Author: Sara Savat


About Sara Savat

As a senior news director for social sciences, I write about political science, religion (and their intersection), sociology, education, anthropology, philosophy and linguistics. I have a passion for storytelling and enjoy working with our world-renowned faculty and members of the media to bring research to life for the public. Prior to joining the Public Affairs team, I worked in public relations at SSM Health and covered academic medicine at Saint Louis University. I have a master’s degree in communication from SLU. Outside of work, I am most likely to be found at a dance studio or cheering from the sidelines of a soccer field. My family and I also love traveling, camping and visiting national parks.

On June 16, the Federal Reserve announced it may raise interest rates twice in 2023 in response to higher-than-expected increases in inflation. In his announcement, Fed Chairman Jerome Powell said the higher inflation recorded this year should be temporary, but the risks that it would be “higher and more persistent than we expect” could not be ignored.

John Horn, professor of practice in economics at Olin, agrees with Powell’s overall inflation forecast of 3.4% for 2021. Inflation in some high-demand categories — such as travel, construction material and automobiles — may be even higher, he said.


However, some prices, such as lumber, are already coming back down, providing hope that current inflation is a short-term corrective measure and not a sign of long-term systemic problems.

“The uncertainty for me is how this gets played politically and what messaging gets through,” Horn said.

Inflation, Horn explained, can be a self-fulfilling prophecy. Worry about rising inflation can lead employees to demand higher wages. In order to pay those higher wages, employers raise prices for their products and services, creating actual inflation. The wage-price spiral is a vicious cycle. Likewise, inflation expectations will cause banks to increase interest rates, making it more expensive for businesses and individuals to borrow money.

“It’s important for the Fed to make sure that this is seen as a temporary blip and not systemic. Because if it’s seen as a systemic problem, and inflation expectations take charge, it’s really hard to make it stop,” Horn said. “Once that happens, the only way to stop inflation is to raise the interest rates really high and cause a recession. Maybe not in 2022, but it will be on the Fed’s radar. They will want to stop [rising inflation] sooner than later.”

“However, if prices come down and people see this as a temporary blip related to COVID-19 and the supply chain problems — if that story takes hold — then I’m not worried about inflation,” he added.

What’s driving inflation?

In the simplest terms, inflation occurs when consumer demand increases or supply contracts causing prices to rise. The current economic situation is a little more complicated, in part because both effects are occurring.

“There’s not a clear understanding of what is currently driving inflation, but most people are pointing to a couple of things,” Horn said. “First, as the economy is recovering from COVID and the shutdown, there has been an increase in demand for things people weren’t buying over the last year due to uncertainty about job future or lack of opportunity — like travel and dining out. As demand increases, so do prices. That’s one driver.”

Adding to the problem, many of the fastest growing sectors — including travel and hospitality, entertainment and restaurants — are struggling to find people to fill open jobs. These jobs typically don’t pay the best wages, and some would-be-workers are looking for better opportunities in other industries. Lack of child care and fears over COVID-19 exposure also are keeping former employees from returning, Horn said.

Another contributing factor: When the pandemic hit, companies scaled back production or, in some cases, shut down factories altogether. Now that demand is increasing, it will take time for the supply chain and production to catch up, Horn said. A highly publicized example of this is the global shortage of semiconductor chips.

“They are used in more things than might expect — not just electronic devices, but also automobiles and appliances. Even if production capacity is available, the raw material inputs are not always available. When we think of the supply shock, the supply is constrained because all up and down the supply chain, companies slowed down or shut down at the beginning of pandemic. And the startup is not instantaneous,” Horn said. 

Ongoing effects of trade wars started under the Trump administration also have driven inflation.

“International trade normally lowers price because you have more opportunities for competition and lower prices,” Horn said. “The trade conflicts, coupled with COVID, have reduced that as an option for price competition.”

While a boost in international trade would have a positive effect on inflation, many of the countries that have historically provided lower-cost labor will continue to struggle with COVID-19, Horn added.

A measured response

The trillion-dollar question of the day is whether the current inflation is just a corrective shock coming out of the COVID-19 pandemic or rather a longer-term systemic shift. The answer will be primarily determined by monetary policy, Horn said.

