By William M. Arnold 

This article originally appeared in The Hill and is reprinted here with permission.

News this week of oil prices hovering near $60 a barrel simply reflects the intersection of supply and demand. Demand is gaining strength as the global economy strengthens — supported by oil prices that are about half of their 2014 peak.

OPEC countries, led by Saudi Arabia and other large producers like Russia, have been more decisive and effective in controlling production. This is not to say that every large producer has cut back; however, the net effect has strengthened prices — but not to the point of killing off rising demand.

In the background are five drivers that get less attention: the small and decreasing imbalance between supply and demand, levels of investment, the normal operational decrease in production, the short-cycle nature of production in the U.S. and the inventory of oil.

In a world market of about 93 million barrels of oil and liquid fuels per day, an excess of supply over demand of less than 2 percent was enough to tank oil prices in 2014, driving them all the way down to the high $20s before climbing slowly to today’s prices.

This reflects the commodity nature of oil, the price of which will gravitate to the cost for the producer who supplies the last barrel to balance the market. Higher-cost producers will be driven out over time, although this may not be linear.

In a $110-plus price world, almost any production anywhere in the world was profitable but adversely impacted demand. But much lower prices put high-cost producers at a great disadvantage. That impacts remote areas like the Arctic, lower-quality crudes like those produced in Canada’s oil sands and in Venezuela, regions with poor infrastructure and deepwater production around the world.

Commodity prices are volatile in both directions. An oversupply like we have seen in the last three years drives prices dramatically lower, but a shortfall could take prices back to the former high levels. Is that likely to happen?

Over the last three years, companies have shed staff and slashed billions of dollars from investments to discover and produce oil in the future. That doesn’t have much impact on supply in the short term, but over three to five years, it will crimp production and trend toward higher prices.

Oil fields outside of OPEC on average decline by about 5 percent each year. That takes more than 2 million barrels per day out of global production. Companies are constantly on a treadmill to replace those reserves. Without new investment, that puts upward pressure on prices.

The “shale revolution” upset the traditional view of energy economics, because much of it is short-cycle. Instead of investing for production that won’t come onstream for three to five years, as in the case of deepwater or Arctic sources, production in places like the Permian Basin of West Texas has become more like a manufacturing process that can be turned off or ratcheted up in a matter of weeks, depending on oil prices and the cost of production at a given site.

OPEC has never seen this kind of competition before and is only now coming to grips with it. Adding to the disruption in energy markets has been the unanticipated but dramatic cost reduction of producing oil in the shale play. Former generalizations about the cost of production may be obsolete.

Initially, that was the result of hard bargaining between operators and service companies, but over the last three years, operators have employed new technology and processes to drive down costs more sustainably.

What this means is that absent a surge in demand or a dramatic shortfall in supply, say from a crisis in Venezuela, prices are likely to cap at West Texas costs of production that cover invested capital, probably in the $55-$60 range.

The final driver is inventory of oil. This has been at record levels while production outstripped demand. That has moderated in recent months, but still represents a limit on traders’ expectations of future prices. Stored reserves represent potential new supply that can cap prices.

Bringing all these factors together suggest that while oil prices may be “lower for longer,” an equilibrium has settled in. Demand has grown in response to moderate prices. Whether this will continue is not a foregone conclusion, as OPEC struggles with dissent among its members and there is no shortage of political instability around the world.

Over time, competition from natural gas and renewables cloud oil’s price horizon.

William Arnold was a professor in the practice of energy management at the Jones Graduate School of Business at Rice University.

Based on research by Jing Zhou, Bilian Lin (Chinese University of Hong Kong) and Kenneth Law (Chinese University of Hong Kong)

Key findings:

• Past research warned against hiring overqualified workers.
• In fact, slightly-to-moderately overqualified workers are more likely to be valuable and to reimagine their duties in ways that advance their institutions.
• To capture this advantage, employers need to give workers a strong sense of connection with the company, and the flexibility to expand their vision of their jobs.

You’re a rocket scientist. You worked for NASA. You've won a Nobel Prize. Shouldn’t your qualifications give you an edge on a software developer job?

According to typical hiring practice, the answer is no. You might not even get an interview for a job sweeping the floor. That’s because, for years, research has warned that hiring applicants with too much experience or too many skills will saddle you with employees who don’t appreciate their jobs.

Now there’s good news for rocket scientists and others who happen to be overqualified for their work. According to a groundbreaking new study coauthored by Rice Business professor Jing Zhou, workers who are slightly to moderately overqualified are actually more likely to be active and creative contributors to their workplace. As a result, they’re more likely to be assets. The study adds to a new body of research about the advantages of an overqualified workforce.

Zhou’s findings have widespread implications. Worldwide, almost half of the people who work for a living report that they are overqualified for their jobs. That means Zhou’s research, conducted with Bilian Lin and Kenneth Law of the Chinese University of Hong Kong, applies to a vast segment of the labor market.

To reach its conclusions, Zhou’s team launched two separate studies in China. The first looked at six different schools with a total of 327 teachers and 85 supervisors. The second analyzed an electronic equipment factory with 297 technicians. Both studies revealed a strong link between perceived slight and moderate overqualification and the frequency of “task crafting,” that is, expanding the parameters of the work in more innovative and productive ways.

