European consumer groups on Thursday accused the world’s biggest video game companies of “purposefully tricking” consumers, including children, to push them to spend more.

Video games are wildly popular in Europe where more than half the population are players, according to industry figures published last month.

Europe’s BEUC umbrella consumer rights group on Thursday filed a complaint with the European Commission, with support from member organizations in 17 European countries including France, Germany and Italy.

The groups said companies behind games such as Fortnite, EA Sports FC 24 and Minecraft are guilty of “manipulative spending tactics” involving in-game virtual currencies, which they said children “are even more vulnerable to”.

The video game giants named were Activision Blizzard, Electronic Arts, Epic Games, Mojang Studios, Roblox Corporation, Supercell and Ubisoft.

Virtual currencies are digital items—such as gems, points or coins—that can be bought with real money, often in the games themselves or in an app marketplace.

When the digital currency is then used to buy options or objects within a game, the consumer groups say players lose sight of the true sums involved, making them vulnerable to “overspending.”

“Today, premium in-game currencies are purposefully tricking consumers and take a big toll on children. Companies are well aware of children’s vulnerability and use tricks to lure younger consumers into spending more,” said BEUC head Agustin Reyna.

The groups called for items to “always be displayed in real money (eg euro), or at least they should display the equivalence in real-world currency”.

According to BEUC, 84 percent of those aged 11 to 14 play video games in Europe, while the in-game purchases market was worth around $50 billion worldwide in 2020.

Children in Europe spend on average 39 euros ($43) a month on in-game purchases, BEUC said. “While they are among the ones playing the most, they have limited financial literacy and are easily swayed by virtual currencies,” it said in a statement.

The groups claim the companies are breaching European Union consumer protection laws.

“Regulators must act, making it clear that even though the gaming world is virtual, it still needs to abide by real-world rules,” Reyna said.

© 2024 AFP

Consumers may enjoy reading funny or sarcastic online product reviews, but does it influence what they buy?

That’s the question my colleagues Susan Mudambi, David Schuff, Ermira Zifla and I wanted to answer with our new research into “pseudo-reviews.” By that, I don’t mean fake reviews that are designed to mislead consumers. Rather, pseudo-reviews, which could be written by anyone, are typically intended to amuse or wink at the reader, often while saying something genuine about the product.

We found that the answer to the question is yes—but not in an entirely straightforward way. The whimsical nature of these reviews engages consumers, making them more interested in the product. A real-life example of this was in 2009, when thousands of reviews appeared on Amazon.com for a T-shirt featuring an image of three wolves howling at the moon. The reviews, humorous, over the top and obviously made up, went viral, and the shirt became a bestselling item in Amazon’s apparel line.

But we determined that humorous reviews also make consumers more uncertain about whether the product is suitable for them, which makes them less likely to want to buy it.

We reached our conclusions after conducting two separate online experiments in which we asked about 450 participants to read a series of product reviews based on actual reviews from Amazon. Some were genuine, but others were tweaked to sound funny or sarcastic, with positive and negative examples of each. Afterward, we asked about levels of amusement, uncertainty about the product and how likely the participants were to purchase the product.

We found that a humorous review increases the feeling of amusement in a shopper and could make them more likely to purchase a product than if they had read a genuine and more serious review. We also found that a funny review can have the opposite effect by increasing consumer uncertainty, such as when the product is a complex item such as a flat-screen TV.

In other words, it’s likely that pseudo-reviews can increase sales in certain types of situations, such as buying on impulse, by enhancing amusement. But it can hurt sales when a product requires more detailed evaluation, and the funny reviews confuse rather than inform would-be buyers.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Americans give about a half-trillion dollars a year to charity. That money helps fund services for the homeless, fight diseases, run museums and other organizations doing worthwhile activities. Some donations, such as those supporting religious congregations, are expenditures that the U.S. government couldn’t legally make even if it wanted to.

That helps explain why the U.S. tax code encourages giving by offering some donors a tax break. When those taxpayers give, they get a discount on their tax bill through the charitable deduction.

Overall, this deduction lowers tax revenue by tens of billions of dollars every year. To be sure, since giving is socially valuable, the forgone tax dollars might be worth it.

Many taxpayers stopped taking advantage of this tax break after President Donald Trump signed the Tax Cuts and Jobs Act into law in late 2017.

