How trust builds and then declines through online reviews

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Two sociologists explain how trust develops and then changes over time in the online sharing economy:

For their research, Parigi and Cook examined Couchsurfing, a website that supports international travel and cultural exchange. Its members both host visitors and surf the site to find sympathetic lodging as they travel the world, all without exchanging money. Profile pages of members list Couchsurfing friends and other personal information.

The findings revealed, the researchers wrote, an interesting mechanism at the root of interpersonal trust: “The accumulation of ratings about users (whether guests or hosts) had a double-edged effect on trust and relationships: it made relationships easier to establish initially but it also weakened them after a certain threshold.”

In other words, technology boosted interpersonal trust among users at first, but it also made it more difficult to build stronger ties as users acquired more and more reviews…

Parigi and Cook explain that in an online community, interactions between people are more normalized, less open to chance. “This is because trustworthiness is promoted not by interpersonal ties, but by the monitoring of one another in a network in which reputations are posted,” they wrote…
As a result, he said, an interesting conundrum seems to be emerging: technology makes it possible for people to trust complete strangers, while at the same time it may be weakening the bonds that unite individuals.

Trust is a necessary component of human relationships; people need to have some confidence that the other person is not going to take advantage of them or let them down and deeper connections can form when mutual trust develops. Yet, trust can develop in different ways. In this particular case, it sounds like the trust is built on crowd-sourced data – posted online reviews – that contribute to confidence but don’t necessarily lead to deeper relationships.

Maybe this is all okay. We don’t expect to form deep relationships with everyone we interact with, particularly when it comes to economic transactions. (Think of interactions with cashiers or waiters or others at the lower status jobs in the service economy.) The larger issue may be when most or all of online interactions develop these qualities. This is the same sort of question that worried Georg Simmel in his piece “The Metropolis and Mental Life.” Simmel made a similar argument: when humans enter a new social space (the big city) that is built around interdependence and specialization, humans can’t hope to get to know everyone. Similar situation today: humans enter a new social space (the Internet, social media) that prioritizes individual action and choosing what connections to make.

Suburbanites who don’t like proposals for affordable housing in the Twin Cities region

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The Metropolitan Council for the Minneapolis-St. Paul region is working on plans for affordable housing but a number of suburbanites are not pleased with where the affordable housing might go:

The Met Council sees a growing problem. Its own newly available data suggest that annual production of affordable housing has dropped by hundreds of units since 2010, even as market-rate housing has rebounded.

An advance peek at the Met Council’s proposed goals, to be released late Monday, shows that communities considered to be prime locations for adding affordable units include upper income suburbs, such as North Oaks and Eden Prairie, and cornfield’s-edge fringe communities such as Minnetrista and Lake Elmo…

The target numbers — released this week for public comment, with adjustments possible from now to July — are part of a once-per-decade planning process that will begin in every city this fall. Each must start to figure out how to accommodate the additional units.

The Met Council is under heavy fire for allegedly pushing too much affordable housing into areas with plenty of it already, intensifying concentrations of poverty and perpetuating racial segregation in the Twin Cities.

It will be interesting to see how this plays out. The region has a history of metropolitanization, a rare occurrence in American cities, as well as an openness to immigrants, yet advancing affordable housing units in middle- to upper-end suburbs may be going too far. As some of the suburbanites in the article note, they moved to these communities to escape issues like this. But, the quality of life concerns they tend to express (good school, low crime, sense of community) seem to be inextricably linked with race/ethnicity and social class. Just a reminder that part of the benefits of having money in the United States is that one can move to such a place that insulates you against interacting with others.

In economic terms, 1 baseball team = 1 midsized department store

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Following up on the academic consensus that sports do not economically benefit communities, one economist notes the economic impact of sports teams:

“If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent,” Leeds says. “A baseball team has about the same impact on a community as a midsize department store.”

The reason?

Economists say the biggest reason sports teams don’t have much impact is that they don’t tend to spur new spending.  Most people have a limited entertainment budget, so the dollars they are spending when they go to a game is money they would have spent elsewhere, maybe even at a restaurant or small businesses where more money would have stayed in the community. Plus, Matheson says, rather than draw people to a neighborhood, games can actually repel them.

Don’t underestimate the money generated by large retail stores. When I worked a short stint at a local Target at the end of high school, I remember seeing the board in our office that listed daily sales. The figure was typically around $100,000. That generates a lot of tax revenue through sales taxes and property taxes.

