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Cowen: Harvard can learn a lot from Olive Garden

The evidence continues to accumulate that America’s nonprofit sector is failing the country in some basic ways. Specifically, it is not doing enough to break down unjust inequalities and barriers to opportunity.
Consider nonprofit hospitals. According to the data, nonprofit hospitals barely behave differently than for-profit hospitals. They do not charge systematically lower prices or somehow do more to help people. Some studies show slight differences, but it’s hard to argue that non-profit hospitals are more charitable or have more altruistic priorities.

Another example: prestigious universities. At Harvard, for example, more than two-thirds of the undergraduates come from the top 20% of the income distribution, while only 4.5% come from the bottom 20%. Given that Harvard has an endowment of roughly $50 billion and enjoys tax-free status, it might be expected to distribute its benefits more evenly — if only to avoid the bad publicity. (Disclosure: I work at a nonprofit university and have a degree from Harvard.)

At this point, I’m no longer surprised when I read a study detailing how inegalitarian some nonprofit institutions are. So I was pleasantly surprised to read an investigation, released last week, that took a novel approach: It used geolocation data to examine which places are the best — and which the worst — at bringing rich and poor Americans together.

Unfortunately, museums scored especially poorly, and of course most of them are nonprofits. Nor do churches fare well, even though their rhetoric tends to be very friendly to the poor. And there are many places in the for-profit private sector that do badly. Drugstores, for instance, tend to be very local, and their customers reflect the income segregation of their neighborhoods.

And which are the best at attracting customers from all income levels? Chain restaurants. Not necessarily fast-food places, but so-called casual restaurants. As it turns out, the rich and poor in America only truly come together at places like Olive Garden and Applebee’s.

Where I live, in northern Virginia, I have noticed that high-quality but cheap Chinese restaurants have an especially mixed clientele. The combination of lower prices and regional cuisine, which can be a signal of refined taste, seems to appeal to a wide demographic.

These kinds of restaurants manage to mix the rich and poor by creating an environment in which a lot of the traditional status markers are absent. None of these places could be described as fancy, and the mixing occurs partly because many higher-income customers are willing to do without the trappings of their local country club (to their benefit, I might add).

These findings raise a question: If the goal is to become more egalitarian, is there anything America’s nonprofit institutions can learn from its casual restaurants?

One lesson is that it’s harder to convince poorer individuals to mingle with wealthier individuals in settings where the culture is shaped to align with a higher socioeconomic status. Churches, for instance, are usually free and open to all — but the poor do not seem so keen on attending religious services in wealthier neighborhoods. Maybe that’s because they don’t view the wealthier church as a “better service” (however that might be defined) but rather as an environment where they do not feel entirely comfortable or welcome.
In other words: Wealthier institutions or establishments attract a mixed customer or user base only when they give up cultural control. Taller stained-glass windows and more comfortable pews can do only so much to attract lower-income churchgoers. (An aside: One nice feature of marketing “culture” — for lack of a better word — on the internet is that it can be broadly appealing. Classical music on YouTube, for example, is not only free but also free of snob appeal.)

The business model of America’s nonprofit sector depends on producing status and reputation, both for itself and its affiliates. Many nonprofits work at creating environments of a very particular sort, both to raise money and to boost their influence. To elites, those environments are innocuous, even inspiring. But those same elites are starting to realize that what is inviting to one person is off-putting to another.

To be fair, the question of how to be more egalitarian plagues more than just the nonprofit sector. The rise of populist politics around the world, for example, can in many ways be explained by the failure of elites and experts to tailor their appeal to ordinary voters.

I will not pretend that Olive Garden is my favorite restaurant. I will say, however, that this latest research gives me a newfound appreciation for it.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. He is coauthor of “Talent: How to Identify Energizers, Creatives, and Winners Around the World.”/Tribune News Service

 

FILE - This Aug. 30, 2012 file photo shows pedestrians walking through a gate on the campus of Harvard University in Cambridge, Mass. (AP Photo/Elise Amendola, File)
The Harvard University campus in Cambridge. (AP Photo/Elise Amendola, File)

 

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