular on carbon emissions – while reducing at the same time taxes on people (income tax and national insurance). The Commission proposed a substantial shift, increasing ‘environmental’ taxes from 5% to 20% of the tax base over 10 years, although the overall effect would be neutral in terms of total government revenues.
The report’s been two years in the making, directed by the environmental economist Paul Ekins, and had the support of some heavyweight commissioners, including Lord Turner, who spoke at the launch. Our former colleague Michelle Harrison, now at TNS-BMRB, was a member.
The conclusions can be spelt out in a few lines. Environmental taxes are effective in changing behaviour, and efficient to administer. They create jobs (around half a million to 2020) at only a fractional cost to economic growth, and they are also, almost certainly, essential if we are to have a hope of meeting the tough carbon reduction targets in the Climate Change Act.
Size – or at least scale – matters. In his comments Lord Turner argued that only “a radical change” would work, both because it meant that people would be able to see the reductions in their income tax bills, and so that there were sufficient long-term incentives for people and businesses to think it worth changing their behaviour and purchase decisions.
The technicalities of such taxes are fairly well understood. Their implementation is more about political will (which is why the panel also included a cross-party array of politicians). So I was also struck by the public opinion data (polling by BMRB), which was largely in line with our research into environmental and ethical attitudes, but was more positive than some would expect. 51% were in support of “green taxes”, and 32% against, but these percentages changed sharply, to 77% in favour and only 9% against, when people were asked about “green taxes” which were offset by other tax reductions.
But some deliberative research, also carried out by BMRB, identified some of the barriers. People were more likely to advocate environmental taxes if they believed that climate change will effect them personally, and there are still significant levels of scepticism in the UK. There was, unsurprisingly, little faith that overall tax bills would not increase – even before the current ‘race to the bottom’ on tax and public expenditure. And although neutrality should mean that there are likely to be as many winners as losers, most people – with an ingrained sense of pessimism about paying tax – thought they would be worse off personally after the tax shift. But fairness also mattered.
The politics of tax are notoriously difficult: “winners nod, while losers scream”. And from the window tax onwards, tax changes are littered with unintended consequences. The Treasury is generally sceptical about them. But if there is an opportunity, it is in the early days of a new government. And all of the politicians on the panel were optimistic that a new Chancellor of the Exchequer of their particular stripe would be keen on the idea – despite the risks. We’ll find out next year.
The picture is from Flickr user JustUptown, and is used under a Creative Commons licence with thanks.
Add comment 29 October 2009
Grant Park’s tipping points
Editor’s note: Walker Smith, who runs The Futures Company’s Yankelovich division in the United States, has sent a long post reflecting on the 40-year context of Barack Obama’s Presidential victory this week. The conventional wisdom is that blog posts should be short and pithy. But we think that from time to time it’s better to give an argument the space and time it needs to unfold. Walker’s short essay is one of those occasions.
Walker Smith writes:
Barack Obama’s victory on Tuesday night was not unexpected. Three weeks out, political pundits knew that Obama had a lead that has never been overcome in modern political history. (Horse race political junkies will enjoy my favorite campaign resource, www.fivethirtyeight.com.) The real drama came an hour later when Obama took the stage with his family to honor this historic moment in his moving victory speech.
Chicago’s Grant Park, the scene of the victory rally, is a beautiful, expansive park bordering Lake Michigan that to this day still stirs up grueling memories for Baby Boomers like me, of the police violence at the 1968 Democratic National Convention. The question that hangs over Barack Obama’s election is whether it really does represents the end of a 40-year cycle of deep political and cultural division, even though his electoral victory was built on effective party-political organisation rather than cutting across party-political lines.
1 comment 7 November 2008
Recession and sustainability
Courtesy of the Transition Island Blog
Andrew Curry writes:
We’ve been thinking quite a lot recently about the impact of recession on consumer behaviour, and I was asked by Radio 4’s Beyond Westminster to join a panel discussion about this, which is broadcast tomorrow (Saturday 9th – if you missed it, you can hear it on the website for another week).
The other panellists were Chris Leslie, of the New Local Government Network (and a former Labour MP), and Jeremy Leggett, who runs one of Britain’s largest solar energy companies, solarcentury, and also wrote a fine book, Half Gone, about the end of the oil economy.