In the school study, teachers who were slightly to moderately overqualified set up new online networks with students and parents. They also rearranged classrooms in ways that made students more engaged and productive. Meanwhile, in the factory, workers took tests to gauge their abilities in complex tasks designing a ship. The ones who were slightly to moderately overqualified built more complex versions that reflected their superior competencies.

The key to both sets of workers’ superiority was their impulse to “job craft.” Every worker leaves a personal imprint: meeting the bare minimum of criteria, pushing to exceed expectations, innovating or imagining new or more useful ways of getting the job done. Expert “job crafters” turn this impulse into an art. Some redraw their task boundaries or change the number of tasks they take on. Others reconfigure their work materials or redefine their jobs altogether. Still others rearrange their work spaces and reimagine their work procedures in ways that can catapult their productivity upward.

For overqualified workers, Zhou’s team found, task crafting is a psychological coping mechanism — a welcome one. Workers want to show their superiors the true level of their skills. Doing so fortifies their self-esteem and intensifies their bonds with the company they work for. Far from being dissatisfied, these overqualified workers are more productive, keen to help their organizations and interested in finding ways to be proud of their work.

So how did the outlook on such workers go from shadowy to brilliant? Past research, it turns out, focused rigidly on the fit between worker experience and a task. It didn’t consider the nuanced human motivations that go into working, nor the full range of creativity or flexibility possible in getting a job done.

Thus, older studies cautioned that overqualified workers are likely to feel deprived and resentful. Zhou’s research shows the opposite: a statistical correlation between worker overqualification and high job performance.

Organizations do need to do their part for this alchemy to work. Above all, Zhou writes, it’s crucial to build a strong bond between worker and institution. This is because workers who identify strongly with their workplace feel more confident that their job-crafting efforts will be well received; those who don’t feel this strong bond often feel mistreated and give up the project of crafting their work.

Similarly, companies also need to grant workers flexibility to expand the scope or improve the process of their jobs. The outcome can be the evolution of the entire business in unexpected and often creative ways.

Not all super-qualified workers will be inspired to re-craft their tasks. When the gulf between skills and task is extreme, Zhou writes, workers are bored and job crafting loses its juice as an incentive. For more moderately overqualified employees, however, their expertise should rocket their CVs to the top of the stack. For seasoned workers, the evidence shows, a job is not just a job. It’s an adventure in finding ways to be excellent.

Lin, B., Law, K. S., & Zhou, J. (2017). “Why is underemployment related to creativity and OCB? A task-crafting explanation of the curvilinear moderated relations.” Academy of Management Journal, 60(1): 156-177. https://journals.aom.org/doi/10.5465/amj.2014.0470. 

Based on research by Michelle "Mikki" Hebl, Laura Barron, Cody Bren Cox and Abigail R. Corrington

• Laws banning discrimination against gay, lesbian and bisexual individuals work.
• The laws reduce discrimination not only by setting consequences for discrimination, but also by reaffirming shared social values.
• Anti-discrimination laws and policies lessen the stigma of homosexuality at work and beyond.

Opponents of laws banning discrimination based on sexual orientation often question whether these laws are effective.

The short answer: they are. Not only do targeted laws reduce employment discrimination against gay, lesbian and bisexual workers, they actually boost acceptance of gay, lesbian and bisexual job applicants.

That’s according to recent findings by Rice Business professor Michelle Hebl and colleagues Laura Barron of the U.S. Air Force, Cody Bren Cox of the Department of Psychology at Texas A&M-San Antonio and Abigail R. Corrington, a psychology professor at Rice.

In their study, the researchers note that politicians have often justified opposition to anti-discrimination laws by questioning whether they really accomplish what proponents say they will.

That argument allows lawmakers a face-saving out: Instead of claiming discrimination towards gays and lesbians does not exist, or that its existence is okay, they can simply question the logic of passing laws that may not do anything.

But these laws do work, Hebl and her colleagues found. In fact, their power is twofold: they work because they show that discrimination is illegal and, just as importantly, because they show that repercussion for it is certain and serious.

In addition, the researchers found, anti-discrimination laws carry symbolic value. They establish a societal norm, alerting the community that mistreating gay, lesbian and bisexual people isn’t accepted.

Regardless of whether the laws are vigorously enforced, the scholars write, their existence educates people about what their conduct should be.

In one study, human resource managers were asked to judge various applicants’ chances of getting a job. In states that lacked anti-discrimination statutes, the managers deemed applicants identified as likely gay or lesbian (because they listed scholarships from gay groups) less hirable than their straight counterparts. In states with anti-discrimination laws, by contrast, the managers showed no difference in how they viewed gay and straight applicants.

Of course, to find out whether these laws work, it is necessary to determine if discrimination against gay, lesbian and bisexual employees exists. Hebl and her team cite several studies that demonstrate the existence of such bias, both subtle and formal. One of those studies found that when job applicants in certain states listed membership in gay or lesbian organizations, they were less likely to be invited for interviews than those who didn’t.

Another study demonstrated that gay men in areas with no sexual orientation anti-discrimination laws generally earn less than their straight counterparts.

Other research shows that gay and lesbian employees who work in areas with legal protections are more likely to be open about their sexuality than those in areas with no legal protections. These workers are also more likely to report having gay coworkers and supervisors and to work for organizations with gay-friendly policies.

