Even in decidedly "wealthy" countries, human health is not always guaranteed. In fact, studies show that the best indicator of a country's health is not its overall wealth, but how that wealth is distributed. Time Magazine's Maia Szalavitz reports:

Imagine there was one changeable factor that affected virtually every measure of a country's health- including life expectancy, crime rates, addiction, obesity, infant mortality, stroke, academic achievement, happiness and even overall prosperity. Indeed, this factor actually exists.

It's called economic inequality. A growing body of research suggests that such inequality - more so than income or absolute wealth alone — has a profound influence on a population's health, in every socioeconomic group from rich to middle class to poor.

Economic inequality is measured by looking at the distribution of wealth and income in a society, not the general wealth of a country. At a basic level, a country's overall economic success does predict its people's well-being, but the healthiest and happiest countries in the world are not the richest. Rather, they are countries where wealth is shared widely and more equally.

One of the most obvious ways that economic equality may improve a country's overall health is by improving access to health care for all of its citizens, but Szalavitz writes that poor overall health manages to persist, "even in countries with national health services." So from where, exactly, does the negative correlation between economic inequality and public health stem?

"The roots of the problem," write Szalavitz,"appear to reach deeper than [access to public health care]. Indeed, they may go back to the dominance hierarchies of our primate ancestors."

Read the rest of Szalavitz's excellent piece over at TIME.
Top image via

Microcredit institutes like Kiva claim to help small business in the developing world by offering small loans to people who aren't able to get them through the normal channels. Their claim is that these tiny loans help the people who are the most impoverished grow their businesses, and substantially improve their lot. Microfinance expert Dean Karlan has just published a study of the effects of microcredit, and while there are some advantages, they're definitely not what we originally thought.

Microloans have been a contentious issue for quite some time — a status exacerbated by the recent surge in interest thanks to online donations. Criticisms have been leveled at microcredit institutes for problems like high interest rates (getting up to 60% per year) and causing the borrowers to become dependent on repeat loans — which sound remarkably similar to the complaints against payday loans.

Dean Karlan and his colleague Jonathan Zinman undertook a large study of 1600 individuals in the Philippines, randomly giving half of them small loans and tracking the progress of all of them over the next 11-22 months. Rather than seeing the businesses grow, most of them stayed the same size or even shrunk. The microloans didn't generate higher income, and the recipients wound up feeling less confident.

The benefit the researchers did find was that the people they funded had stronger risk management, and their families were better able to weather fluctuations in personal finance and unexpected expenses. They were then able to better rely on informal lending from other sources, and the ties between the individuals and their communities were strengthened.

While this is only one study in one country, it does paint a picture remarkably different from the one that the creators of these programs want us to see, where microfinance leads to small businesses growing stronger and more wealthy. Instead we see businesses stay the same size or even shrink, but cement their places in the community.

A study finds that the closer your last name is to the end of the alphabet, the faster you make purchasing decisions. And yes, the behavior is ingrained in us based on how we all used to line up in school.

Researchers tested groups response times four different ways, and in each of them, the R-Z set responded faster than the A-Q set.

The study's authors theorize that people at the front of the alphabetic line are used to going first, taking their time, and getting their prime choice. Those towards the back are used to always being last and having to pick through the remainders. Dubbed the "last name effect," the Zucks of the world are habituated to having to act fast and are much more susceptible to "buy it now" and limited time offers than, say, the Abrams and Adams.

So what does this mean for you? "Any time you can better understand yourself and the factors that affect behavior, you can override them," said one of the study's authors. If your name is towards the back, take an extra moment when making purchasing decisions if time is short. And those with names towards the front should be more on the ready to pounce when time is pressed.

Tyranny of the Alphabet [Slate]
The Last Name Effect: How Last Name Influences Acquisition Timing [The Journal of Consumer Research]

Ever order the second-cheapest wine on the menu while dining out? You don’t want to spend very much, but you also don’t want to look like a cheapskate ordering the cheapest bottle on the whole menu. Well, one in four diners do (in the UK, at least). In the marketing world, we can define this as a choice set effect with respect to reference pricing—using the cheapest bottle of wine as a standard of comparison against which the other wines are compared.

But did you know that the second-cheapest bottle is usually the worst value?

• Link
• Cracking the Code Of Restaurant Wine Pricing

All hope is not lost though. An important issue regarding social norms is whether they are created to increase welfare. Are they society’s response to market failures? One such norm is tipping for service quality. Azar (2003) has shown that the norm of tipping increases social welfare. In this paper, we show conclusively that the social norm of leaving the toilet seat down after use decreases welfare and by doing that we hope to convince the reader that social norms are not always welfare enhancing. Hence, there is a case for scientifically examining social norms and educating the masses about the fallacy of following social norms blindly.

• Link (via Slashdot)

This book contains 32 interviews with founding members of different tech startups. Most of the interviews follow the same general format: how they got their idea, their first steps in forming a company, how they executed their plans, and what major obstacles they encountered. I think the author captures the character of many of these startups quite nicely in the introduction to the book: “In its plain form, productivity looks so weird that it seems to a lot of people to be ‘unbusinesslike.’ But if early-stage startups are unbusinesslike, then the corporate world might be more productive if it were less businesslike.”