It’s difficult to summarise the flavour of a fifteen minute discussion in a few lines, and I wouldn’t want to spoil the programme, but some themes seemed to emerge:
- The upwards shift in oil and energy prices is a step change not a blip (a Dutch energy consultancy recently estimated that the floor price for oil had reached $110/barrel).
- In the short term this is reducing car use, but hurting the poorest hardest, mostly through the cost of their domestic energy bills (the poorest tend not to own cars).
- In the longer term, however, the government has to make a choice between orchestrating a full-scale shift to renewable energy sources, or trying to muddle through with conventional energy (Leggett is a member of the group which wrote the recently published The Green New Deal, which linked energy innovation, climate change response, and financial reform).
- Shifting to renewables will take investment, which probably isn’t going to come from taxation but could – without going into the economic theory here – come from market incentives and from encouraging people to save more, which would be good for the long-term stability of the economy.
Some of the evidence suggests that people are ahead of the politicians here. But it will still take some political courage to act on this – a quality which seems sadly lacking from British politics at the moment.
Add comment 8 August 2008
Blind spots on globalisation
Joe Ballantyne writes:
Back in the late 90s, and even more recently, globalisation was all the rage. Some people thought this was a jolly good thing and it would make us all rich and free, while others thought it was a really bad thing. which would lead to greater poverty and environmental damage. Either way, almost everyone agreed that we were careering towards a brave new globalised world, ruled by the free flow of capital between nations, and characterised by global institutions and global flows of people and goods.
Fast forward a decade, however, and things start to look quite a bit different. Countries like India, Russia and China are much wealthier and more powerful than ten years ago, the expansion of international groupings such as the EU seems to have all but halted, and the ongoing drama of the credit crunch suggests that financial deregulation has reached its limits. Protectionism is a recurring theme in the Democrat candidates’ contest in the US, and the chief executive of Deutsche Bank was recently quoted as saying that he “no longer believes in the market’s self-healing power” – and when the head of a major bank starts saying that financial markets need some sort of state intervention, you know something’s up. The public seem to think so: most of us admit a growing suspicion around the role free markets in the economy.
So how did the global theorists – from both the left and the right – so misjudge globalisation? There’s a whole thesis to be written on this, but some pointers could be:
- Many of them were working in internationally-focussed institutions such as universities or global banks – which probably blinded them to the attitudes of the majority who weren’t globetrotting, post-national types.
- Many of them had come to believe the widely canvassed idea that financial power will always trump state power – where as in fact, nationalism is a tremendously strong driver of domestic politics and therefore of political change.
- The Brits in particular lived in a country which had probably gone further than almost any other towards developing a ‘post-national’ identity, embracing the market and minimising the role of national symbols such as the monarchy, religion and so on. But what happened in Britain wasn’t replicated elsewhere.
One of the things we say in futures work is that if the filters you see the world through are too strong, they act like the blinkers on a horse – and create blind spots which make it harder to see signs of change. It’s interesting to think of other blindspots our assumptions about the world might create for us.
The picture was taken by David Eppstein.
1 comment 24 April 2008
What to read in 2008?
Andrew Curry writes:
The most recent issue of The Wire, WPP’s in-house paper, has a feature on ‘What to read in 2008′, a collection of recommendations from individuals working for businesses across the world. I blogged a while ago on my contribution – about Thomas Homer-Dixon’s The Upside of Down. If there are themes from the other contributions, they are about the emerging economies, especially China, and about marketing and management.
WPP Chief Exec Sir Martin Sorrell’s choice is the two working papers (99 and 119, opens in pdf) from Goldman Sachs which, in his words, “describe the shift in wealth from west to east”. (The more recent Working Paper 134 , also pdf, is an update). The other two Chinese selections – from people working in Asian markets – look at China “as a country, not just as a market”. The Search for Modern China locates China within its cultural and political history, while China: The Fragile Superpower is subtitled, “How China’s internal politics could derail its peaceful rise”.