Since the Great Recession of 2008-09, central banks around the globe have been pumping money into their national economies in an effort to stimulate the economy. Before the Great Recession, the Fed had just $800 billion in the economy. Today, that figure has grown six-fold to $6 trillion.

“When that extra money is out in the economy and there’s not more products to buy, prices will go up because consumers will be willing to pay more to get the products they want,” Horn said.

“That’s the longer-term systemic problem with having an increase of money in the system. And most central banks around the world have been doing this for more than a decade.”

Decreasing the money supply without triggering a recession is a challenge, though. Before the pandemic, the Fed had successfully decreased the money supply to the $3-tillion range. But, over the past 15 months, the money supply has doubled and surpassed its post-Great Recession peak, Horn said.  

“This really is a balancing act: How fast can they pull back on money supply to prevent inflation from taking off without putting the brakes on the economy just as we’re recovering from COVID?” Horn said.

“If the Fed takes the money out too slow, it causes systemic inflation, as opposed to temporary corrective inflation, which may be what’s happening right now. On the other hand, if they start to incrementally increase interest rates ahead of that happening, they’ll also cause a recession. It’s not like the global economy is so stable and strong that the Fed has a lot of wiggle room to play with.”

While it has been more than 40 years since the U.S. experienced serious inflation, the country has already experienced two significant recessions in a little more than a decade. A third recession could be disastrous, especially for younger generations. Getting this response right is of the upmost importance, Horn warned.

“My grandparents’ generation lived all their lives as if they were still in the Depression,” he said. “There already is some evidence that younger generations — Gen Z and millennials — are starting to behave this way. If that cohort goes through three major recessions in less than two decades, it will affect consumption — probably for the rest of their lives.

“That’s not good for the long-term economic growth of the U.S.”   

Today’s consumers are more attuned to brands’ values and willing to pay a premium to support companies that share their values, according to new research from the Bauer Leadership Center at Olin and Vritya brand measurement company specializing in values.

Additionally, the majority of consumers—54%—now say companies should take a stand on issues, even if they disagree with that stance.

The findings come from a survey conducted in January 2021 by Vrity. Researchers wanted to study generational differences in consumer values and how the COVID-19 pandemic has impacted brand-related purchasing behaviors. They surveyed 1,072 people living across America about recent employment changes, personal values and the brand values that matter most to them.


“I think the most interesting findings are about generational similarities and differences in values, causes, and the effect of values and causes on purchasing behavior,” said Stuart Bunderson, director of the Bauer Leadership Center and the George & Carol Bauer Professor of Organizational Ethics & Governance at Olin Business School.

“2020 was an inflection point for many Americans,” added Jesse Wolfersberger, CEO and co-founder of Vrity. “Some percentage always cared about brand values, but now we’ve crossed a threshold where most people care and are willing to make purchase decisions based on values. It’s the new differentiator for brands, and the genie is never going back into the bottle.”

2020’s effect on personal values

Times of crisis often cause people to reflect on their values, and 2020 was no exception. In a year marked by a global health crisis, historic job losses, high-stake political elections and social unrest, some 35% of the people surveyed reported a change in their personal values over the past year. Conversely, 36% reported no changes in personal values, and 22% reported that their values were affirmed last year.

Younger people and people of color were most likely to report a shift in values in 2020. Older generations — the Silent Generation (1928-1945) and the baby boomers — and whites were less likely to experience personal value change and reported the highest levels of value reaffirmation.

Interestingly, those who experienced any kind of employment change in 2020 were more likely to experience a change in personal values.

“We have robust evidence that people who underwent an employment change — primary job loss or furlough, significant cut in pay or hours or shift to permanently or mostly working from home — were more likely to report that 2020 changed their personal values. This holds after controlling for income, education, age and ethnicity,” Bunderson said.

Brand values and purchasing behaviors

One of the most significant findings was that 55% of respondents reported paying more attention to brand values today than they did one year ago. Generations X and Y were generally more values-conscious than other generations. The Silent Generation and Gen Z reported the lowest levels of value consciousness (38% and 39%, respectively), however the small sample size may have influenced the results for Gen Z.

“People who shifted to working at home were especially likely to report that they pay more attention to brand values now (73%). Other types of employment change did not appear to have the same effect,” Bunderson said.  

Americans are not just paying attention to brand values, they are incorporating values into their buying decisions.

