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Tuesday, July 5, 2016

Productivity mismeasurement: it goes both ways [feedly]

Productivity mismeasurement: it goes both ways

Many economists, myself included, argue that among our greatest concerns is theslowdown in productivity growth, as the growth of output per hour (that's how productivity is measured) is a key determinant of living standards (yes, the distribution of productivity growth is another key determinant; in our age of inequality, growth is necessary but not sufficient to raise middle class living standards and lower poverty; but it sure is necessary!).

Some critics of the slowdown hypothesis argue that we are undercounting output, and thus systematically undercounting output per hour. I and many others find this hypothesis wanting, but an article I read in the NYT this AM got me thinking about a corner of this debate that tends to be overlooked: virtually every mismeasurement argument focuses on how technology is making us better off that are not counted in the national accounts, but some technologies push hard in the other direction.

The article focuses on tech support, which is often not only unbearable and enraging for users trying to find out how to restore their files after their cat erased them, but can be deliberately set up to be so, in order to save costs and discourage their use. One could say the same thing about phone menus in general. They are typically one of the many ways technology is used to externalize labor functions that were formally internal, which is a cost shift onto those of us endlessly pushing buttons in hopes that maybe we'll find a person, and maybe that person will deign to help us.

If we were accurately measuring the output of tech service industry, such inconveniences would score as a negative.

There are other ways in which we fail to capture quality deterioration in our national accounts. Air travel is often raised as a poster child. Infrastructure deterioration is another. If you try to commute into DC, where parts of the Metro are shut down making our already terrible rush hour traffic even worse, you see an electronic sign over the highway that "helpfully" says, "Rethink your commute." Perhaps I lack imagination, but I've rethought it, and all I can come up with is driving or taking the Metro.

End of the day, technology probably provides us with more mismeasured good stuff than bad stuff. To be clear, and this is very important, to make the case that productivity growth is faster than we think, you have to show that mismeasurement has worsened, and there's little evidence to support that claim. In fact, there's some to the contrary–we're actually doing a little better in capturing tech's benefits, which sadly implies the slowdown in productivity growth might be even a little worse than we thought.

But anyone seriously considering this mismeasurement hypothesis must consider both sides of the equation. There's no point in denying the existence of the often hellish worlds of tech support and phone menus.

 -- via my feedly newsfeed