Data: Manager Evaluations, Budget Reforms, and Natural Disaster Insurance

THOUGHT

“Insurance companies have been very clear-eyed about climate change for a long time and the effect that has on their balance sheets.”

Real estate and finance professor Benjamin Keys on what the recent California wildfires mean for insurers and homeowners. Keys discussed how the natural disaster will affect an insurance industry already in turmoil and the need for smarter land-use policies on an episode of the Wharton Business Daily podcast.

DATA INTERPRETED

Companies with higher “returns to scale” can generate this much more output.

A paper from Wharton assistant finance professor Sergio Salgado and School of Arts & Sciences assistant economics professor Joachim Hubmer underlines how a stable, consistent approach to production, rather than temporary tactics, is what often drives scalability. Companies with high scalability (RTS) tended to spend more strategically on inputs (like raw materials), leading to stronger growth outcomes. Scalability isn’t just about pouring more money into the mix; it’s about how effectively companies use those investments to produce more output (products or services). The study offers insights for business leaders, investors, and policymakers and explores why giants such as Amazon stay on top.

THOUGHT

Why Workers Should Evaluate Their Managers

When associate professor of business economics and public policy Shing-Yi Wang asked production-line workers at a Chinese automaker to evaluate their managers, the results spoke for themselves: happier teams, better leadership, and a noticeable boost in productivity — without a single downside.

Wang conducted the study alongside University of Maryland professor Jing Cai over the course of eight months. For the first six months, the workers’ evaluations directly impacted managers’ monthly performance scores, which influenced their bonuses, annual pay raises, and chances for promotion. In the final two months, the feedback continued, but it no longer affected scores or financial rewards. Nonetheless, the impact lingered. Managers in teams receiving feedback changed their behavior, encouraging workers more and criticizing them less. Stronger relationships followed, improving team dynamics and morale. Workers in teams that evaluated their managers were 6.2 percentage points less likely to quit compared to those in the control group, according to the study. This translates into a 50 percent reduction in turnover.

The improvements weren’t short-lived, either. The paper, which was published in the Quarterly Journal of Economics, shows that even workers who joined the Chinese manufacturing company after the experiment ended — and never participated in the feedback system — reported that managers who had been evaluated by staff were more encouraging, empathetic, and supportive than those who weren’t.

“This lasting change points to a real shift in the norms in the workplace and provides proof that better management doesn’t need constant oversight or other costly interventions to take root,” Wang reports.

The Chinese carmaker that Wang and Cai studied scaled up the feedback system across all its plants, covering thousands of production teams and nearly 20,000 workers. The research has broader implications for companies in industries such as hospitality that struggle with high turnover, offering a practical and affordable method to improve workplace outcomes. Ultimately, it shows that allowing workers to provide regular, structured feedback creates a loop of accountability that encourages better management, improves team morale, and keeps workers on the job longer. The takeaway is simple: When workers have a voice, managers listen — and when managers listen, the workplace performs better. —Seb Murray

DATA INTERPRETED

Low-income Americans could accrue this much in savings through policy reforms proposed by the Penn Wharton Budget Model.

The 18-page report, which was produced under the direction of PWBM experts Alexander Arnon and Felix Reichling and faculty director Kent Smetters, shows how to reduce the national debt while boosting the economy. The policy bundle consists of 13 wide-ranging reforms, from introducing mandatory Health Savings Accounts to raising the Social Security retirement age. Most changes are proposed to start this year; they’re projected to grow GDP by 21 percent over the next 30 years.

THOUGHT

“I asked my MBAs, ‘Would you rather have search [engines] or indoor plumbing?’ Many of them still pick search.”

Wharton operations, information, and decisions assistant professor Daniel Rock on the challenge of fully capturing the impact of technology in economic statistics. Rock discussed how AI is shaping productivity and innovation on an episode of Knowledge at Wharton’s Ripple Effect podcast, produced in cooperation with the Mack Institute for Innovation Management.

DATA INTERPRETED

Firms that report using AI weekly across functions

The percentage almost doubles that of 2023, according to a 2024 survey by AI at Wharton co-director Stefano Puntoni, former AI at Wharton executive director Mary Purk, and Jeremy Korst, partner at marketing consultancy GBK Collective. Their report, “Growing Up: Navigating Gen AI’s Early Years,” surveyed more than 800 senior business leaders in large organizations on how they use the technology. Participants cited accuracy, bias, data privacy, team integration, and ethics as their top concerns.

Published as “Data” in the Spring/Summer 2025 issue of Wharton Magazine.