Posted 9 a.m. Wednesday, Nov. 27, 2024
December graduate and economics major delves into public views on fair pricing
As UW-La Crosse graduating senior McKenzie Sullivan finishes her final days on campus this December, one question is top of mind: What is fair?
Sullivan, an economics student, has spent the past semester surveying 5,000 UWL undergraduates to explore attitudes toward price changes, inflation, and price gouging. Her research asks questions like whether it’s fair for a landlord to raise rent just because others have done so, or if ride-sharing companies should be allowed to charge exorbitant prices during times of high demand.
What’s become clear from Sullivan’s research is that perceptions of fairness vary significantly depending on a student's major, gender, and level of economics education. Students from the College of Business Administration (CBA) and male students tended to view scenarios that the overall student body deems unfair as more acceptable. Sullivan, who conducted the research with fellow student Brett Lubetski, plans to present the findings to Economics Department faculty, staff and students as part of the "Celebration of Student Inquiry in Critical Thinking and Communication" on Dec. 11, just days before her graduation.
“McKenzie was selected because she is one of our most outstanding graduating seniors,” says Economics Professor Lisa Giddings. “She is an excellent student with great communication and analytical skills.”
Sullivan, a native of Port Washington, WI, will graduate with a degree in economics and a minor in legal studies during UWL's Dec. 15 Commencement. She chose UWL after visiting her older brother, a former student, and falling in love with the campus’s picturesque bluffs and rivers. She says the small campus size was a major draw and has been crucial to her success here.
“The fact that UWL is a smaller campus is something I was attracted to. I didn’t fully appreciate it until later in my academic career,” Sullivan reflects. “I’ve worked with incredible mentors, and it’s been really cool to walk into a classroom and have professors know me by name.”
This close-knit academic community, coupled with meaningful mentorship, led Sullivan to the research project that is the cornerstone of her final year on campus. The idea was conceived by her faculty mentor, James Szymalak, an assistant professor in Political Science and Public Administration. He saw an opportunity to connect Sullivan’s interests in both economics and legal studies by exploring how firms determine when and how to raise prices, and the legal and behavioral considerations involved.
Sullivan's work builds on a study by Nobel Laureate Daniel Kahneman, examining the point at which price increases become unacceptable to the public. From an economic perspective, firms prioritize maximizing profit, but behavioral economics shows that they often limit price hikes to avoid backlash. By surveying UWL undergraduates, Sullivan sought to identify when and why the public perceives price increases as unfair.
“We’re trying to understand what fairness means in the economy and how that relates to law and legislation — especially during inflationary periods,” says Sullivan. “At what point does the government step in and say, enough is enough? It’s interesting because while laws designed to ensure fairness are often popular, they contradict some of the core principles we learn in introductory economics.”
Sullivan’s research shows significant differences in how College of Business Administration students and men perceive price fairness compared to the student body overall. Men and business students tended to view scenarios seen as unfair by the general student body as acceptable. Sullivan was surprised by the finding among male students, but expected to see differences among CBA students as these students likely have a deeper understanding of core economic principles.
"I found it interesting that men and CBA students responded differently. As a student of economics, I have a different understanding of these issues compared to someone who doesn't study business. Economics, finance, consumer behavior, and marketing all play into these views,” she says.
Price gouging is another key component of Sullivan’s research. In the wake of economic crises, federal laws like placing a national ban on price gouging are designed to prevent businesses from exploiting consumers. While such laws are popular with the general public, economists typically oppose them, arguing that they can exacerbate shortages, encourage hoarding, and disrupt market dynamics in times of crisis.
“The fact that economists often oppose price gouging laws, while the public strongly supports them, makes this topic so fascinating,” Sullivan says.
As she prepares for her December 11 seminar, Sullivan reflects on the broader impact her experiences at UWL have had on her career. Last summer, she studied abroad at the Copenhagen Business School in Denmark, an experience she describes as transformative.
“Copenhagen was an inspiring city. I made so many connections with people from all over the world, and it really expanded my global perspective,” Sullivan says. “It taught me a lot about myself, and I encourage all students to take advantage of study abroad opportunities.”
After graduation, Sullivan plans to take a gap year, continuing to work part-time in competitive intelligence research at a Milwaukee law firm. She then plans to apply to law school in 2025.
Looking back on her time at UWL, Sullivan credits the close relationships she’s developed with professors as one of the highlights of her experience.
"The UWL experiences I've valued the most are the connections I've made with professors," she says. "There are so many faculty out there who will go above and beyond to help you. They truly want to see you succeed."