While the research by Hebl and her colleagues reveals that anti-discrimination laws work, it also reveals that they do so only when the public is well aware of them. Thus, the success of these laws may hinge on how effective public information campaigns and media coverage are. Success also hinges on whether these laws are enforced.

Both awareness and enforcement of these policies are a sound investment, the researchers note. That’s because gay, lesbian and bisexual employees who feel welcome in a workplace tend to perform better. In fact, Hebl and her team argue, businesses in states and cities without anti-discrimination laws should establish their own such policies. Doing so does more than discourage employees from discriminating against gay, lesbian and bisexual coworkers, it also counteracts the notion that homosexuality is abnormal, instead presenting it as just another sexual orientation.

An added benefit: because of its focus on effectiveness, the American workplace is a powerful driver of cultural norms. Companies that prioritize human capital — and punish discrimination — will have a greater range of job applicants, more motivated staff and more creative work environments. They also stand a good chance that the community they serve will follow their lead.

Michelle "Mikki" Hebl is a Martha and Henry Malcolm Lovett Chair of Psychology at Rice University and a Professor of Management at the Jones Graduate School of Business.

To learn more, please see: Hebl, M., Barron, L., Cox, C. B., & Corrington, A. R. (2016). The efficacy of sexual orientation anti-discrimination legislation. Equality, Diversity and Inclusion: An International Journal, 35(7/8), 449-466.

Rice MBA ranked among top 10 in US

The Master of Business Administration program at Rice University’s Jones Graduate School of Business is ranked No. 10 in Bloomberg Businessweek’s new analysis of the best full-time MBA programs in the nation. This marks the second year in a row that the school is ranked among the top 10.

“What students want from a business school are the classes, professors and networks that help lead to a career that they will find gratifying,” said Jones School Dean Peter Rodriguez. “This top ranking reflects our commitment to students, the excellent work of our faculty and staff and the support of our stakeholders here in Houston and across the country.”

The rankings include 85 schools. To create the ranking, Bloomberg Businessweek surveyed recruiters and the programs’ alumni and students. It also looked at graduates’ success in finding jobs with high starting salaries. Each university was given an overall score out of 100, taking into consideration an employer survey rank (counting for 35 percent of the overall score), alumni survey rank (counting for 30 percent), student survey rank (15 percent), salary rank (10 percent) and job-placement rank (10 percent).

The Rice MBA full-time program provides students with a comprehensive MBA learning experience that combines specialized coursework and real-world experience to improve and amplify their strategy, leadership and critical decision-making credentials. The program features innovative classes, expert faculty and a diverse group of candidates who often become colleagues for a lifetime.

Rice Business is consistently recognized by several rankings publications for its programs, including the Rice MBA, Rice MBA for Executives and Rice MBA for Professionals. The school is internationally known for the research and thought leadership of its faculty. For more information on Rice MBA programs, visit http://business.rice.edu

To view the complete Bloomberg Businessweek rankings and methodology information, visit www.bloomberg.com/graphics/2017-best-business-schools.

Based on research by G. Anthony Gorry (1941-2018) and Robert A. Westbrook

Information technology is reshaping relationships between companies and customers, bringing benefits to both. But unfettered use of this technology can erode customer care. For a company to care for clients effectively, both its managers and front line employees must listen empathetically to what they have to say. Unfortunately, a rash of "innovations" aimed primarily at reducing costs has made many companies opaque to their customers who are, as a consequence, inadequately served and increasingly frustrated.

A number of innovative companies have shown, however, that technology need not sour relations between businesses and those they serve. Indeed, it can enrich them if senior managers take the following steps. They need to affirm an empathetic involvement with customers; understand how current systems mediate interactions with customers; deploy technologies that help customers tell their stories; and, finally, enable workers and managers alike to hear and respond to these stories. When these steps enable employees to step “into the customers' shoes," their companies can genuinely claim, "We care for you."

A company’s claim to care for its customers ultimately rests on an empathetic connection with them. It is innate in each of us to respond to the joys and sorrows of others, to feel what they feel. Our empathetic responses are strongest in the presence of others where we can see how they act and hear what they say. Thus face-to-face interactions with customers are invariably more vivid and powerful than the abstractions of quantitative marketing and sales analyses.

Now, however, social networks coupled with our own highly developed imaginations, can place us in the situations of others who are not physically present.

Technology has played a central role in this ability, reshaping customer relationship management with intelligent call routing, interactive voice response, Internet protocol telephony, self-service web portals, and multi-channel integration. It has also given companies better knowledge of who their customers are and how they were acquired.

These deployments profoundly affect front line employees who deal directly with customers, answering questions, resolving problems, and generally supporting them. The attitudes and actions of these employees directly determine the nature of the company’s care for its customers. With appropriate technology and systems, businesses can make it easier for these workers to render not only sufficient but exemplary customer service as well.

One example: access to extensive real-time customer information enables service agents at USAA and American Express to respond almost instantly to customer inquiries and requests for assistance. Indeed, without properly functioning technology, it would be difficult for a large business to care even minimally for its customers.