This is more evidence that the more important feature of sports teams in major cities is their social and cultural value. Teams provide something for a city to rally around and contribute to the city’s collective identify. In major cities with millions of people, it is difficult to find features or events that can bring large numbers of people together. Sports teams also provide opportunities for leisure, whether through enjoying the stadium experience or experiencing the game from afar. Now, if only we could find politicians that would admit the taxpayer money going to stadiums or teams was due to the interest in having a common sports identity and leisure experience rather than some grand economic impact…

Obama administration proposal to limit tax-free government bonds for stadiums

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Federal policy might change how sports teams and municipalities negotiate stadium deals:

That’s what the Obama administration proposed in its budget last month: to end the issuance of tax-free government bonds for professional sports facilities, a practice that has, according to research by Bloomberg, siphoned $17 billion of public money into arenas for NFL, MLB, NBA, and NHL franchises over the last 30 years and cost Americans $4 billion in forgone federal taxes on top of that. It’s too late for residents of Cobb County, but Congress might yet save the rest of us some dough…

So how did we wind up in this situation? Local authorities have long used tax-exempt bonds to raise money for certain private uses—whether factories, train stations, or home mortgage loans—in addition to schools, sewers, and other infrastructure projects. In most cases, the ensuing economic growth was at least intended to pay back the municipal investment. Sports stadiums were no different: Governments could raise money in exchange for a share of future revenue…

Much of the rest of the article summarizes the research that shows cities and taxpayers tend not to come out ahead in these deals. So, this new policy might solve the problem?

Still, it wouldn’t stop cities from paying for stadiums. The last time Congress made public financing more onerous, in 1986, the result was a disaster: Cities jumped to meet the new, harsher terms, opening a three-decade stadium construction spree.

In other words, the policy might close the loophole for this particular financial instrument but there are other ways to make such deals. As I’ve said repeatedly, few politicians are willing to let the big team get away. Of course, the historical record suggests that everything does not necessarily fall apart when teams move. Many of the cities since the 1950s that saw teams move away later saw new teams take their place. Sports teams only have limited numbers of places they can move to make the kind of money they want; this is the reason Los Angeles looms so large right now in the NFL’s urban landscape because the next options are not very good.

The bigger question may be whether cities and suburbs can stop themselves from making bad deals, even with federal policies that take away some of their options.

What does “going full sociology professor” mean to conservatives?

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One recent eventful flight may just confirm all the conservative stereotypes of sociology professors:

“The United States has declared war on Venezuela!” a woman aboard a plane says repeatedly in the video.

The Miami New Times identified the woman as 52-year-old Karen Halnon, an associate professor of sociology at Pennsylvania State University-Abington…

“In a democracy one must speak up and against injustice,” Halnon said in an e-mail to The Post on Tuesday after saying in another email that she was mistreated during her arrest. “To be tortured is not democracy!”…

According to “Inside Edition,” Halnon said she was not intoxicated. “Anyone who is speaking out for social justice, it is the usual situation that most people will think they’re crazy,” she said, according to the show’s news release…

The release noted that Halnon said she lit a cigarette on the plane “to show solidarity with her idol, Cuban dictator, Fidel Castro.”

Airplanes are not the best places to light up and loudly espouse political views. (I do wonder, however, if certain topics might be viewed more favorably by other passengers. What if the airline service was bad and a passenger got up to deliver a populist rant?) Here we have a sociology professor who wants to be deviant (political views, smoking, rant on a plane) in order to promote social justice as well as defend left-wing or Marxist regimes. According to conservatives, isn’t this what all sociology professors do or would secretly like to do?

This is one of those times that it would be interesting to gather a large group of sociologists to see how they would respond…

Financial problems at the FHA: homeownership for many vs. the private sector

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The Federal Housing Administration may be helping the lower ends of the housing market but it is also running into some financial difficulties:

The House Financial Services Committee heard testimony from Housing and Urban Development Secretary Julian Castro on Feb. 11 and the Housing and Insurance Subcommittee heard from several witnesses on Feb. 26…

Historically, the FHA has controlled about 10 to 20 percent of the mortgage market. But after Congress increased the size of mortgages the agency could insure from $360,000 to $625,000, the FHA controlled about 60 percent of the low down-payment mortgage market from 2008 to 2010. That means the income eligible for FHA mortgage insurance went from the national average of about $64,000 to $110,000. Put another way, more than twice as many people can get FHA insurance than they could before the limit was raised.

At the same time that eligibility has exploded, FHA has faced serious solvency problems, culminating in a $1.7 billion bailout from the U.S. Treasury at the end of 2013. The Congressional Budget Office estimated that FHA insurance cost taxpayers $15 billion from 2009 to 2012. Nonetheless, the agency’s website falsely claims it “is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing.”