“To me, the most unexpected finding was the degree to which people will vote with their wallets,” Wolfersberger said. “I expected a small effect here, but the findings show that 82% would pay more for a value-aligned brand, 43% of people would pay twice as much and 31% would buy the value-aligned brand at any price.

When shopping in stores, 46% of participants reported doing research on brand values. A slightly higher percent of respondents — 49% — look into brand values before making online purchases. In both scenarios, Gen X and Y were most likely to study brand values.

Altogether, 60% of respondents reported that they “have made a purchase from a brand because they have values I believe in.” Likewise, 53% of the respondents said there are brands they would never purchase because of their stance on an issue.

“Across generations, Gens X, Y and Z show affinity to brand values in their purchasing,” the authors write.

Given the potentially high cost of negative public relations, some brands may be inclined to stay silent on issues. However, the majority of respondents — including 63% of Gen X and 59% of Gen Y — believe that companies should take a stand on issues, even if the respondents disagree with that stand. Gen Z was the most likely to punish a company for silence on an issue.

What causes matter most?

According to the authors, there was reasonable agreement between generations other than Gen Z about their top 5 brand values, which included “affordable and a good value,” “good customer service” and “honest and authentic.”

Gen Z had more unique values in their top 5, preferring “friendship and family,” “treats their employees well” and “fun and comfortable.”

There were more differences across generations when it came to ranking causes. “Fighting poverty, hunger and homelessness” and “curing or treatment of a disease” were more important for older generations.

Generations X, Y, and Z showed stronger preferences for “ending racism,” “gender equality” and “LGBTQ equality” than the two older generations, particularly baby boomers — who showed the weakest preferences for these categories but did show the highest preference for helping “people with disabilities” (35%).

Seemingly paradoxically, Gen Z showed higher preferences for “military and veterans” (25%) than either Gen X or Y, which is interesting because they ranked “patriotic” particularly low (8%) on the brand values ranking.

 “Our researcher shows that consumers care about brand values more than ever. It’s not enough to simply make a good product, today’s brands need to do right by the customer, their employees and the community,” Bunderson said.

“Those that do will have the most loyal customers,” Wolfersberger added.

Nick Johnson, a PhD student at Olin, and Chris Copeland, chief strategy officer and co-founder of Vrity, also contributed to this research and white paper.

On May 13, the director of the U.S. Centers for Disease Control and Prevention announced that people fully vaccinated against COVID-19 do not need to wear masks or practice social distancing indoors or outdoors, except under certain circumstances.

The announcement came as a surprise to many, including business owners who suddenly had to reevaluate their mask requirements and how these changes might impact their employees and businesses.

In a November 2020 studyRaphael Thomadsen, professor of marketing, and Song Yao, associate professor of marketing, both at Olin Business School at Washington University in St. Louis, found mask mandates boosted consumer sales by 5% on average. But that was before COVID-19 vaccines were readily available.

Below, Thomadsen and Yao share their perspectives on how the new CDC guidelines might impact businesses.

How might the new CDC guidelines impact retail, restaurant, travel and leisure business? 

“I think it is too early to tell what the impact of this will be,” Thomadsen said. “My sense is the business effect does not come directly from the rules, but on whether people feel safer with these recommendations.


“Travel and restaurants were already beginning to pick up beforehand. That said, I suspect that there is a segment of the population that will be assured by the CDC recommendations and will start going out. In that sense, I think that the recommendations will probably help the restaurant and bar category in particular, where wearing a mask might not be feasible.

“For everything else, it is harder to know at this time since there is evidence that masks helped people be confident that they are safe while shopping. On the other hand, those studies are from before the time of vaccines, so there is good reason to think that the masks may not make as many people feel safe as before.”

“I also think it may take a while to tell the impact of the new guidelines. But my reasoning is that many local governments and business are hesitant to relax the mask requirement yet,” Yao said. “Talking with some colleagues and friends, I also notice that many people say they will still wear masks, and some even said they would reduce their visits to groceries if those stores start to relax right away.

“In a couple of weeks, if the case number remains low, local governments, business and, more importantly, customers may become more confident going out shopping.

“In short, the guidelines probably do little to boost the business. Rebuilding confidence is more crucial, which requires more vaccinations and reduction in case numbers.”

