Technology Is Not the Answer

[1st article in a series of 6: {1} {2} {3} {4} {5} {6}. A version of this post first appeared in The Atlantic online, March 28, 2011.]

Technology is not the answer.

That’s the conclusion I came to after five years in India trying to find ways to apply electronic technologies to international development. I was the co-founder and assistant director of Microsoft Research India, a Bangalore computer-science lab, where one of our objectives was to research ways in which information and communication technologies could support the socio-economic development of poor communities, both rural and urban.

In one of our early projects, we worked with a rural sugarcane cooperative a few hours outside of Mumbai. They had a network of village personal computers that allowed the cooperative to report sales results to farmers. To reduce costs, we experimented with a mobile-phone-based system that replaced some of the PCs. Our system was faster, cheaper and better liked by farmers, but when it came time to expand the pilot, we were stymied by internal political dysfunction at the cooperative.

In several projects to design educational technology for schools, we found that teacher and administrator attitudes were the real keys to success. Then, when we connected low-income slum residents with potential employers, limited education and training posed critical barriers. And again, when we used gadgets for microfinance operations, a capable institutional ally was indispensable.

Our successes were due more to effective partners, and less to our technology.

In project after project, the lesson was the same: information technology amplified the intent and capacity of human and institutional stakeholders, but it didn’t substitute for their deficiencies. If we collaborated with a self-confident community or a competent non-profit, things went well. But, if we worked with a corrupt organization or an indifferent group, no amount of well-designed technology was helpful. Ironically, although we looked to technology to attain large-scale impact into places where circumstances were most dire, technology by itself was unable to improve situations where well-intentioned competence was absent. What mattered most was individual and institutional intent and capacity.

As I wrote and spoke about this lesson publicly, I received two kinds of feedback. Some people didn’t agree that technology only amplified. They would say, “The Internet makes new things possible — without it, how else could $10 million have been raised for Haiti just through text messages?” I still feel this can be explained as amplification, but even if not, I’d propose that between technology and human intent, intent matters more. The purposes to which the technology is put depend first on the right intent and capacity.

The second class of feedback went in the other direction: It nudged me to generalize beyond the developing world and beyond electronic technology. Let’s consider, for example, poverty and technology in the United States. The rate of poverty in America decreased until about 1970, but it has since held steady at an embarrassingly high 13-14% only to rise in the recent recession. Since 1970, we’ve also had a boom in digital technologies from the PC to the iPhone, from Google to Facebook. If these technologies are solving social ills as social-media cheerleaders would have us believe, then we’d hope at the very least that in the golden age of innovation in the world’s most technically advanced country, all this technology would have put some dent in poverty.

It hasn’t. And, the theory of technology-as-amplifier explains why: As a society, we haven’t been so intent on eradicating poverty, as much as perhaps, on ever cleverer ways to guide us to the nearest cup of coffee. The technology is incredible, but our intent is not there.

It’s not just electronic technologies that we place undue faith in. We also expect too much from other technologies, institutions, policies and systems, or “TIPS” to coin an acronym. Like the tips of icebergs, TIPS are the most visible part of cultural change and public policy, but they are dependent on the much more significant, if invisible, bulk of individual and societal intent and capacity. Current events are constant reminders of this.

For instance, Japan’s nuclear reactor challenges brought global energy concerns to the fore. The proximal cause of Fukushima’s troubles was a natural disaster beyond human control, but a deeper issue is that with ongoing growth in population and consumption, the world is nearing the ceiling on established sources of energy. Technology promises to raise the ceiling, but in doing so, it only increases our intent and capacity to consume more. On a finite planet, the very desire to consume still more is itself the problem. Until we tame that intent within ourselves, technology at best postpones crises. It doesn’t banish them.

The uprisings in the Middle East call attention to the institution of democracy. Analysts have noted that with the Egyptian revolution over, the country now begins the more challenging task of establishing a working democracy. Meanwhile, American hesitation to support rebellions in Tunisia through Libya underscores our own doubts about democracy. The lessons of Zimbabwe, Bosnia, and even Iraq weigh on us. The institution of democracy, per se, is far from a guarantee of national stability or of anyone’s well-being. Institutions, too, must be undergirded by the right intent and capacity among stakeholders.

Finally, there are the waves of news about increasing inequality in America. Capitalist policy and the free-market system excel at feeding consumer wants, investor wealth and entrepreneurial ambition. But, they do more for the well-connected and the well-educated, thus amplifying underlying social differences. As Robert Reich articulates in his book Supercapitalism, a laser focus on economic efficiency leads to a system that neglects other values we care about as citizens and communities, be it equal opportunity to a good upbringing, a thriving local economy of mom-and-pop shops, or separation of wealth and state. Adjustments to policy and system are needed, but the will to implement the right ones depends on our own balance of desires as consumer-citizens.

I’m not saying that TIPS aren’t important. Technologies can enrich lives; democracy can be preferable to dictatorship; and market capitalism can be an equitable economic engine, no doubt. But, we fetishize technocratic devices and forget that it’s our finger on the “on” switch and our hands at the controls. Something other than TIPS still demands attention — something I’ve so far called good “intent and capacity,” and what in future posts I’ll call virtue.