In the best of circumstances, technology designed to support front line employees promotes not only the company's interest, but the interests of customers as well. It facilitates convenient access to information about products and services, expedited procurement, easier shipping and billing inquiries and faster reporting of emerging problems. FedEx customers, for instance, can dispatch and follow the course of shipments through the Internet. Amazon customers are able to buy a wide variety of products in an easily, quickly and enjoyably from their own homes or businesses.

The challenge is that in their quest for efficiency, companies too often deploy technology solely as a replacement for front-line personnel, and thereby diminish the role of empathy in customer care. Then uncaring robots or humans rigidly constrained in their responses are deaf to customer concerns and complaints.

Luckily, not all businesses have filled their front line ranks with robots. Many offer less rigidly structured portals where customers seeking a sympathetic hearing have the option of speaking with humans. Used properly, technology can enhance customer experience. Companies such as USAA and American Express have earned their reputations for outstanding customer service with integrated systems that make extensive knowledge about customers readily available to front line personnel. An agent who can pick up the thread of a previous conversation is better able to imagine the customer's situation, more likely to respond empathetically, and more likely to help.

But such companies seem exceptions. In too many others, economic reasons alone have driven increased reliance on technology in customer relations, causing even well intentioned companies to drift away from those for whom they profess to care so much.

Then, too, customer narratives, elicited by empathetic employees on the front line, can suggest ways a company can improve its performance. The story of IBM is a case in point. When Lou Gerstner took the company’s reins 1993, the company had lost its way. Many in the financial community doubted it could recover. But Gerstner sent each of his top 50 managers to meet with five large customers, not to sell any product but to listen closely to their suggestions and concerns. Gerstner opened every staff meeting with one question: “What are you learning from customers?” This dedication to a culture of listening and empathy is credited with turning the company around.

Good customer care, in other words, is not a luxury. Research shows that when customers feel a company cares, they value its products and services more highly. Greater customer satisfaction means deeper customer loyalty, which translates directly into higher repurchasing and more convincing recommendations to others. Just a 1% gain in customer satisfaction, the researchers point out, has been shown to boost net operating cash flows by an average of $1.01 per $1,000 in company assets. For the larger U.S. firms, that translates to an average gain of $55 million in future cash inflows.

The great companies also innovate with their customer service. Consider Apple’s groundbreaking “Genius Bar,” where customers meet with support personnel — the “geniuses” — to get face-to-face technical help. The booming demand for the geniuses’ time reflects customers’ desire to talk to Apple directly, to tell their stories to an empathetic listener, and to get their problems resolved in real time.

In recent years, the Genius Bar has been translated to cyberspace. Companies like IBM, Nortel, and Cisco are implementing elaborate virtual environments where customers can meet employees “face to face” and express themselves as they would in person. In the coming years, the Rice researchers expect countless new customers will join these virtual communities. The technologies that companies employ to serve the customer need to evolve too, because companies need to do more than only care about their customers. Above all else, they need to be able to treat customers as promised.

Tony Gorry was the Friedkin Professor Emeritus of Management at the Jones Graduate School of Business at Rice University.

Robert A. Westbrook is the William Alexander Kirkland Professor of Business in the Jesse H. Jones Graduate School of Business of Rice University.

To learn more, please read: Gorry, G. A. & Westbrook, R. A. (2011). Once more, with feeling: Empathy and technology in customer care. Business Horizons, 54(2), 125-134.

By James P. Weston and Erik Dane

Flooding in your home can be as psychologically traumatic as the death of a loved one or grave illness. Unfortunately, it’s also a demanding time when important financial decisions need to be made. Should you buy flood insurance? Should you stay and rebuild, renovate, or sell and move away? These are especially tough decisions because we are all prone to biased thought patterns, even without the added stress of a disaster. Fortunately, there are ways we can become aware of and overcome these patterns.

Rebuilding in a flood zone is risky, so it’s natural to consider whether and when Houston will flood again. Although we can’t predict when another catastrophe will happen, it’s important not to assume that because we flooded recently, flooding will happen again soon. Research shows that when people are planning for the future, they give too much weight to recent events. Sales of insurance policies soar after floods, but homeowners tend to cancel the policies after a year or two if their houses don’t flood again.

Considering these common reactions, try not to over-insure — but don’t be lulled into a false sense of safety, either. Houston has seen three “one-in-500-year” floods over the past three years. There’s a one-in-125-million chance of that happening, so the term “one-in-500-year” is clearly inaccurate. But if you’re not on the flood plain, and your house flooded for the first time in, say, 50 years, it might not be that far off.

We also tend to overestimate risks to our personal safety, but this danger is far more imagined than real. During a storm, if you don’t live where ocean surge is a risk, and you stay off the roads, it’s very unlikely that you’ll suffer critical injuries. Research shows that the more clearly we envision a life-threatening event, the more we believe it can occur. Hurricanes evoke threatening images, which may lead us to overestimate the personal risks that storms pose.

So how should we make level-headed decisions about what to do with a flooded house? Every house and homeowner is unique, but some general principles apply. It may help to consider all your options as a monthly expenditure, like a car payment. How much would you pay per month to avoid the risk of a flood? Are you anxious about flooding, or do you take it in stride? These factors can guide your decision.