Are businesses caught between a rock and a hard place if they do or don’t continue to require masks?

“I think this depends a lot on where the business is located,” Thomadsen said. “In St. Louis, I have observed most people still wearing masks at supermarkets or other stores, and even some stores still requiring masks. I suspect that these businesses are OK requiring the masks — the number of people who are truly anti-mask, to the point of not accommodating polite requests, in the country is relatively small. If there is another surge, I think that those businesses can go back to requiring masks.

“That said, I do think there are some areas in our country where there is stronger pushback. This probably affects the Walmarts and more corporate businesses more than the small local businesses, who probably already ignored the mask mandates if their customer base strongly opposed them.”

What do businesses need most right now? 


“Beyond the multiple rounds of stimulus checks, I feel the government still needs to figure out some innovative approaches to boost vaccination rates,” Yao said. “While the vaccination passport idea may be infeasible, some financial incentives for vaccination may not be a bad idea. Ultimately, this would be good for public health and businesses alike.”

 “From my perspective, the largest issue currently impacting businesses is that many supply chains are not running at full capacity,” Thomadsen said. “It is hard to get supply chains to get synchronized, so I think that is to be expected as the economy gets back to full strength.”

Added Yao: “As Raphael pointed out, it may worthwhile to figure out the weak links in the supply chain and spend some money to fix those first.”

Less than half of the population is fully vaccinated, and children 11 and under are not yet eligible to receive a vaccine. Was this move too soon?

“This is a hard question. I would have preferred that we use vaccine passports rather than this type of guidance,” Thomadsen said. “However, such a system is costly and perhaps politically fraught. I also do not think that this policy incentivizes people to get vaccinated, so from that point of view, the decision was not a great one.”

“On the other hand, you cannot keep things closed forever, and cases have already fallen a lot. Most people who want to be vaccinated have gotten vaccinated, except for children, so it is not clear how beneficial waiting would be. 

“Most importantly, though, the declines we see likely reflect not just the vaccinations, but the fact that people who had COVID previously are less likely to get COVID again. The best estimates are that half of the people in the US had COVID, where only about 20% of these cases were diagnosed. If we take early estimates the we need 70% community immunity to contain the spread of COVID, we are there when we add the vaccinations and the cases together (even accounting for overlap). I am not saying that people who had COVID shouldn’t be vaccinated – there are many cases of people getting COVID twice. However, as long as people who had COVID are less likely to get it again, what we are seeing now is that, as a community, this reduced susceptibility is likely enough.

“I expect we will know whether this decision was a good one in about two weeks. If cases continue to plummet even after two weeks then it was the right call. If cases plateau again – or – even rise, then it was too early.”

Picture is of a smiling young white woman with long green hair wearing a long-sleeved gray shirt with arms crossed. She is standing outside with track and field equipment under a blue sky with puffy white clouds.

Leah Wren Hardgrove came to Washington University in St. Louis with the desire to make the world a more accessible and inclusive place for people with disabilities.

Born legally blind, Hardgrove grew up understanding that society was not built for her.

“I would not be who I am without my disability, and I would never choose to not have my disability. The discomfort I’ve experienced is what motivates me to make the world a better place,” Hardgrove said.

She envisioned going to law school, but discovered a different path though business. Her “aha” moment came when Starbucks announced its eco-friendly plan to eliminate plastic straws.

“It wasn’t legislation; the company had the power. And it had a ripple effect on others,” said Hardgrove, noting the move came at a cost: some people with disabilities need straws. “Clearly, if I want to make lasting societal changes, I need to be in business.” 

Hardgrove is set to graduate in May with dual degrees in marketing and organization and strategic management from Olin Business School. Marketing, she said, has the power to normalize disabilities through better representation. Yet many aspects of marketing — like print ads — are not accessible for people with certain disabilities.

Hardgrove was selected as a Lime Connect Fellow, a highly competitive leadership development program, where she connected with other student leaders with disabilities. She also interned at Google, where she contributed to an accessible marketing guide for advertisers and hosted talks about good representation in media.

“Google is the industry leader. If they adopt accessibility practices, it will have a domino effect on others,” she said. 

At Washington University, Hardgrove was a thrower for the track and field team and a member of Alpha Phi Omega service fraternity. Over the last year, she has made and donated face masks with a clear plastic mouth covering so others can read lips.