Economics as if Utility Really Mattered

[This post first appeared as “The Case for Happiness-Based Economics” in The Atlantic online, March 21, 2011.]

When typical measurements make your economy look like a failure, politicians tend to look for alternate report cards.

Last year, British Prime Minister David Cameron called for his government to start measuring psychological and environment well-being.* Two years ago, French President Nicholas Sarkozy commissioned prominent economists to come up with alternatives to GDP that better mirrored national well-being. A young king of Bhutan started it all in 1972, when he proposed that his country seek Gross National Happiness rather than Gross National Product.

Money doesn’t buy happiness — beyond a point. Economist Richard Easterlin reached that well-known conclusion as early as 1971. He found that among rich countries, people living in countries with the highest per-capita GDPs didn’t report greater happiness. He also didn’t find evidence that GDP growth among rich countries made people happier. Above some level of income required to meet basic needs, the absolute level of wealth didn’t seem to matter. Easterlin did find on the other hand, that within a single country, richer people were happier than poorer people. The apparent contradiction came to be known as the Easterlin Paradox.

For a while, the evidence supported it. Europe, the United States, and Japan all appeared to flatline in happiness even as their economies grew. Some poorer countries seemed just as happy as richer ones. The only disagreement seemed to be the critical threshold. Estimates ranged as low as $10,000 per year, and last September, economist Angus Deaton and psychologist Daniel Kahneman found $75,000 annual income as the point beyond which more money failed to “buy” more happiness. Whatever the case, it seemed that above a threshold, happiness stopped growing with increasing income.

The paradox was resolved through evidence from psychology, which found that, like so many things, happiness was all relative. Happiness relative not only to the wealth of our neighbors, but also to the level of our aspirations. And both tend to increase as we get richer. As a result, we end up on a “hedonic treadmill,” where more income is continually required to stay at the same level of happiness.

Then, in 2008, economists Betsey Stevenson and Justin Wolfers upended that view just as it was becoming accepted. They painstakingly converted incomes to purchase price parity, normalized different scales for happiness, and even re-interpreted survey questions in other languages. They then reexamined Easterlin’s claims and found that they didn’t hold up. Their conclusion: Absolute income matters. Life satisfaction continues to increase with greater income, after all.

Neoliberal economists cheered. Angus Deaton said wryly, “As an economist I tend to think money is good for you, and am pleased to find some evidence for that.” Stevenson and Wolfers wrote triumphantly that their findings “put to rest the earlier claim that economic development does not raise subjective well-being,” and all but broke out the green pom-poms to cheer for GDP.

Their research, however, also emphasizes something that most economists are less eager to discuss. Central to Stevenson and Wolfers’s analysis is the use of a logarithmic scale to relate happiness to income. What correlates with a fixed increment of happiness is not a dollar increase in absolute income (e.g., an additional $1000), but a percentage increment (e.g., an additional 100%). So, going from a $5000 annual income to $50,000 links with as much additional happiness as going from $50K to $500K, or from $500K to $5 million, or even from $5 million to $50 million.

To put it another way, as income rises, every additional dollar represents a smaller increment of happiness. At one level, this is perfectly obvious. The first increase of $45K — from $5K to $50K — would take a family from hunger and homelessness to being well-fed in an apartment, probably with a TV to boot. An additional $45K of income to $95K might allow for a few luxuries, but certainly nothing close to the difference between starvation and the middle class!

Economists know this at some level, but they largely neglect it in their models. Introductory textbooks highlight the field’s concern with “utility” — mainstream economics’ clinical term for happiness — and often include student exercises that equate utility with the logarithm of income. The idea rarely makes it out of textbooks, however, probably because it makes the math more complex. For one thing, your $1000 is no longer worth the same as my $1000. National accounts would be a nightmare if in tallying each purchase, it was necessary to know the income of the buyer.

Still, if policy makers were serious about utility, they could take the logarithm of personal wealth and sum over all citizens for an estimate of national welfare. Though this would overlook other components of well-being, it would immediately focus more attention on income inequality: Ten people each earning $100,000 would have much greater total happiness than nine people earning $10,000 and one person with $910,000, even though each group earns the same $1 million.

This suggests that a more even distribution of income would correlate with greater total happiness than an unequal distribution. That would mean seeing unemployment as an even worse scourge than it already is. That would mean increasing marginal tax rates on the richest and maybe even plowing the extra dollars to the poor. Most importantly, that would mean greater investments in education for the underprivileged.

Building a public policy on the foundation of happiness research would be controversial, to say the least. Critics, especially on the right, might accuse Washington of using wishy-washy assumptions about money and happiness to guide our tax and welfare policy. To be sure, causal relationships between income and happiness are still not established, and we care about values beyond income equality. But, focusing on the logarithm of income might make us pay a little more attention to that third pursuit Thomas Jefferson hailed in the Declaration of Independence.

*The UK’s GDP has grown steadily, year by year, decade by decade. But publicly reported happiness across the country is flat. Great Britain’s experience, by the way, is typical of rich, developed countries.

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