Even with all of the taxpayer money that has been thrown at the agency, the FHA is seriously undercapitalized. The law says FHA needs to keep 2 percent cash on hand, which would be about $18 to $20 billion, but as of the beginning of 2015, it had only less than half of 1 percent, or $4.7 billion.

This piece was written by an activist against government waste yet it highlights the contrast of priorities: homeownership for many versus letting the market sort this out. Americans, including politicians and presidents, have pushed homeownership for decades. We assume this is a positive outcome as people will take better care of their property if they own as well as enjoy the status and privacy of their own home. Yet, if homeownership were entirely left to the private sector, the lower end of the housing market may not do very well. Even with the efforts of the FHA in recent years, we can see some of this in action: luxury building is booming in places like New York and Miami as cheaper and smaller homes don’t generate as much profit. In the recent past, the private sector resorted to tricks to help lower-income borrowers but we saw how those subprime loans worked out for everyone.

In other words, if Americans want homeownership as a social good available to many, it still needs to be worked out how this can be done effectively.

Perhaps the drop in property values in Ferguson could prompt change

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The fallout from last year’s events in Ferguson, Missouri continues including this look at the changes in property values:

For the city’s 2014 budget, approximately 20 percent of the city’s revenue came from the city’s courts, and 17 percent came through property taxes. But after a Department of Justice report found the courts were profiting off racial discrimination, the State of Missouri took over to implement reforms. Couple that with rapidly falling property values (which are used to calculate owed taxes) and it seems like key parts of the city’s business plan are falling out from under it…

The average selling price of a home in the city has been on a steady decline since the shooting of Brown last August, according to housing data compiled from MARIS, an information and statistics service for real estate agents. Prior to Brown’s death, the average home sold in 2014 was selling for $66,764. For the last three and a half months of the year, the average home sold for $36,168, a 46 percent decrease.

The trend has continued on through this year, with the average home selling for only $22,951 so far in 2015. Another negative indicator: in the eight and a half months leading up to Brown’s death, the average residential square foot in 2014 was selling for $45.82. In the eight and a half months since Brown’s passing, the average residential square foot in the city has sold for $24.11. That’s about a 47 percent downtick in one of real estate’s core indicators.

In the suburbs, where quality of life (including factors like crime, the quality of the houses, performance of the local schools) is paramount in (1) influencing housing values and buying and selling real estate and (2) building a tax base through attracting businesses and organizations, infamy is not a good thing. But, given the patterns of local treatment of people by police in the area, it is hard to see how this wouldn’t affect housing values and the tax base. When given options across the suburbs of St. Louis, how many homeowners or companies would choose to move to Ferguson? And, if we’re honest, hitting suburbanites where it really matters – property values and their tax base (the double whammy of housing and land values going down while property taxes may need to increase to close the gap) – may be what is needed to prompt change.

Even affluent Chicago neighborhoods, like Lincoln Park, have lost significant numbers of residents

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Rust Belt cities like Chicago have declined in population since the mid-1900s and the population loss is not just limited to poorer neighborhoods:

For a long time, most accounts of Chicago’s lagging population have focused on parts of the South and West Sides where many residents, largely African-American, have decided to decamp for the suburbs or the South in search of better schools, less crime, and more jobs.But the under-appreciated flip side of population loss in those parts of the city is that places that ought to be growing like gangbusters are stagnant, often sitting 25% to 50% below their peak populations. Lakeview, for example, was once home to 124,000 people; its population is now 94,000. North Center is down from nearly 49,000 to under 32,000. West Town, which includes Wicker Park and Bucktown, has fallen from 187,000 to 81,000.

Decline5010

What explains the population loss in even popular neighborhoods? Here is one possible answer:

Since replacing a couple two-flats with a courtyard building is now illegal, developers make money by tearing down an old two-flat and building a luxury two-flat in its place. Or they build a mansion, and the neighborhood actually loses a housing unit. As a result, as a neighborhood becomes more attractive, the city encourages fewer people to live there.

Zoning (theoretically based on improving the neighborhood) plus chasing profits may just lead to population loss. This could be balanced out by approving more high-density housing in a particular area (like the Loop are in specific portions of popular neighborhoods as to limit their effect) but that leads to major changes in two places.

It is still worth noting that the areas that seen an increase in population are either (1) the Loop with a reemphasis on residential construction and (2) community areas on the edges of the city which other lower densities as well as potentially more open land since 1950.