This law greatly increased the standard deduction. As a result, many people stopped itemizing and started using the standard deduction instead because they could pay less in taxes without itemizing that way.

About 30% of taxpayers itemized their tax returns in 2017, making them free to take advantage of the charitable deduction, according to the Internal Revenue Service. But since 2018, only about 10% have been itemizing.

For the 30 million taxpayers who stopped itemizing, the charitable deduction disappeared. They lost an incentive to support many of their favorite causes.

I am an economist who studies charitable activities and public policy. Working with two colleagues, Mark Ottoni-Wilhelm and Xiao Han, I co-authored a study looking at what happened to charitable giving after the Trump-era tax reforms were enacted.

Losing out on revenue

Our study uses data from the University of Michigan’s Panel Study of Income Dynamics, which asks families questions over time, to look at how their giving behavior changed when tax laws changed. This survey lets us see how donations from the same families changed after they stopped using the charitable deduction. This data is available every other year. We studied what happened in 2018, compared with 2016.

We found that Americans who stopped itemizing their tax deductions gave less to charity in 2018 than they otherwise would have. On average, these donors who could use the charitable deduction in 2016 gave nearly US$1,000 less in 2018 after losing out on the tax break.

All told, we estimate that the 2017 tax package annually reduced charitable giving from individual donors by about $20 billion in the following year from what we would have seen had the bill not become law. That’s roughly 5% of all charitable giving.

Overall, charitable giving fell to $523 billion in 2018 from $528 billion a year earlier, measured in inflation-adjusted 2023 dollars, according to the annual report from the Giving U.S. Foundation, produced in partnership with the Indiana University Lilly Family School of Philanthropy. It fell again in 2019, then rose in 2020 and 2021 before declining in 2022 and 2023, when giving stood at $557 billion.

Giving from individual donors, after the same kinds of fluctuations, had declined by $2 billion to $374.4 billion in 2023 from $376.4 billion six years earlier, in 2017. Giving by foundations and corporations rose over those same six years. Bequests from the estates of people who had died fell—a reflection of effects from other changes in the Tax Cuts and Jobs Act.

To be clear, giving usually increases from year to year—especially when the economy is doing well, as it has generally fared in recent years. Had the tax laws not changed, we would have expected an increase in giving, especially from individual donors, after 2017.

New opportunity to encourage giving through the tax code

The charitable deduction encourages giving but costs the government money in terms of lost tax revenue. Economists and policymakers have long wondered whether the trade-off makes sense. We believe that our study offers clear evidence that the tax code can promote charitable giving.

Congress will get a new opportunity to expand tax incentives for charitable giving in 2025, before many Tax Cuts and Jobs Act provisions expire in 2026.

Some lawmakers are already trying to increase giving incentives for the donors who don’t itemize their tax returns. But it’s not clear that they will prevail once this debate heats up.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The number of Americans living in poverty, according to the nation’s official definition, fell slightly to about 36.8 million in 2023, the Census Bureau announced on Sept. 10, 2024. The data released also indicated that the poverty rate declined a little. However, an alternative way to measure poverty ticked up, as more people in the U.S. faced economic hardship.

The Conversation U.S. asked Mark Rank, a sociologist who researches poverty and economic inequality, to explain the latest numbers and to share some of his insights about poverty in America.

What’s the most significant news?

I think the most interesting aspect of this report is the different directions the two measures of poverty went in 2023. On one hand, the official poverty measure declined to 11.1% in 2023 from 11.5% in 2022. At the same time, the supplemental poverty measure, an alternative way to measure poverty introduced in 2011, increased to 12.9% in 2023 from 12.4% a year earlier.

The official poverty rate fell because overall household income rose modestly in 2023—even after taking inflation into account—according to other census data. However, like many poverty experts, I believe that the supplemental poverty measure is a better indicator of what’s going on because it takes into account household expenses as well as tax credits and the effects of government programs on reducing poverty.

It turns out that one key reason for the increase in the current supplemental poverty measure is that Social Security benefits and the Supplemental Nutrition Assistance Program—also known as SNAP or “food stamps“—pulled fewer people out of poverty in 2023 than in 2022.

The supplemental poverty measure also increased as the result of out-of-pocket medical expenses being higher in 2023 than in 2022.

Are there more meaningful ways to assess poverty in America?

The annual Census Bureau report only represents a year-by-year snapshot of poverty. I think estimating the long-term risk of impoverishment across a typical American’s lifetime is a more meaningful approach.