After graduation, Hardgrove returns to Google, where she will serve as associate product manager. “Society is not built to include people with visible and invisible disabilities, and I’m going to change that through strategic product development, people management and brand management,” she said. “Nobody should feel less valuable because of a physical or developmental difference.”

Leah Hardgrove, a member of the track and field team, will work at Google to make products more accessible for people with disabilities. (Photo: Joe Angeles/Washington University)

Forget the 30,000-foot, big-picture view. When faced with a cutting-edge technological idea, business leaders who approach the idea in more concrete “how” terms — rather than in abstract “why” terms — are less likely to be deterred by its novelty and more likely to recognize its utility, which increases their propensity to invest, according to new research from Olin.

This method of information processing, known as a low-level construal, is especially useful for leaders who lack technological expertise.

In today’s rapidly changing world, companies that are willing to embrace new technologies often have an edge over the competition. Yet decision-makers who are out of their depth with a novel technology often reject it because they lack the expertise to make sense of the technology, resulting in a sense of uncertainty and general unease with the idea.


“The further removed decision-makers are cognitively from an idea, the less likely they are to invest in it,” said Markus Baer, professor of organizational behavior and study co-author. “Keeping up with the rapid pace of technology can be especially challenging. But missed opportunities and failing to keep up, technologically speaking, is a recipe for failure.”

What’s a business leader to do?

“Research suggests that managers tend to undervalue ideas that fall outside their area of expertise and overvalue ideas that are squarely in their wheelhouse,” Baer said.

“And it gets worse. The further removed they are intellectually from the idea, the more likely they are to view it as too ‘out-there’ and as less useful, both of which make it less likely that decision-makers will financially commit to the idea.”

To overcome this expertise gap, previous research has suggested managers should engage in a type of deliberate cognition that involves drawing on prior experience with similar ideas to evaluate new technological ideas. However, that’s not possible when the idea is truly novel.

Baer — along with Matthew P. Mount of Deakin University and Matthew J. Lupoli of Monash University, both in Australia — wanted to better understand the ways in which managers process information about novel technological ideas and how that influences their interpretation and likelihood to invest.

Their research findings, forthcoming in Strategic Management Journal, offer a way for business leaders to overcome organizational inertia and recognize new technological opportunities.

Abstract vs concrete?

Baer, Mount and Lupoli conducted two experiments to study how expertise distance and information-processing style influence perceptions of novel technological ideas and likelihood to invest.

The first experiment took place “in the field” and involved 300 senior R&D and innovation investment decision-makers who work for organizations that were exploring Quantum Key Distribution (QKD) as a novel cybersecurity technology. QKD is a secure communication method that relies on cryptographic protocol involving components of quantum mechanics. Participants were given information about the technology and then were asked to rate how novel and useful the technology was. Finally, they were asked to specify the proportion of their annual disposable income they would be willing to invest to bring QKD to market.

The second experiment, an online survey, included nearly 500 middle- and upper-level managers. Participants assumed the role of a senior executive of a fictitious, application-based taxi company “AppCab” faced with the prospect of investing in a fleet of self-driving cars. They were randomly assigned to one of the four conditions — expert/concrete thinking, expert/abstract thinking, non-expert/concrete thinking or non-expert/abstract thinking.

Respondents in the expert groups were given detailed information about the self-driving cars, while respondents in the non-expert group were given general background information about the taxi industry. Respondents in the high-level construal groups were asked a number of “why” questions to switch their thinking to an abstract mode, while respondents in the low-level construal groups were asked “how” questions to shift their thinking to a more concrete mode. They also were asked questions about the perceived novelty and usefulness of the technology. Finally, they were asked to rate how likely they were to invest in the fleet of self-driving cars.

“Across our two studies, we show that decision-makers who are distant from a highly novel technological idea in terms of domain expertise are less likely to invest in it. However, our results also show that the effect of expertise distance is entirely dependent on how abstractly vs. concretely they approach the idea,” the authors wrote.

Shifting managers’ perspectives

As the current research demonstrates, how decision-makers process information influences their interpretation of novel technological ideas, which ultimately shapes their investment decisions.