One approach is to simply live in a house that floods frequently, but pay a large insurance premium and the costs of repair. The upside to this is lower mortgage payments and property taxes. The downside is the emotional toll of repeated flooding. For some, this might be too much to bear, but others seem to shrug it off. Many coastal residents repair staunchly after every hurricane, and are drywall magicians.

Raising the foundation can also be an option. Let’s say it would cost $100,000 to raise your foundation. If you borrowed $100,000 at 5 percent interest for 30 years, it would cost about $500 per month. This might be worth your while. Now, if you could move a mile away to a neighborhood that doesn’t flood for an extra $300 monthly mortgage payment, is it really worth it to keep your present house, with a raised foundation? You might think you would spend anything not to leave you neighborhood, or school, but comparing the monthly costs puts things in perspective. For example, could you tear down and rebuild on the same property with those same funds?

It might seem like these questions could be solved easily enough with a formula that could spit out a tidy answer. It’s not that simple — many of the factors in play are psychological and emotional. But to help you arrive at these decisions, the costs can be at least roughly monetized. You might not want to leave your neighborhood, but is it worth an extra $400 a month to stay? Thinking about decisions in this way can help us surmount biased patterns of thinking. One main takeaway from behavioral economics is that if we become aware of our cognitive biases, we can often mitigate their effects and make better decisions in times of uncertainty.

James Weston is the Harmon Whittington Professor of Finance at the Jones Graduate School of Business at Rice University

Erik Dane is a former professor and was the Jones School Distinguished Associate Professor of Management (organizational behavior) at the Jones Graduate School of Business at Rice University

By Utpal Dholakia

This article originally appeared in Psychology Today. 

In my last post, I wrote about the downsides of eating $19 avocado toast. The post stemmed from the rather critical comments made by the Australian real-estate millionaire millennial Tim Gurner about his fellow peers. The gist of his comments was that because millennials today eat $19 avocado toast, drink $4 coffees, and travel to Europe every year, they are not able to save enough money to put a down payment on a house. His conclusion was that millennials are spending money in an undisciplined way.

Gurner's quote generated a lot of debate in social and traditional media, both supporting and protesting such a view of undisciplined spending. Specifically, whether you agreed with Tim Gurner's views or not depended on whether you thought paying $19 for avocado toast constituted undisciplined spending behavior.

In this post, I want to define the concept of undisciplined spending carefully. This will make it easier for us to judge whether spending $19 for avocado toast or $4 for a coffee is undisciplined spending. Careful definition is warranted because concepts like undisciplined spending tend to be interpreted in different ways by different people.

The four properties of undisciplined spending

The Oxford English dictionary defines "undisciplined" as "uncontrolled in behavior and manner." For spending specifically, when we explore what this really means, it boils down to four properties of spending behavior.

1. Overspending relative to income.

Any discussion of financial concepts has to account for the fact that different people make and have different amounts of money. As a result, overspending, like many other financial behaviors, is not an absolute concept. It depends on how much money you make. If you make a lot, your threshold to reach overspending will be much higher. If you don't make much, you will reach the threshold very quickly. In essence, overspending occurs when the individual's spending is disproportionately high relative to his or her income.

Considering the $19 avocado toast purchase through this "relative spending" lens, it is a perfectly reasonable expense for someone who has a high income. But for the average millennial who makes $35,000 per year, it will count as overspending for just one meal (beverage not included). The price of the toast is too high to pay for what millennials make.

2. Spending without a proper plan or budget.

A second property that classifies spending as undisciplined is when the consumer doesn't keep track of how much money they have to spend, or how much they are spending at the moment. When a particular expenditure is budgeted for in advance, it can be high relative to the individual's income and still be part of a disciplined approach to personal finances.

For example, the typical American spends around 12.5% of their income on food. This means that someone earning $35,000 would be able to budget approximately $365 for food every month, or about $4 per meal (assuming three meals per day). Again, within this budget, $19 for just for one plate of food is high, and therefore seems like an undisciplined act. (The only exception is if the individual has been eating ramen at home for a few meals to save up for an avocado toast splurge).

3. Paying a price that is far outside a product's range of reasonable prices.

Consumers have a range of reasonable prices for what a product is supposed to cost. For example, my range of reasonable prices for lunch is $2 (for a food truck taco) to $15 (for a sit-down lunch in a nice restaurant). Similarly, my range of reasonable prices for a sandwich is $3 to $8. And so on. When a product is priced below this range, it will be judged as cheap. It will be deemed as expensive if it is above the range. But if a product is far above the range of reasonable prices, it is seen as exorbitant and spending on it is seen as extravagant.

This is the case with avocado toast that costs $19. Most of us can buy an avocado for one or two dollars (or even less; in Houston, you can buy two jumbo avocados for a dollar at the moment). In this context, spending $19 for bread and avocado that would cost a small, small fraction to make at home, or even purchase in a cheaper restaurant, simply appears unwise.

In some sense, this property of buying an exorbitantly priced product is the most prominent and visible property of undisciplined spending. Even high income levels are not immune. For example, when it was reported that high-income-earning mega-celebrities Kanye West and Kim Kardashian spend $500 to rent and watch new-release movies in their home theater, it generated widespread mockery.