To that end, I’ve conducted research using a large nationally representative dataset from University of Michigan researchers who have tracked the same households each year since 1968. Based on this analysis, I’ve found that a clear majority of Americans will experience poverty for at least one year of their adult lives.

Some 58.5% of Americans will experience at least one year below the official poverty line between the ages of 20 and 75, while 76% will either experience poverty or near poverty—meaning that their income falls below 150% of the poverty line.

The numbers presented in the annual Census Bureau report indicate that only about 1 in 9 Americans are facing poverty today. But my research shows that 3 out of 4 Americans will experience poverty or near poverty at some point in their lives. The result is that poverty should be viewed as an issue of “us” rather than an issue of “them.”

How does poverty in the US compare with what’s going on in similar economies?

The U.S. has one of the highest rates of poverty among Western industrialized nations. Whether the focus is on working-age adults, children, people over 65 or the population as a whole, the U.S. is near the top in terms of the extent and depth of its poverty.

One major reason is that the federal government does much less than its counterparts in many other countries to help people stay out of poverty. The U.S. safety net is relatively weak when it comes to protecting Americans from economic destitution.

The result is that the percentage of Americans experiencing poverty in any given year is among the highest among comparable nations.

In addition, the extent of both income and wealth inequality tends to be more extreme in the U.S. compared with other high-income countries.

How do you interpret the long-term patterns in the US poverty rate?

The U.S. made substantial progress in terms of reducing poverty in the middle of the 20th century. The poverty rate was cut in half from 22.4% in 1959 to 11.1% in 1973.

This improvement was due to the robust economy of the 1960s and government initiatives known as the “War on Poverty.” However, since 1973, the overall rate of poverty has ranged between 11% and 15%. It has tended to decline somewhat during periods of economic growth, and it has risen during periods of economic stagnation and recession.

The official poverty rate of 11.1% in 2023 matches the poverty rate in 1973. The supplemental poverty measure, which stood at 12.9% in 2023, reflects a similar lack of progress. It was first calculated in 2009, when it stood at 15.1%.

There are two major success stories, however.

First, older Americans have become less likely to experience poverty.

In 1959, 35.2% of people who were 65 and up were experiencing poverty—the highest rate of any age group. In 2023, only 9.7% of older Americans were in poverty, as indicated by the official rate, and that was among the lowest for any age group.

The primary reason for this reduction was the expansion of Social Security benefits and the introduction in 1965 of the Medicare and Medicaid programs. Without these programs, poverty for older Americans would rise to an estimated 40%.

The other major success story was that the share of U.S. children experiencing poverty fell substantially in 2021 as a result of the child tax credit expansion and the economic impact payments the federal government made to all Americans beginning in 2020, when the COVID-19 pandemic wreaked economic havoc.

As a result of these policies and others, the supplemental poverty measure among children fell by nearly half to 5.2% in 2021, from 9.7% in 2020. With the expiration of these benefits, the rate of childhood poverty has returned to pre-pandemic levels. According to the supplemental poverty measure, it rose to 13.7% in 2023—the highest rate since 2018.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The intensifying great power competition between the People’s Republic of China and the United States has meant the possibility of future war in the Indo-Pacific region has become a regular feature of Australia’s national discourse.

It is surprising, then, how little attention has been given to what day-to-day life could look like if a war actually did break out.

While such a war is not inevitable, scrutinizing what it might look like should be an urgent priority so we can take the necessary steps to improve Australia’s preparedness and ultimately our deterrence.

I previously worked in the Department of Defense analyzing what would be required to mobilize Australia’s privately held industrial base and civil society to support various wartime scenarios. From this experience, I believe the government has a detailed understanding of how war could impact domestic supplies of critical goods and international freight transporting supplies to Australia.

What is missing, however, is a frank engagement with industry and the public about the hardships that may arise during a crisis and how our industrial base needs to be recalibrated to address these vulnerabilities.

Shortage of critical goods

There are three categories of goods that would be most impacted by war:

• energy and fuel
• pharmaceuticals and raw materials
• smart devices and their components.

These are utterly indispensable to our daily lives and the continuity of our society. Yet, Australia currently lacks the ability to produce enough of these goods domestically to endure the supply disruptions that a conflict would bring.

For example, as a member of the International Energy Agency, Australia has an obligation to maintain sufficient reserves of refined fuel to meet its needs for 90 days. In practice, however, Australia has arguably never met this requirement.

