Business Supplement Issue-24

OPINION 7
DT
Sunday, August 6, 2017
The fault in how we measure things
THE lAST
WORD
• Tim Worstall
We are quite obviously going
through a massive technological
revolution at present – Bangladesh
imported 31 million mobile phones
last year, a product that didn’t
even exist at all well within my
own adult lifetime.
The smart-phone has made mobile
internet a possibility and that’s
almost certainly the fastest adopted
technology in the entire history
of the human species. All of which
is great of course, technological
advance makes us richer and we’re
just fine with getting richer.
However, the one great problem
is that we can’t quite see is this is
the normal economic numbers. If
technology is changing, in a manner
that adds more value, then we
should see productivity rising.
Yet we don’t, not as much as
we think we should be at least – so
there’s something wrong with the
story that the new technology is
adding value. One answer here
is that we’re just measuring stuff
wrong. Hal Varian, the chief economist
at Google, has pointed out
that GDP does deal well with free.
The same is true of most of our
normal economic statistics.
Take the case of WhatsApp.
There is no charge for it, it carries
no advertising, therefore the output
doesn’t appear in GDP at all.
There are some 200 people within
Facebook who work on it so the
costs do appear in GDP.
The net effect is, if we record
the costs of producing something
but not the value of what is
produced, a reduction in productivity.
Yet we’ve some 1 billion
people getting some to all of their
telecoms needs from the work of
200 people. That’s quite obviously
a massive rise in productivity
right there. Part of our problem is
therefore just the way we measure
things.
But there’s another problem too.
We generally do vastly underestimate
the difficulties of gaining
something useful out of a new
technology. It’s not the new thing
which adds value, it’s what people
do with it. That in turn is hugely
influenced by two things the
jargon calls path dependency and
incumbency.
What’s going to happen is hugely
reliant upon what has already
happened – that internet access in
Bangladesh is largely on mobile
phones is dependent upon the fact
that there never was a widespread
Implementing a new technology is difficult because the world
works in a certain way already. We’re therefore disrupting those
who work by the current rules and there will thus be some
resistance
landline phone network before.
The US and UK have much more
cable and wire internet access
because there was such a network
before mobile phones, before even
the internet. Incumbency just
means that whatever the current
arrangements are there are people
who benefit from them. Those
people therefore provide a certain
resistance to changes in the way
we do things.
On Thursday, this newspaper
had a super piece on YouTube
tutorials and the like (web tutorials
help Bangladeshi kids get their
maths right) which neatly illustrates
both problems for us.
Our basic method of teaching,
and this is even more so at university
level, is actually a medieval
technology. The one person up at
the front, the teacher, reading out
from a book, or explaining to the
students, whatever it is, started
because books were so expensive.
Before Gutenberg and movable
type in Europe, one single copy
of a book took some full year of
labour from two people. A book
was therefore worth the same as
two full years of human labour.
Even the most exalted professor
might therefore expect to acquire
a library of say a dozen volumes
in his life – and the students most
certainly weren’t going to have a
series of textbooks.
Thus that medieval technological
solution – the teacher reads
out, or explains, the subject to the
listening audience. Cheap printing
should rather have replaced that
but the university lecture lives on.
It’s difficult to get an institution
built around one technology to
change. YouTube videos is bringing
another such change. It’s possible
for the student to sit through
the same lecture as often as necessary
to get the point across. This
very much changes how education
should be structured.
For example, we simply do
not want to measure education
achieved by attendance. For attendance
in one room, or a school,
for a period of time is no longer the
evidence we want that something
has been learned.
Why would it be when there is
this other method of being able to
understand something?
That, of course, poses something
of a problem for the education
system we currently have. They
currently mix and match two tasks,
only one of which is actually teaching
things to people. The other is
providing a qualification, evidence,
that something has been learned.
Now of course, it’s possible to
take this too far for not everyone
is going to learn everything online.
But what we almost certainly
want to do is separate out those
two tasks. Divorce the proof that
something has been learned from
BIGSTOCK
the attendance for a period of time
at a certain institution.
It’s possible to think of ways to
do this, say just the one system of
public exams which anyone can
take whenever, with anyone who
wants to be able to contribute, in
whatever manner, to people being
able to pass them.
That is, with this new way of
teaching we want to be able to
separate out the proof of what has
been learned from the current system
of teaching things to people.
Note that this isn’t really a diatribe
on how to reform education.
It’s just an example.
Implementing a new technology
is difficult because the world
works in a certain way already.
We’re therefore disrupting those
who work by the current rules and
there will thus be some resistance.
Think of the push-back we’d
get if we announced that you don’t
have to attend, or pay for, a school
or university but you can still get
your degree just by passing the
exam? There will be at least some
professors who will object, no?
Technological advance is a
wonderful thing and it is indeed
what will make us all richer in
the future. But it’s also not easy
– that’s why it’s taken us 10,000
years and counting of civilisation
to get even this far. •
Tim Worstall is a Senior Fellow at the
Adam Smith Institute in London.