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The Money Programme ‘The Real Cost Of Divorce’ highlights one of the key characteristics of the divorce process in England – the fact that couples divorcing have no real idea up front who is going to get what when it comes to sharing out the assets. Recently, a number of judgments have favoured the divorcing wives of rich men, fuelling a new industry in wealth management for divorcées!

The reason for this uncertainty is that divorce settlements are decided on a case by case basis. The principle is now a 50:50 split between husband and wife, but 50:50 of what? Are we talking past earnings before the marriage took place, earnings during the marriage, future earnings, pension or even offshore assets hidden in a Swiss bank account? And pets can’t be split in half. This gives judges a lot of discretion.

The first act relating to divorce in England was in 1857 – before that, divorce required a private Act of Parliament, available only to the very few. The Divorce and Matrimonial Causes Act of 1857 gave men the right to divorce their wives on the grounds of adultery – but not vice versa. Women not only had to prove adultery, but also bigamy, cruelty, incest or desertion!

Without divorce, women weren’t free to leave their husbands. If they did, the husband could make them return to the marital home.

In Anthony Trollope’s novel, Phineas Finn, written 12 years after the Matrimonial Causes Act, Lady Laura Standish foolishly married an MP, Kennedy, who made her life a misery

When she tried to leave him, Kennedy went straight to his lawyer and ‘desired that steps might be taken for the restitution to him of his conjugal rights’. Poor Laura was forced into exile in Dresden, to stop Kennedy making her come home ‘if there be any law in the land, she shall be made to do so’.

Nowadays, women and men have a much easier time getting divorced. That’s not the issue. What’s at stake is the division of the spoils.

The English system, reliant on precedent, isn’t the only way to go about this. I would argue that the continental system of a marriage contract – equivalent to the ‘pre-nup’ so beloved of Hollywood celebrities – is much fairer.

When you get married in France, for example, you can choose whether to have a ‘pre-nup’ or not. If you do, it’s respected, not overturned by judges. If you don’t, there is a default marriage contract.

With this, whatever you bring to the marriage is yours, whatever you inherit is yours. It’s only the money earned during your marriage that is split evenly between the two of you.

If you think this is unfair you can agree a ‘pre-nup’ before you walk down the aisle, to make it more equitable. At least, under this system, you know the score beforehand. It isn’t the Russian roulette practised by the English divorce courts!

One thing is clear from the programme. Women are wising up to how much they can take out of a marriage on divorce. Perhaps that explains why, of the people who have just signed up for the Open University’s new course, You and Your Money, women outnumber men by a factor of 3 to 1!

Further reading

• The Real Cost Of Divorce – half of all marriages end in divorce, and companies are cashing in
• The price of parenthood – having children brings many changes
• Division of assets in a divorce – details on the French marriage contract system
• Horlick Launches 'Bramdiva' – details of the launch of Bramdiva, a wealth management business aimed at wealthy divorcées, by Nicola Horlick, herself a recent divorcée
• '"The widow, the clergyman and the reckless”: women investors in England 1830-1914' by Janette Rutterford and Josephine Maltby in Feminist Economics
• Phineas Finn by Anthony Trollope, published by Oxford University Press

About the author

Janette Rutterford is Professor of Financial Management at the OU Business School, having previously worked in corporate finance and investment. Jannette's research includes pension funds, equity valuation and investment history, in particular the history of women and wealth.

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Has Kim Winser identified a new direction for Aquascutum? Relying on its traditional lines and existing customers is unlikely to change the fortunes of this troubled retailer.

When a new leader joins a company in turmoil, everyone looks to them to establish a renewed sense of direction and purpose. Carlos Ghosn, Chief Executive of Renault-Nissan, is celebrated as a “rock star” of the car industry. He's credited with rapidly transforming Nissan's financial fortunes. The Japanese carmaker was losing six billion dollars in 1999, but has earned at least four billion dollars every year since 2003. Ghosn's vision of profitability at Nissan was supported by plans to:

• enter new markets
• bring out new models
• boost sales in the US

A favourite question for debate in this area is, of course, are great leaders born or made? Is leadership all about having charisma, or other exotic personality traits?

No, says John Kotter, an expert on leadership and change. Kotter draws a clear distinction between leadership and management, which he sees as two distinctive and complementary systems of action. So what's the difference?

Kotter argues that while managers cope with complexity, leaders cope with change. Leaders set out a vision for the future and the strategies that will move the company in the right direction.

Above all, successful leaders never underestimate the need to get people behind the vision - or the effort and energy required at this stage. A leader needs to communicate his or her vision widely to staff, and ensure that people are committed to it.

"Great leaders keep people motivated"

Great leaders keep people motivated, inspired, and moving in the right direction! This is no mean feat, particularly in a large organisation. In a recent interview, Idris Jala, currently attempting a business turnaround at the struggling Malaysia Airlines (MAS), wondered how “you go about influencing over 20,000 people”.