Indeed, our domestic capacity for refining fuel has gone backwards and sufficient storage facilities have yet to be established. Recent unpublished estimates from the energy sector I’ve seen suggest if supply lines were cut today, Australia would only have enough fuel to meet just days or weeks of demand.

Once road freight is impacted by a lack of fuel, supermarkets would start experiencing shortages of basic goods. Air travel would collapse. Non-essential retail businesses and most personal vehicle travel would likely cease, as fuel would need to be rationed for freight, emergency services and the military.

It’s important to emphasize that Australia’s low onshore capacity to refine and store fuel would mean these dire impacts could be expected from even a relatively short-lived crisis disrupting our maritime supply lines.

When it comes to pharmaceutical products, the vast majority (90%) are also imported. China is an essential source of many of Australia’s medicines, which means they’d be inaccessible if a war erupted between Beijing and Washington.

Australia has the facilities and expertise to produce a wide range of pharmaceuticals, but scaling up capacity would take time. Disruption to the availability of medicines could therefore have catastrophic impacts on the welfare of Australians and potentially spark a panic.

Australia’s access to digital devices and components is also highly reliant on foreign imports, especially from China. While shortages of this kind would not be as immediately life threatening, there would still be a significant change to how Australians live.

More worryingly, smart devices have been embedded in the operational technology of most Australian industrial systems, such as food processing, waste management, water treatment, freight management, transport or pharmaceutical manufacturing.

A prolonged disruption to our technology supply chain could have devastating effects on our economy and essential services, as we would be unable to replace or upgrade key components. This problem would be exacerbated by our nascent capacity to disassemble and recycle the salvageable components of electronics, such as semi-conductors. Currently, we largely ship discarded devices overseas.

A ‘first 90-day’ crisis plan

While these scenarios are indeed alarming, we can take heart from the fact that Australia’s maritime supply lines are highly adaptable.

A war over Taiwan or in the South China Sea would have a far greater impact to global shipping than the COVID pandemic. However, the pandemic demonstrated the capacity of international shipping and air freight to recalibrate and adjust as key markets were disrupted by lockdowns and other response measures.

The result was that after a period of shortages, the arteries of international trade to Australia were restored.

Given these complexities, Australia needs to focus its national preparedness and mobilization planning around the uncertain period between a crisis occurring and international shipping being re-established.

From my examination, such planning is not taking place to a sufficient degree.

The former secretary of Home Affairs, Michael Pezzullo, has similarly suggested such planning is overdue.

I believe the government should adopt a “first 90 days” national mobilization plan designed with industry partners. The aim: to ensure Australia’s survival during the first 90 days of a war or similar catastrophe in our region.

Such a plan should be centered on increasing the domestic stockpiles and manufacturing capacity of the three most essential categories of goods mentioned earlier—fuel, pharmaceuticals and smart devices (and components). This would give us the capacity to sustain Australia through the initial period of a conflict as we wait for international supply lines to adjust.

Australia must also look for ways to diversify sources of these goods away from China because of the high likelihood of disrupted maritime routes through Southeast Asia. This diversification would ensure critical supply chains are more resilient in those first 90 days and beyond.

Why talking about preparedness is important

There is a critical need to include industry in such preparedness and mobilization planning. Yet, from my experience, many business leaders are in the dark about what security interventions the Commonwealth may initiate in wartime to keep Australia ticking. There appear to be two reasons for this.

First, there’s a view in government that this kind of talk would cause alarm. The opposite is true. Clarity about our nation’s contingency planning in a crisis can only improve market confidence.

And second, policymakers may fear that any discussion about diversifying our key supplies away from China would harm our relationship with Beijing. It may also signal Australia is preparing for aggression.

Again, I believe the opposite is true. For many years, China itself has been on-shoring its key supplies to make its economy more resilient to stormier weather. Australia could simply point to China’s example as demonstrating prudence—hoping for the best, but preparing for the worst.

Ultimately, strengthening our preparedness through a “first 90 day” policy would make our deterrence more credible by showing we take the prospect of war seriously.

This would complicate the planning of would-be adversaries by ensuring Australia could not be easily isolated and neutralized. It would also show to our people, allies and adversaries alike that while Australia does not want war, we intend to endure it should one arise.

This article is republished from The Conversation under a Creative Commons license. Read the original article.