“Highly novel ideas, when evaluated by decision-makers who have no expertise in the relevant domain, are perceived as too uncertain and too risky,” Baer said. “Changing how they approach the idea can help managers mitigate the negative effect of expertise distance.”

Many leaders believe they need to focus on the big picture and leave the day-to-day tasks and small details to lower-level managers and employees. Indeed, there can be benefits to this high-level perspective. Decision-makers engaged in high-level thinking are future-oriented and tend to focus their attention on abstract, broad information related to distant goals.

However, when it comes to evaluating novel technology, this type of high-level construal thinking can hold leaders back.

“Most decision-makers have a preference for rationality and predictive accuracy over the uncertainty inherent in novel technological ideas,” Baer said. “When leaders focus only on the high-level, abstract features of the technology, they tend to over-emphasize the novelty and risks of the idea, which, in turn, decreases their likelihood to invest.

“Our research shows this type of thinking can compound the negative effects of decision-makers’ expertise distance on the propensity to invest in novel ideas.”

In contrast, decision-makers using low-level construal are present-oriented and tend to focus their attention on concrete, narrow information related to the benefits and feasibility of adopting the novel technology. By focusing on the idiosyncratic, technical details of highly novel ideas and aspects of feasibility, decision-makers may be more inclined to perceive the idea as being useful and, by extension, less novel and risky, Baer said.

Ultimately, the research highlights the unique value of adopting a more concrete way of thinking when faced with radical technological change.

“By shifting the way in which they evaluate novel ideas — from abstract to concrete — managers will improve their ability to recognize the potential value of groundbreaking ideas, maintaining a technological edge on the competition,” Baer said.

President Joe Biden has expressed support for raising the federal minimum wage for federal contractors and employees to $15 per hour. On Jan. 26, House and Senate Democrats took it a step further— introducing legislation to increase the federal minimum wage to $15 per hour by 2025, more than doubling the current minimum wage of $7.25 per hour set in 2009.


But Biden’s plan is too aggressive, according to Radhakrishnan Gopalan, professor of finance at Olin.

Gopalan, who has used big data on multiple impact studies on minimum wage increases, recommends delaying any increase until 2022 to allow the economy and unemployment rates to rebound.

He also recommends increasing it in increments of $1 to $1.50 and, going forward, having a clause to automatically index the minimum wage rate.

In a forthcoming paper in the Journal of Labor Economics, Gopalan and Barton Hamilton, the Robert Brookings Smith Distinguished Professor of Economics, Management and Entrepreneurship, found positive and negative effects for U.S. workers over a two-year period in six states that enacted minimum wage increases between 75 cents and $1.25 per hour in the 2010-15 period.

On the positive side, their study shows that minimum wage hikes not only increase the wages of those workers, but also create a positive “spillover” effect on the wages of other workers earning up to $2.50 above the minimum wage. Additionally, these workers continue to retain their jobs as they are no more likely to be fired.

‘Make the increase more gradual’

However, raising the minimum wage hurt new entrants into the labor market. Researchers found that businesses, especially those making tradeable goods — such as the manufacturing sector — reduce the rate of hiring new workers at low wages following an increase to minimum wage rates. Read more about this research here.

Given the fact that unemployment remains at 6.7%, according to the U.S. Bureau of Labor Statistics, Gopalan warned that increasing the minimum wage would likely make a bad situation worse.

“There are two broad effects of a minimum wage increase. One, it reduces firm’s incentives to hire more minimum wage workers. This effect would be all the more enhanced when firms are hurting from the pandemic,” Gopalan said.

“On the flipside, minimum wage increases put money in the hands of people who are most likely to spend it. Thus, a wage increase is likely to give a boost to consumer demand.

“Having said that, the multiple stimulus packages have put a lot of money in people’s hands, so one is talking about demand in the economy possibly outstripping supply once the pandemic is brought under control. Some are already cautioning about the economy overheating.”

Going slow on the minimum wage increase is the best option, Gopalan said. “Not only is it better to wait for the pandemic to be brought under control, but it is also good to make the increase more gradual and not drastic from $7.25 to $15 in one fell swoop.

“Currently, small businesses are especially hurting from the pandemic. The restaurant sector, which employs a significant number of minimum wage workers, and the retail sector are struggling. Raising the minimum wage now would spell a death knell for many small restaurants.”