On management, the idiosyncratic Rory Sutherland (of Ogilvy) praises Discover Your Inner Economist, while bemoaning the fact that “It is a disgrace to marketing and research disciplines that economists are now writing more interesting books than we are”. David Muir, at WPP’s Channel Practice, commends as a management primer Team of Rivals – a history of how President Lincoln managed a cabinet whose members disliked each other and coveted his job.
And as always in such lists, there are some quirkier recommendations. The arguments in David Maister’s Strategy and the Fat Smoker, about strategy and change, are both “irrefutable and wonderfully personal”, while Very Thai is a cultural journey into modern Thailand – pictures and text – which offers “new ways of exploring your own, or a new culture”.
Add comment 7 March 2008
Making markets for buyers
Trevor Harvey writes:
Springwise has an item this week on a new initiative (opens to Dutch web page) in the Netherlands whereby ING – one of the country’s largest banks – helps buyers makes offers for other people’s homes – even through the houses aren’t actually on the market. There have been similar schemes elsewhere.
They see it as further evidence that we’re moving towards Doc Searls‘ ‘intention economy‘, which is more interested in what buyers would like to buy rather than what producers want to sell. It’s an interesting idea, and since buyers are likely to have the money it cuts out a lot of marketing effort. But before we rush to declare a new dawn, there are some wrinkles. It seems to me that it opens up some privacy concerns – or even just straight nuisance calls; how long before there is a register akin to the Mail Preference Service for people who decline to be approached in this way? Most contract law, certainly in the UK, is based on sellers making an offer to which a buyer accedes. And the notion of the market seems deeply embedded in cultures throughout the world. There may be good social reasons why – for 10,000 years or so – the dominant sales model has been of sellers gathering their wares and buyers going to find them.
Add comment 28 February 2008
Influential Boomers
Siân Davies writes:
Henley Centre HeadlightVision is just embarking on a merger with the US research company Yankelovich – the market leaders in understanding the changing values and behaviours of US consumers.
While we’ve been negotiating I’ve had the good fortune to immerse myself in much of their research. One publication which stood out for me was ‘Generation Ageless‘, by J Walker Smith and Ann Clurman, Yankelovich’s leading commentators on generational marketing. Yankelovich coined the term ‘baby boomers’ in the 1960s when they first started collecting data on this influential generation. As Walker and Ann say: “Without notice or warning, in defiance of all trends and expectations, Baby Boomers exploded onto the American scene, and in the process changed everything”.
Add comment 1 February 2008
It’s not about the money any more
Brian Chien writes:
In an article for the latest edition of the Royal Mail’s Contact magazine, we looked at how modern consumer currencies go way beyond money. Sparked by some recent examples of free marketing in the television and music sectors, including Radiohead’s latest album (initially, but no longer downloadable at the price the user chose to pay), we noted that even when such transactions don’t involve cash they still take both time and energy . Consumers understand that there’s no such thing as “free” marketing, so how should worth be measured?
We tested this against our database of attitudes on five user “currencies” – Information, Time, Energy, Money, and Space (ITEMS) – and found that 38% of UK consumers rated Time as the most valuable of the five currencies, while 30% believed Energy to be most precious. Which prompts a question: how much do marketers know about how their consumers juggle between currencies?
Add comment 21 January 2008
The attitude-behaviour gap on debt
Gemma Stevenson writes:
The scale of consumer debt in this country is now pretty well-known – whether it’s the £1,000 million of mortgage debt or the fact that overall consumer indebtedness now exceeds annual national income. But one of the big surprises for me when I attended a breakfast briefing we ran for public sector clients today was how people feel about it.
Research data shows that between 2002 and 2007 the number of people agreeing with the statement “I am happy to have short term debt to allow me to buy the things I want” fell from 43% to 32% – a clear and significant shift in consumer attitudes. (Click on ther thumbnail above to see the chart). Yet the question raised on Wednesday was ‘when will this lead to a change in behaviour?’ This doesn’t seem to have happened yet, despite the attitudinal data. Yet at the same time, there are ‘weak signals‘ of change out there, such as the relatively rapid rise of local freecycle groups.
One thought that emerged from the discussion was that the debt conundrum had similarities with public health issues such as obesity: that providers had to change their behaviour, perhaps nudged along by regulators, before consumer behaviour starts to change in line with underlying attitudes.
Add comment 16 January 2008
