Crosscountry: Canada at a glance — September 2014

New research shows that children’s stories have a greater impact when their message is positive, that unemployment affects not only those who have lost their jobs but those who are still working, and more.


Tales we tell

For thousands of years, parents have told moral tales to their children, assuming that the lessons will fall on eager ears. But some lessons are absorbed more easily than others, according to tests carried out by Kang Lee, a psychology professor at the University of Toronto.

Kang tested three tales meant to encourage honesty — Pinocchio, The Boy Who Cried Wolf and George Washington and the Cherry Tree. The first two emphasize the negative consequences of lying — i.e., Pinocchio’s nose grows and a flock of sheep gets eaten. But the third story stresses the upside of telling the truth: George Washington is lauded for owning up to chopping down the cherry tree.

It was only the third story that had any effect on the children, prompting them to admit they had cheated on an earlier test. The moral? Keep your tales positive.


Job loss is a community affair

Rising unemployment affects not only those who have lost their jobs, but also those who are still working, finds a study by John Helliwell of the University of British Columbia and Haifang Huang of the University of Alberta.

Analyzing US surveys, the researchers found that an increase of one percentage point in local unemployment has the same effect on those still working as a 4% decline in household income.

As could be expected, the smaller the locality where unemployment is measured, the greater the effect on those living there. "Just as gossip spreads through local circles, economic circumstances creep into our daily lives and shape our sense of satisfaction through conversations with neighbours and colleagues," says a newsletter from the Canadian Institute for Advanced Research.


The Davids and the Goliaths

Small businesses are paying too much for credit card swipe fees, according to the Small Business Matters Coalition, which claims to represent more than 90,000 small and medium-sized businesses in Canada.

According to the coalition, the fees small businesses must pay to credit card companies every time they process a transaction are among the highest in the world, representing a total cost of about $5 billion. "Swipe fees are eroding the already slim margins these small business owners experience," it says.

The coalition’s goal is to see these fees reduced — a solution that chair Gary Sands says "will allow small businesses to manage their future, as opposed to having the credit card companies manage it for them."


Holding the fort

Canadian consumers have continued to carry the economy in 2014. To do so, they haven’t borrowed; instead, they have relied on their piggy banks, says a report by CIBC World Markets Inc..

Healthy equity markets and climbing home prices have encouraged consumers to reduce how much they tuck away, leaving more for spending. As a result, Canadians’ savings rate stands at 5%. That said, household debt, including mortgage debt, is still at 150% of disposable income. Beware when interest rates start to rise again, most likely around March 2015.