One Productivity Problem: We're Only Human

(Bloomberg View) -- We all know that productivity growth is a problem. That's partly because of the limitations of new technology. But it's more about the imperfections of people.

I suggest that we focus on how hard it is to build communities and how trying it can be to get people to see the world in the same way. That may sound entirely off point, but in many cases productivity improvements are difficult to accomplish because humans do not behave rationally.

For instance, the health-care sector would work much better if people had more discipline. Many diabetics don't follow the proper regimen of diet and medication to control their blood sugar. That's a health problem in its own right, but when users don't follow instructions it also lowers the return from developing new anti-diabetes drugs. It isn't just a failure of research or pharmaceutical companies -- humans are the main problem.

Or consider ways to get more out of education. People gather in a classroom for a lecture when an online connection might transmit the same information. The costly face-to-face contact is often needed because the teacher is trying to alter the student's emotional brain. That requires the student to regard the teacher's information as salient. And when it comes to salience, we take social cues from others. If the other students in the classroom are studious and attentive, this will rub off.

QuickTake Productivity

The limitation of the “more efficient” online transmission is this: The speaker and the audience may be connected, but the audience members usually are not, and so the relevance of the speaker's message is hard to gauge. Online listeners are not surrounded by dozens or hundreds of other people affirming the importance of what is being said, and so what is being said does not sink in. Therefore the problem of education is very often a problem of building effective communities, online or otherwise.

To better understand this point, consider popular music, which produces a kind of organized fandom. The last time I went to see a Paul McCartney concert, earlier this year in a large arena, I mostly watched him on a screen, even though the event was live. But it worked because I shared the experience with many other enthusiastic viewers. It is the crowd -- and its accumulated understanding of the importance of the event -- that accounted for much of the enjoyment (and thus productivity), not McCartney himself, as his voice wavered and cracked throughout the show.

To be sure, a significant percentage of humans can process material without so much social reinforcement. Many people follow their doctor's instructions without nagging, or enjoy the solo YouTube listen more than a public concert, or can read and digest the material of Bloomberg View without seeing cheering crowds egging on the writers. But this is a limited number of cognitive and personality types.

The logic of the usefulness of face-to-face contact also shapes the geographic distribution of economic activity. A lot of high-productivity companies are in common locales, such as Manhattan or Silicon Valley, which raises rents and limits migration to the detriment of both productivity growth and upward economic mobility.

Given all this, at least three answers to the productivity problem suggest themselves. First, we can make online communities more vivid. E-sports, a diverse set of online competitions, have hundreds of millions of viewers. Through the development of internet fandoms and communities, many people now find these activities more exciting to watch than the World Series. Even chess on the internet has proved popular, as commentary and chat rooms make it more exciting for the viewers. The community-building tactics used by e-sports could be applied elsewhere.

Second, we can make face-to-face communities more effective. I am struck by the occasional scorn shown to ex-President Barack Obama for his past as a community organizer. Yet building communities is a critical skill for boosting business productivity in a service economy.

Third, individuals should read and cultivate Stoic philosophy in themselves, whether explicitly or as they might pick up from a best-seller. More self-reliance and less dependence on social cues for doing the right thing will increase economic performance.

The enterprise of boosting the productivity of our robots and smart software is coming along just fine. We humans should take a look at ourselves for the next step.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “The Complacent Class: The Self-Defeating Quest for the American Dream.”

To contact the author of this story: Tyler Cowen at tcowen2@bloomberg.net.

To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net.

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