4. Showing a repeated pattern of these three behaviors.

Each of the three behaviors, performed once in a blue moon by themselves, would still raise questions about whether the person's spending is really undisciplined. Like this coffee enthusiast who bought a $47 mug of coffee from Starbucks, I am sure we can all think of times when we spent money foolishly or made really bad spending decisions.

However, it is when the three behaviors, either individually or together, are performed repeatedly, and when they form a pattern or even a habit that we have a discipline issue. That is when the person's spending is truly undisciplined and it usually leads to adverse consequences for the individual.

There you have it: A road-map for what constitutes undisciplined spending. Undisciplined spending is a repeated, even habitual pattern of three negative spending behaviors: (1) overspending relative to one's income, (2) spending without prior planning or budgeting, and (3) paying far more for a product than is reasonable.

Utpal Dholakia is the George R. Brown Professor of Marketing at Jones Graduate School of Business at Rice University.

By Claudia Kolker

This article originally appeared in Houston Public Media.

Mary Ann Constantinou is a cool customer. Born in New Orleans, she prepped her never-flooded Houston house long before Hurricane Harvey swamped her neighborhood. When water seeped through the floorboards, she located a rescue boat and got her husband, teenaged son, elderly neighbor and basset hound to safety. Harvey may have deluged her with challenges, but she weathered them all.

So why, weeks later, can’t she recognize acquaintances or recall the day of the week?

All over Houston, people are complaining of an odd forgetfulness. Highways may be clear, deadlines met, and the city mostly back to business. But storm survivors and even residents all but untouched by the downpour now find themselves muddling dates, weeping at small frustrations or vexed by insomnia.

“It’s called Acute Stress Disorder, and it occurs two to four weeks after exposure to a trauma,” explains Rosalie Hyde, a social worker who works closely with trauma victims including Harvey survivors. Most people are familiar with Post Traumatic Stress Disorder, or PTSD, in which serious symptoms linger after eight weeks and often don’t go away. But in the immediate aftermath of stressful events such as Harvey and other global disasters this year, many others will feel some form of time distortion or emotional and physical unease.

“In the case of Harvey we were so connected with each other through the flooding and social media that the traumatic event was shared,” Hyde says.

Befuddlement over time is one of the most common complaints. “I call it flood brain damage,” Constantinou says. Like many post-Harvey Texans, she now wakes up laser-focused on mucking out and rebuilding her destroyed home. Yet at a recent PTA function, she kept reintroducing herself to people she already knew. At home, she insisted that a doctor’s appointment she scheduled for April was actually slated for this November.

Even Houstonians who didn’t personally suffer losses notice the distortions. “During Harvey, I went fully polychronic,” says Rice University engineering professor Matthew Wettergreen, who spent the storm immersed in relief work. In plain English, Wettergreen started seeing time as fluid, only meaningful as far as what needed to be done.

As an engineer, he is ordinarily fixated on dates, appointments, and measurements. But in the wake of the hurricane, when he ran software linking food providers to rescue groups, Wettergreen routinely called colleagues at midnight without apologizing. “I wasn’t sure what day it was. It didn’t matter,” he adds. “Things had to happen immediately.”

Losing track of time, experiencing the present as if it’s a dream: Both are ways the brain fends off overload under stress. “Dissociation happens because you can’t take it all in at once,” Hyde says. “In the first few weeks after a traumatic event, everyone feels a little removed, a little out of sorts. My own house didn’t flood, but I still felt confused at times.”

Punctuating that eerie remove, for many people, are jagged, intrusive memories. Some remember looking out the window and seeing a familiar street become a disaster site with boats, megaphones and sobbing neighbors. Others have sensory flashbacks, like the feel of oily, foul-smelling water as they swam or trudged to safety. And many feel a surge of panic during the regular rainfalls common in a wet city like Houston.

The flashbacks can be especially fierce for Houston’s sizeable population of refugees, combat veterans and survivors of earlier catastrophes. “Ninety-year-old Holocaust survivors are having flashbacks,” Hyde says. “Think about it. In Houston, you have so many people who were disaster survivors already. So many people already have had the experience of leaving their homes, and this brings that back.”

On occasion that can lead to full-fledged PTSD. But what more Houstonians will experience is the normal next phase of acute stress: irritability, melancholy, a general malaise. That’s what Matthew Turner, a soft-spoken English professor at Lone Star College, now is finding. He and his wife, Laura, thought the worst of Harvey was over when they escaped from their flooded house by canoe. Used to arduous adventures such as weeks hiking through Spain, they were startled to find themselves bickering over small things like paint chips.

“Laura wants to pick wall colors and I say, we don’t have walls,” Turner says. “Paint is the one thing in the future she has the power to make a decision about. And I keep worrying about controlling our money. I’m not happy with the way I’ve acted sometimes.” Thanks to a Chili’s gift card from a friend, the couple was able to sit down in a tranquil place and voice the emotions underlying their short tempers.

Resources like grief support, jobs – even monetary help such as gift cards – make a huge difference after an upheaval, says pyschotherapist Judy Nguyen. In her work as a domestic violence advocate, she often sees the damaging effect of losing power over one’s life. “When people lose control in one area, they will have the tendency to gain control over something or someone, to feel sane,” she says.