This brings us to the crucial role played by the managers who support visionary leaders like Ghosn, Jala or Winser, and help to implement the changes required throughout the organisation. A manager (in contrast to a leader) should be concerned with developing the organisation's capacity to action the plan that the leader's setting out. So the management task is all about activities such as organising and staffing, planning and budgeting, controlling and problem-solving.

So Winser needs to set out her vision, and surround herself with a strong management team to help her achieve it. But what obstacles might still be lying in wait for her?

Perhaps we should leave the final word to Idris Jala, still wrestling with a dire financial situation at Malaysian Airlines. One of his principles of business turnaround, he says, is “divine intervention”. In other words, a large number of the things that happen to us in life are beyond our control. So maybe Kim Winser should simply be praying for rain?

Further reading

• Transforming Aquascutum – will Kim Winser be able to transform Aquascutum into a profitable fashion brand?
• Women as leaders – discover how discrimination led to a leadership revolution
• Manager at Work: Remaking MAS
• “What Leaders Really Do” by John Kotter, in Harvard Business Review, May 1990
• What Leaders Really Do by John Kotter, published by Harvard Business School Press
• Turnaround: How Carlos Ghosn Rescued Nissan by David Magee, published by HarperCollins

About the author

Maureen Meadows is a Senior Lecturer in Management at the Open University Business School. Her research interests include the use of tools to support strategy development in organisations, including scenario planning and visioning.

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Millions of people throughout the world don't get enough to eat. Not surprisingly, their health suffers. We need food for growing, repairing ourselves, keeping all our body systems ticking over properly, and reproducing. We also need food for activity – even sitting thinking uses energy, and physical work, of course, uses a lot more. Without adequate food intake, all these things suffer.

But here in the developed world, very few of us go to bed hungry on a regular basis. We have plenty to eat, and generally live longer than our counterparts in the developing world. Of course, we do get ill, but the immediate cause isn't usually lack of food.

Why, then, is there currently such an obsession with trying to improve our health and performance with specific dietary components? If we are already healthy by all normal measures, why do we want to be healthier – how could we tell, and what benefits might it bring us? And, more importantly, what makes us believe that a particular supplement will do the trick for us?

The evidence that food supplements improve health is patchy to say the least. Yes, vitamin C is important for health – without it we would get scurvy, and there is some evidence that moderate doses allow us to recover from colds more quickly. But that's a long way from proving that massive doses can prevent colds, as is sometimes claimed.

And there is, relatively, a lot of research on vitamin C, including the 'gold standard' of clinical trials. In many cases the trials just haven't been done and even when they have, there's no justification for mentally extending the conclusions to areas the trials were never designed to cover. Take, for example, the 'bioactive' probiotic drinks and yoghurts available in a supermarket near you.

Laboratory studies and some animal tests have shown that these drinks may indeed improve colon function and digestive health, if the microbes they contain survive long enough to get to the colon, and if they remain there for long enough to have an effect. And we don't really know if this happens - many researchers believe that you would have to drink as much as 5 litres a day of the probiotic to see any effect!

There's no evidence that fish oil can help you pass exams

Also in the news recently has been the story from Durham of giving children studying for their GCSEs a daily dose of fish oil. Everybody knows that fish oil is good for you, so what's the problem? Well, there's some evidence that fish oil can boost your immune system, but none at all that it can help you to pass exams.

There's an opportunity here for a proper trial: give some students fish oil, and to a matched group give a placebo, and see which group scores the better. But this isn't being done, so we will never know whether the fish oil helped or hindered. And that's the point about many of the claims being made: in many cases, the most you can say is that they will probably do you no harm. Personally, I'll go for a balanced diet every time.

Further reading

The fish oil files – The Guardian's Ben Goldacre on the Durham trials
Probiotics research published by the Food Standards Agency
The Vitamin C Myth National Public Radio's Morning Edition audio report on the gap between the claims for Vitamin C and the evidence
Human Nutrition – a Health Perspective by Mary E. Barasi
Understanding Human Nutrition – Open University short course perfect if you are interested in your own and your family’s diet, or if you are involved in the nutrition and health of others

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Markets such as the airline industry, where there are a few large players, are known as oligopolies. In such markets, the limited number of players mean there’s an opportunity – and temptation – for firms to formally or informally agree to increase the prices of the services they provide, operating what is known as a cartel. Game theory can help us understand this behaviour, and the choices made.

The Prisoner’s Dilemma is a classic game devised in the late 1940s by John Nash (the subject of the movie A Beautiful Mind) to teach the conflict between group and individual rationality. Consider a crime drama where two partners are arrested. Both are being separately interrogated by a clever inspector who offers them this deal:

• If one implicates the other, he may get parole while the other will get 20 years in jail
• If neither implicates the other, both will get two years in jail
• If both implicate each other, both will get ten years in jail

Given the consequences of the different choices, and to minimise their individual punishment, both partners choose to implicate the other and end up getting ten years in jail.