Far from being a dry business book, the stories are engaging and inspiring. There are lots of great insights to be found in these interviews. Max Levchin tells us how much effort they spent to find ways to combat credit card fraud at PayPal, which became their main advantage as their competitors bled money from chargebacks. Mike Lazaridis was able to leverage their technical skills at Research In Motion to build a robust and reliable system for delivering wireless email. Philip Greenspun’s interview is a cautionary tale on what can happen when venture capitalists bring in incompetent managers to run your company.

Founders at Work is a good read for anyone curious about turning a wild idea into a sustainable business.

Rating: 7/10

Links:

• Amazon.ca
• LibraryThing

We walked in to get the tickets and met a very long line of people waiting to do the same. After 10 minutes of waiting, a “Question Answerer” came by and made it clear why it was taking so long: the sales people had to explain the “packages” and pricing to each and every person in the line. This was not because the package was that complex, but because each person in the line thought they were going to be paying $25 per person. In reality, the tribe was charging another $50 on top of the $25 for each person. You read that right, 75 bucks a pop. The “Question Answerer” explained it to us:

“The investor wants to get his, that’s the $25. But it’s our land, and we don’t get any of that $25, so we have to get ours too, you know?”

• Link (via Digg)

Though Wikimedia has less than ten full-time employees, it has real expenses. Bandwidth in 2007 is expected to cost up to $100,000 a month, and the group now runs more than 350 servers. Will the necessary money continue to flow in from donations when so many ‘Net users have grown used to getting content for “free”?

Not everyone thinks so. While Wales wants to keep Wikipedia free of ads and corporate influence, others say that this is exactly what the site needs to grow and ensure its financial stability. Weblogs Inc. CEO Jason Calacanis has been harping on Wikipedia for months, arguing that the encyclopedia could rake in as much as $100 million a year with only minimal advertising.

• Link

You see that little Google search box on the upper right? If you use that box to make a search and click on one of the Google ads from the results page, Firefox gets an estimated 80% of the money. In addition to the search box, Mozilla also makes money from searches made on the Firefox start page.

• Link (via Digg)

As Google’s historic August 2004 IPO approached, the company’s senior vice president, Jonathan Rosenberg, realized he was about to spawn hundreds of impetuous young multimillionaires. They would, he feared, become the prey of Wall Street brokers, financial advisers, and wealth managers, all offering their own get-even-richer investment schemes. Scores of them from firms like J.P. Morgan Chase, UBS, Morgan Stanley, and Presidio Financial Partners were already circling company headquarters in Mountain View with hopes of presenting their wares to some soon-to-be-very-wealthy new clients.

Rosenberg didn’t turn the suitors away; he simply placed them in a holding pattern. Then, to protect Google’s staff, he proposed a series of in-house investment teach-ins, to be held before the investment counselors were given a green light to land. Company founders Sergey Brin and Larry Page and CEO Eric Schmidt were excited by the idea and gave it the go-ahead.

• Link (via reddit)

Someone’s done the math and my hunch was right. A New York Times article titled The Word on Warranties: Don’t Bother expains why:

• They’re actually a profit center for retailers. The margins on electronics are very thin, but they extended warranty margins are as high as 80%.
• It’s a sucker’s bet: you’re betting against the bathtub curve and you’re also betting against the trend of falling prices in the belief that the cost of repair will exceed the cost of replacement.
• A Consumer Reports study shows that only 10% of digital cameras fail in their first five years. For the extended warranty to be valuable, it would have to be less than 10% of the purchase price, yet extended warranties often cost as much as 20% of the item’s price. Besides, if you had a five-year old digital camera, you’d probably want to replace it, not repair it.
• Last year, suckers spent $16 billion on extended warranties.

• Link

From The Road Less Traveled:

When discussing the indie dream much fuss is made about “making the leap.” This idiom can be applied to many risk-taking situations, but in this context it usually refers to that fateful day when an individual decides to stop receiving a steady paycheck, in favor of some pursuit which probably offers less certain financial rewards.

Your familiarity with the phrase is inextricably linked with another well-worn utterance: “don’t quit your day job.” This phrase probably started as a cautious piece of well-meaning advice, but has evolved into a nasty weapon, used by terminally unhappy people to assassinate the dreams of those who aspire to something different.

• How to become an independent programmer in just 1068 days.
• The Full-Time Gap
• The Road Less Traveled

The printer. It’s one of the most common peripherals in the computer age and so cheap — at first blush, anyway — that stores often give them away when you buy a PC. Yet how many people realize, when they walk out of CompUSA, a nice $99 inkjet model tucked under their arm, that it’s likely they’ve just committed themselves to spending nearly $1,500 on ink cartridges over the next four years? (In fact, only about 3 percent realize it, according to Stanford economist Robert Hall.)

• Link (via reddit)

The parable describes a shopkeeper whose window is broken by a little boy. Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefitting the baker, who will then buy shoes, benefitting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.

• Link (via reddit)