Investors who look like you
Racial segregation is still with us, unfortunately. Lingering prejudice may be one reason for this, but another reason may be the value that people get from social networks linked by ethnic bonds. A recent study of almost all investments made by venture capitalists in the United States between 1991 and 2010 found that venture capitalists were “systematically more likely to invest in a start-up when the VC and company have top-level personnel of the same ethnicity.” This pattern was “driven by executives belonging to the less common but more distinct ethnic communities in the United States (i.e., individuals not of Anglo-Celtic or West European origin)” and was more prevalent in early-stage, and thus more risky, investments. Moreover, ethnic similarity predicted better startup outcomes (e.g., going public or being acquired), especially for first-time entrepreneurs, even controlling for a variety of other factors related to the venture capitalist, the startup, and the entrepreneur.
Hegde, D. & Tumlinson, J., “Does Social Proximity Enhance Business Partnerships? Theory and Evidence from Ethnicity’s Role in U.S. Venture Capital,” Management Science (forthcoming).
Tea Partiers sort themselves out
Many people think that Tea Party types are just a bunch of ignorant rednecks. Yet, according to a new study, people with a college degree are actually more likely to support the Tea Party than people who haven’t been to college. One big caveat though: This is particularly true in “counties with high levels of educational segregation”—where college-educated people are less likely to live near non-college-educated ones. Tea Party organizations are also more prevalent in counties with higher levels of educational segregation. This pattern persists even when controlling for other important factors like political orientation, income segregation, income inequality, race, sex, and religion. The study’s authors theorize that educational segregation is associated with a greater belief that success—and the inequality it can engender—has been fairly earned.
McVeigh, R. et al., “Educational Segregation, Tea Party Organizations, and Battles over Distributive Justice,” American Sociological Review (forthcoming).
Short refs call more fouls
If you play basketball, beware of the short refs. An analysis of thousands of regular-season NBA games found evidence that “shorter referee crews call more personal fouls than their taller counterparts.” The disparity was of a similar but somewhat smaller magnitude compared to the disparity that previous research found for referees officiating players of a different race. The good news, at least for fairness, is that short refs seem to be equal-opportunity whistle-blowers; they didn’t call more fouls on taller teams.
Gift, P. & Rodenberg, R., “Napoleon Complex: Height Bias among National Basketball Association Referees,” Journal of Sports Economics (forthcoming).
Don’t think about beer!
People under the influence are known to be ornery and quick to anger: There’s a reason that “barroom brawl” is its own genre of fight. But new research suggests that the influence of drinking isn’t just chemical—it can just be subliminal. In experiments, college students wrote a short essay on abortion and were then exposed to subliminal messages in a word-detection task. When the subliminal messages were related to alcoholic beverages, the students reacted more aggressively when later given ambiguously negative feedback about their essay. The effect was short-lived, though, dissipating after several minutes of distraction.
Pedersen, W. et al., “Are You Insulting Me? Exposure to Alcohol Primes Increases Aggression Following Ambiguous Provocation,” Personality and Social Psychology Bulletin (forthcoming).
How selling backfires
Salesmanship is built on the notion that if you can just get through to the customer, you can persuade them. New research suggests that it’s the last thing you should want. Researchers had Harvard students play a transaction game—buying something from a seller. The seller was played either by a computer or another student; in the latter case, the seller was either allowed to chat briefly or not allowed to communicate at all with the buyer. Even though the rational move in this particular game was always to make the purchase, buyers were significantly less likely to buy from a human seller—but only if the human seller could communicate. In other words, buyers were scared off by salesmanship, even if the merits of the deal were the same. Nevertheless, human sellers didn’t anticipate this effect, and wanted to be able to communicate.
Ert, E. et al., “Cynicism in Negotiation: When Communication Increases Buyers’ Skepticism,” Judgment and Decision Making (May 2014).