Houston’s mental health first responders have jumped into this breach with a kind of emotional triage. In the Fifth Ward, home to many low-income residents, life already could be overwhelming before the flooding, peer counselor Julia Walker says. So as soon as she saw that recovery groups were delivering water and food, she began one-on-one counseling amid the piles of debris crowding the streets.

Many storm survivors need professional, stage-by-stage mental health care, something already in short supply before Harvey. In its absence, ordinary Houstonians can help. If you know someone who was flooded, counselors say, listen to them. Friends and acquaintances can make a difference by inviting recent survivors to say as much as they want to about their experience.

“One of the most important things to know is that we are still hurting,” says Mary Ann Constantinou about Harvey’s survivors. “I know terrible things have happened in Florida and Puerto Rico. But it feels like we have been forgotten. Even a text helps: ‘Hey, I just want you to know I’m thinking of you.’ ”

At work, meanwhile, managers need to be aware that seemingly unscathed employees may be living in a new reality, and to calculate that into their expectations. According to former Rice Business professor Otilia Obodaru, even without a disaster most workers coexist with “alternative” identities -- the selves they might be if they’d made different choices

After a disaster, survivors live alongside those lost selves without having made any choice.

The transformation isn’t always for the worse. Before Harvey, Constantinou’s neighborhood was the placid place where she lived and attended church. Now it’s the place where she charged through neck-high water in a dark house to save a friend’s parrot. When the creature attacked her, piercing a vein, Constantinou swathed her arm in a towel, grabbed the angry bird and got them both to a rescue boat.

But a parrot bite will heal more quickly than other injuries from the disaster – some of which are still surfacing. At a recent visit to pick up contact lenses, Constantinou learned that her long-distance vision had worsened so much in just the few weeks since the flooding that she needed a new prescription. Hurricane Harvey, the eye doctor said, had played havoc with her ability to see far ahead.

Claudia Kolker is the editor of Rice Business Wisdom and author of "The Immigrant Advantage: What We Can Learn From Newcomers To America About Health, Happiness and Hope" Originally published in the LA Times.

Based on research by Vikas Mittal

• According to social psychologists, being biologically male or female is closely linked to what is called “feminine” and “masculine” identity: attitudes, beliefs and learned behaviors that traditionally have been identified as masculine or feminine.
• These “masculine” and “feminine” identities affect charitable giving.
• "When women prioritize morality, they’re more likely to give to strangers and international charities. Men with high moral identity, in contrast, typically give to friends and family or local charities.

The images flood your family’s living room. Parents and toddlers jammed in a motorboat. An elderly man clutching a sodden dog. And, far across the ocean, flimsy huts reduced to smears of wood on the ground. Who turns the TV off? Who dials the relief hotline in the neighboring state? And who pulls out a credit card to help people on the other side of the globe?

It depends a lot on gender: Not just the visible, biological one nature imposes, but a range of behaviors that, if not always interchangeable, are associated with it.

Scholars have devoted considerable attention to why people donate to particular charities — partly because the information is so helpful to charities crafting appeals. The stakes are high: Individual Americans donated $281.86 billion to charities in 2016, according to Giving USA 2017: The Annual Report on Philanthropy for the Year 2016.

According to Rice Business professor Vikas Mittal and coauthors Karen Page Winterich of Pennsylvania State University’s Smeal College of Business and William T. Ross Jr., formerly of Pennsylvania State University’s Department of Marketing, one of the primary forces in these decisions is gender identity. Beyond that, the researchers found, much depends on how much importance a person places on being moral, and whether the potential beneficiaries belong to an in-group or out-group.

To reach their conclusions, Mittal and his colleagues conducted three experiments analyzing gender and moral identities and their impact on donor decisions. The study expanded on several decades of research showing that in-group members are in general more likely to benefit from donor largesse.

First, the researchers established their terms. Moral identity, they wrote, is the importance people place on being a moral person. Gender identity, which closely corresponds to biological sex, describes a set of attitudes, beliefs and learned behaviors traditionally identified as masculine or feminine.

Traditionally, men or people with a masculine gender identity show agentic behavior — that is, a focus on the self, risk seeking and personal achievement. People with a feminine gender identity, by contrast, show more communal behavior, prioritizing relationships, group welfare, risk mitigation and collective achievement.

These characteristics influence charity decisions because they affect how inclusive people are in choosing the beneficiaries of their help. The more willing you are to consider the needs and feelings of strangers, the wider is your “circle of moral regard.” Women already tend toward communal behavior; those who in addition have high levels of moral identity will have an even broader circle of moral regard, and thus are more willing to give to charities targeted to strangers.

To trace the impact of these characteristics, Mittal and his colleagues asked two groups of undergraduates at a U.S. university to make choices about donating to relief efforts for Hurricane Katrina, which struck New Orleans in 2005, and the devastating Indian Ocean tsunami of 2004. For American undergraduates, Katrina signifies an in-group with victims closer to home, while the Indian Ocean tsunami refers to an out-group.

The surveys were rooted in the fact that Americans donated $4.25 billion to Katrina relief — nearly three times what they donated to tsunami victims. The researchers theorized that the disparity may have reflected donors’ views of fellow Americans in New Orleans as an in-group, and of tsunami victims on the other side of the world as an out-group.