McKinsey predicts drop in car ownership (after 2040) due to self-driving cars

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McKinsey suggests one side effect of self-driving cars will be less need for owning one:

But it’s in Phase 3, after 2040, that the fun begins. This is the point where autonomous cars become our primary means of transport, and all the rules are up for debate. Just as car design will fundamentally change once things like forward-facing seats, mirrors, and pedals are no longer necessary, the way we structure physical space could evolve: McKinsey predicts that by 2050, we might need just 75 percent of the space we now reserve for parking our cars. Because this is America, that means we get back 5.7 billion square meters of space—enough to hold the Grand Canyon and then some. That’s because autonomous cars can pack themselves together tightly (no need to allow space for human to exit).

More than that though, our entire idea of car ownership could change. Currently, cars sit unused about 95 percent of the time. That leaves a lot of room for improvement in terms of how we allocate resources.

We won’t stop buying cars altogether—people will still want the option to “independently drive and use the vehicle, and have fun doing so,” says Kaas— but we will buy fewer cars. Without the need for a human at the helm, one autonomous vehicle could take the place of two conventional vehicles: If Joan is going golfing and Joe needs to go shopping, a single car could drop Joan off at the club, swing back to the house to take Joe to the supermarket and back, then return to the club and get Joan. Kaas also predicts you could see the rise of private commuting services, shuttling customers around for a fee.

The recurring theme in the McKinsey report is that the consumer wins. Yes, cars crammed full of high-end technology will likely cost several thousand dollars more than they do today. But “drivers” will save money in the form of regained time (spend your commute working instead of driving!) and many fewer accidents: McKinsey pegs the savings on repair and health care bills alone at $180 billion in the US, predicting a 90 percent drop in crashes.

Cars are expensive so this could theoretically save money (as long as the new autonomous cars have reasonable price tags) and offer more convenience. Yet, it could take a lot to overcome the American love of cars. They aren’t simply about convenience or getting from Point A to Point B (and Americans would always choose mass transit if it were more convenient and effective). It is about other ideas in the American Dream, about freedom and independence and having a status symbol and being mobile. Perhaps by 2040, these things won’t matter as much as we all adjust to autonomous vehicles (and perhaps legislation that makes them the norm for safety’s sake). But, this isn’t just a technological change; this requires some big cultural changes as well.

Cracking down on massive hide-and-seek games in Ikea stores

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Ikea in the Netherlands has banned viral hide-and-seek games inside its stores:

Ikea has quashed the dreams and shortened the bucket lists of tens of thousands people, saying it won’t allow several guerrilla hide-and-seek games to take place in its stores in the Netherlands. “It’s hard to control,” an Ikea spokeswoman told Bloomberg. “We need to make sure people are safe in our stores and that’s hard to do if we don’t even know where they are.”

More than 57,000 people were invited to participate in a May 16 game of hide-and-seek at the Ikea in Eindhoven, Netherlands, according to a Facebook page for the event, with about 32,000 people RSVPing. Twelve thousand were invited to a similar event at an Ikea in the Netherlands’ Breda on May 9. Had either game moved forward, it could easily have broken Guinness’ record for the world’s largest game of hide-and-seek, which was set in January 2014 in China and involved a mere 1,437 participants.

While this isn’t the first time Ikea has contended with plans for massive hide-and-seek outings in its stores, it may be the first time the company has banned them outright. A game that took place in 2009 at an Ikea in Sweden reportedly attracted about 150 people and forced organizers to apologize for the “whooping and cheering” that scared customers straight out of the store. And when thousands of people in Melbourne, Australia, signed up to play hide-and-seek at an Ikea the following year, the company said it would “discourage” customers from participating in the event but would not “go so far as to ban them.”

At any rate, the more interesting question here is how many people an Ikea store could reasonably host for a game of hide-and-seek, were the company’s management to get on board. The Eindhoven store, which opened in 1992, is 28,600 square meters, according to Ikea’s website. That’s about the same as four standard soccer pitches, or 5? American football fields. Let’s stipulate that for a really good game of hide-and-seek, you need at least 20 square meters (about 225 square feet, or a 15-foot-by-15-foot spot to stand in). Less than that and you might as well play sardines or blob tag instead. Also, presumably not all 28,600 square meters in the Eindhoven store are usable space, or even accessible to customers looking for hiding spots.

Think of all the hiding places! I’m not surprised that safety was the primary reason for banning the games though I assume the real reason was that this could be bad for business. (Yet, how many of the game players would purchase something – from meatballs to another Billy bookcase) on the way out?) If you think about it, a lot of businesses could be overwhelmed by such viral efforts. (Maybe all those extra parking spots mandated in American parking lots would then be filled.) How far away are we from outright bans on indoor games in multiple countries or from other stores and businesses as well?

At the same time, why doesn’t Ikea turn the tables on this and host some special hide-and-seek events with a lottery system for participants. This could generate good publicity and reestablish the brand’s cool factor.