Social Studies: The Michelin Star Curse; When States Favor; The Hangover of Feudalism

Be careful what you wish for

Getting Michelin stars is the crowning glory of many fine dining establishments. But it all comes at a price. The study examined what happened to New York City restaurants that received Michelin stars after 2005, when the city became the first outside Europe to be included in the renowned restaurant guide. The researcher examined 276 restaurants that opened between 2000 and 2014 and received a positive review from The New York Times. The study found that of the 92 Michelin-starred restaurants in the sample, 42 had closed by 2019. Of the 184 non-Michelin-starred restaurants in that group, only 35 had closed during the same period. It seems that getting Michelin stars makes life harder for many restaurant owners, increasing the demands and expectations of employees, owners, suppliers and customers.

Sands, D., “Double-Angle Stars: Michelin Stars, Reactivity, and Restaurant Closings in New York City”, Strategic Management Journal (forthcoming).

Subsidizing favoritism

Businesses that received targeted subsidies from a state government were later more likely to be punished by the federal government for misconduct in that state but not in other states in which they operated. This pattern was not explained by general changes in law enforcement or economic activity, nor was it explained by financial support for state politicians. However, it does seem to be explained by a reduction in the likelihood of a business being punished for misconduct by the state government, ostensibly because the state needed the business to thrive. This explanation is strengthened by the fact that this pattern is not seen when a state’s governor changes or when the state’s attorney general is not of the same party as the governor.

Raghunandan, A., “Government Subsidies and Corporate Misconduct”, Journal of Accounting Research (September 2024).

Old habits

In 1218, a major feudal dynasty in what is now Switzerland fell for want of an heir, and the Holy Roman Emperor allowed the associated fiefdoms to practice a form of democratic self-government. (Other dynasties, notably the Habsburgs, later tried to reverse this but were rebuffed.) Other areas in Switzerland largely remained under the feudal system until they were liberated by Napoleon almost 600 years later. One economist found that even today, people in areas that achieved self-government before Napoleon were more likely to cooperate with anonymous fellow Swiss citizens. These areas were also less tolerant of tax and benefit fraud, bribery, and lies, and had higher charitable donations, membership in associations, environmental behavior, support for the inclusion of women and minorities, and voter turnout.

Rustagi, D., “Historical Self-Government and Norms of Cooperation”, Econometrica (forthcoming).

Creative party

In a series of experiments, researchers found that people who were told to come up with creative ideas (e.g., for an empty storefront or candle scents) later felt more indulgent and made more indulgent hypothetical choices (they wanted a higher-calorie burger, a more alcoholic drink, or a less intense workout) and made more indulgent actual choices (e.g., food and sweets) than people who were told to come up with practical ideas or simply describe the previous day.

Krause, V. et al., “Creative Thinking Activates Disinhibited Reward Seeking and Indulgent Choices,” Journal of Personality and Social Psychology (forthcoming).