Prisoner’s Dilemma is applicable to many walks of life. Consider sports. Imagine a contest with two players. Each player’s in a dilemma about whether to take a performance-enhancing drug. Rationally, each player may think like this:

• If I don’t take it and the other one takes it, this increases my chances of losing
• If I take it and the other one doesn’t take it, this increases my chances of winning
• If both of us take it, then at least I’m not disadvantaged

Thinking like this each player ends up taking the drug!

There's an incentive to any player in the game to blow the whistle

However, cartels aren’t a recent phenomenon. Adam Smith, the father of modern economics, warned of such possibilities over three hundred years ago in Wealth of Nations, when he wrote,

"people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices".

Fearing this, many countries have created regulators to curb anti-competitive behaviour. But would Smith have approved of regulatory interventions to prevent anti-competitive practices in a free market? The answer would appear to be no, as he went on to say,

"it is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice".

Now, let’s get back to the recent story about airlines. It is alleged that British Airways (BA) and Virgin conspired to increase the prices of passenger tickets, by making almost parallel increases in fuel surcharges over the last few years. Virgin reported this to the Office of Fair Trading (OFT), a government agency in charge of curbing anti-competitive practices.

Let’s look at this case from the perspective of game theory. The Enterprise Act 2000 provides that any party involved in cartels can become an informer to the OFT and cooperate with the investigating agency for possible ‘immunity from prosecution’. This provides an incentive to any player in the game to blow the whistle on another player.

Whether Virgin and BA cooperated and earned huge profits, or not, won’t be known until the full report of the ongoing enquiry is published. But, by becoming an informer before BA could do so, Virgin has increased its chances of going scot free by playing the game smartly. It appears it's one more smart move from Richard Branson and co!

Further reading

• Play the Prisoner's Dilemma with Open2 – an interactive version of the philosophical experiment
• Money Programme: The great plane robbery
• Calling companies to account – explore the tactics used to keep companies in line
• An Enquiry into the Nature and Causes of Wealth of Nations by Adam Smith
• Game Theory .net
• Setting the trap in the Economist
• Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life by Avinash Dixit and Barry Nalebuff
• The Cartel Offence from the OFT (PDF document)

About the author

Devendra Kodwani is Lecturer in Finance at the OU Business School. His research interests include the economic regulation of utilities and he has written several papers on privatisation and regulation.

Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world - and down your street.

The growth of chilled ready meals, together with concerns about their "healthiness", highlights the important role perception plays when we buy our food.

For example, some of the reasons chilled foods have overtaken frozen foods is that they’re seen as fresher, more sophisticated, and offer a wider variety of recipes.

If you look at the packaging of ready meals, it tends to be more glossy and up-market than that of frozen foods. We can often see the contents of a chilled ready meal, which isn’t possible with frozen food or with tinned food, so we've a better idea of the portion sizes inside. The overall impact is that we "think" we know what we're getting.

In addition, the open chiller displays within supermarkets tend to stock products such as milk and cheese, which have a shorter shelf life than the products you find in the frozen food cabinets. This reinforces the idea that their contents are fresher. So we might not be completely to blame for thinking like this.

This isn’t the first time the chiller cabinet has been used to take advantage of consumer perceptions. Sunny Delight was placed in chiller cabinets in order to suggest it was a fresh fruit juice. In reality this drink, which was high in sugar and low in juice, could have been stored on ordinary grocery shelves.

Although technology has given us microwaveable meals instead of the "boil in the bag" variety, it hasn’t improved the flavour. One solution to this, increasing the amount of salt, has started to become a problem simply because of the sheer quantity of convenience foods we eat.

"clearly most of us are not clued up enough to appreciate the amount of salt often used in ready meals"

With these ready meals we might think we can see what we’re getting, but clearly most of us are not clued up enough to appreciate the amount of salt often used in ready meals let alone some of the other potentially harmful ingredients.

Since the approach in Britain is only to legislate as a last resort, the government often uses "social marketing campaigns" in order to change our behaviour. The idea is that if we’re better informed, we’ll be able to make better choices. An important part of social marketing campaigns is changing our attitudes. For example, with drink driving and anti-smoking campaigns we’re encouraged to think of those activities as being anti-social.

The current campaign by the Food Standards Agency (FSA) is an example of social marketing. It highlights the high salt content of much convenience food and the dangers of excessive salt consumption. The hope is that with consumers being better informed, their perceptions of healthy food will better match reality, rather than being influenced by product packaging or the misplaced connotations of the chiller cabinet.

Further reading

• Money Programme: convenient cuisine – Britain is addicted to convenience foods, and retailers are making a killing
• Calling companies to account - explore the tactics used to keep companies in line
• Salt – FSA website dealing with salt
• Social marketing – Institute for Social Marketing

About the author

Haider Ali is a lecturer in marketing at the OU Business School. He has extensive experience of delivering courses to people in industry ranging from the most junior functions in organisations to senior executives.