The surveys first assessed respondents’ gender and moral identities, then asked them to decide what portion of a specified sum of money they should keep for themselves and what portion allocate to Katrina or tsunami charities.

In another experiment, an online survey of 233 U.S. adults, respondents chose between hypothetical donations to a fund benefiting victims of terror attacks in London — the in-group — and in Iraq — the out-group. Participants’ responses were assessed according to their biological gender, which the researchers determined is a close proxy for gender identity. This in itself was an important practical finding, since charities can direct appeals to men or women, but have no way to conduct controlled tests for gender or moral identity.

Statistical analysis of all three studies showed consistent results. Donations to the out-groups were linked significantly to strong moral identity and strong feminine gender identity. Among respondents with strong moral identity and strong masculine gender identity, donations to the in-group rose, but out-group donations were weak.

What should charities make of these findings? Appeals to men, the researchers suggested, might try to position their organization as an in-group. Appeals to female donors, on the other hand, might do better if they characterize the initiative as reaching a broader set of beneficiaries.

In an era when gender identity and traditional behavior are become more and more fluid, a few laws of nature and behavior are still useful shorthand in charitable giving. The person with a strong moral sense and a feminine identity — most likely, a woman — is the likeliest to donate the most to the greatest variety of people.

Vikas Mittal is the J. Hugh Liedtke Professor of Marketing and Management at the Jones Graduate School of Business at Rice University.

To learn more, please see: Winterich, K. P., Mittal, V., & Ross, W. T. Jr. (2009). Donation behavior toward in-groups and out-groups: The role of gender and moral identity. Journal of Consumer Research, 36(2), 199-214.

Also please see: Mittal, V. (2017). 5 ways nonprofits can engage donors. Marketing News, American Marketing Association.

Based on research by Hajo Adam (former Rice Business professor), William W. Maddux and Adam D. Galinsky

• Living in and adapting to foreign cultures seems to facilitate creativity.
• People who have lived abroad are better able to discover links between ideas and come up with creative solutions to problems.
• Recreating multicultural experiences helps lead to creative breakthroughs.

Can eating good pizza and drinking copious amounts of red wine make you smarter? Likely not. You’ll probably just gain weight and end up hungover. But stick around Rome long enough to not only do as the Romans do, but understand why they do it, and you might end up with a real intellectual advantage.

Those are the findings of a former Rice Business professor Hajo Adam and his co-authors, William W. Maddux and Adam Galinsky. In a series of experiments, the researchers showed that moving abroad and learning a new culture is creatively broadening.

Moving to another country can be a shock. For some people, navigating different belief systems in a strange environment can be downright overwhelming, driving them to cling even more tightly to their own norms. But for those who adapt, the reward may not just be having more fun. It may also include the development of more multifaceted, complex thinking.

Indeed, the researchers note, adapting to a foreign culture demands the same psychological processes as creative thinking. Each time we learn our way around a new culture, we likely see our treasured assumptions challenged, integrate new ideas, make novel connections and glean new insights.

In China, for example, good manners require leaving a bit of food on your plate at the end of the meal; this indicates that the host has been generous. In the U.S., however, the same behavior may be considered rude, signaling that you didn’t like the meal enough to finish it. This nuanced frame of reference — understanding the various meanings possible in one scenario — creates an understanding that there’s more than one way to solve a given problem.

But it isn’t enough to book a hotel near the Trevi fountain and expect creative insights to ensue. Past neurological research shows that, for new knowledge to permanently imprint on the brain, we need to pay close attention and undergo repeated exposure to the new stimuli. Adam and his colleagues went a step further: Once multicultural learning experiences occur, they suggest, recreating these experiences should reactivate the cognitive map that led to creative breakthroughs.

To test those ideas, the researchers set up experiments designed to show that mentally recreating multicultural learning experiences enhanced difference types of creativity. Among these were the ability to solve the same problem in multiple ways, noticing underlying associations, and solving problems in a way that ignores typical frames — i.e. thinking outside the box.

In one experiment, all the participants had lived abroad, but only one set was asked to recall and write about something they learned from their contact with a foreign culture. Another set was asked to recall and write about something learned in their own culture. Afterwards, all participants completed a supposedly separate task, completing word fragment pairs. The conceptual challenge was to see whether the subjects could discover more than one match for the same word fragment.

As the researchers had predicted, the subjects who were primed by recalling multicultural experiences came up with more correct matches for the word fragments.

Adam and his colleagues then led experiments looking at the role of what is called “functional learning” in the equation of creativity and foreign experience. Functional learning is the process of learning about the underlying meaning of an observed or learned behavior.

In both studies, the researchers found that only when functional learning was combined with a multicultural context did it lead to more creativity in problem-solving.

In other words, it isn’t enough to fly to Rome, hop on a Vespa and nibble some gnocchi. The real cognitive leaps happen when you stick around long enough to learn what, when and how Romans do all the other things they do in daily life — and what it all means to them.

Hajo Adam is a former assistant professor of management at Jones Graduate School of Business at Rice University.

To learn more, please see: Maddux, W. W., Adam, H,. & Galinsky, A. D. (2010). When in Rome… Learn Why the Romans Do What They Do: How Multicultural Learning Experiences Facilitate Creativity. Personality and Social Psychology Bulletin, 36(6) 731-741.