If it now takes researchers much more time to come up with ideas, how much of that is caused by their consumption of distractions?

Sir, Diane Coyle writes that current productivity data does not consider what’s achieved through outsourcing since GDP excludes all the intermediate links in the chain and the additional value is netted out. If included “economic output would look somewhat better than the current statistics suggest. “Conventional measures pose the wrong productivity question” August 16.

But when Coyle refers to “a recent paper a group of economists from Stanford University and the Massachusetts Institute of Technology…calculate that it now takes more than 20 times the number of researchers to generate the same economic growth as it did in the 1930s.” I would have to ask: Does that calculation take due consideration of the ever-growing time researchers spend, not working, but consuming distraction on the cell phones or laptops?

Some months ago, in Bank of England’s “bankunderground” blog, we read a post by Dan Nixon titled “Is the economy suffering from the crisis of attention?” It said, “With the rise of smartphones in particular, the amount of stimuli competing for our attention throughout the day has exploded... we are more distracted than ever as a result of the battle for our attention. One study, for example, finds that we are distracted nearly 50% of the time.”

If those distractioninterruptions were recorded for what they really are, we would probably see a dramatic increase in productivity, in real salaries, in voluntary unemployment and in GDP.

In other words our current economic compasses might not be working properly, risking taking us in the wrong direction.

@PerKurowski

If we want real productivity data, we need consider real working conditions

Sir, I refer to my former colleague at the World Bank Kurt Bayer’s letter of August 16, “Real productivity is an efficiency measure”. I fully agree with what he argues, though, unfortunately, lately, life has become more complicated, even for statisticians. 

Some months ago, in Bank of England’s “bankunderground” blog, we read a post by Dan Nixon titled “Is the economy suffering from the crisis of attention?”. It said, “With the rise of smartphones in particular, the amount of stimuli competing for our attention throughout the day has exploded... we are more distracted than ever as a result of the battle for our attention. One study, for example, finds that we are distracted nearly 50% of the time.”

And so these interruptions should have to be recorded for what they are, meaning a consumption of distractions during working hours. If so, we would perhaps see a dramatic increase in productivity, in real salaries, in voluntary unemployment and in GDP.

In other words our current economic compasses might not be working properly, risking taking us in the wrong direction.

@PerKurowski

Going up the mountain is going north, going down is going south, and west or east doesn’t matter, anyway around it.

Sir, Gillian Tett writes of “some fascinating studies by neurologists, for example, which suggest that when people rely on GPS to navigate, they stop interacting with their environment in a cognitive sense, and their brains appear to change.” “We’d be lost without GPS”

Yes, young people nowadays have no idea about a compass or what north and south is. If you by chance have a person under 15 in your car when you go up or down a hill, do the following experiment: Tell them “See we are now going north (or south)” and you will be amazed about how easy they swallow that.

But, being on this theme, we should also ask neurologists to study the brain of bankers to see how it has changed when, following the instructions of the Basel Committee, they transitioned from the “know your client” to the “read his credit rating” 

The GPS and the AAAs 

PS. Many cellphones have a compass app. Teach your kids how to use it, and keep a real compass at home  J 

@PerKurowski ©

Nobel prizes should be recalled if wrongly exploited & tenure of most professors of finance revoked for incompetence.

Sir, I refer to Tim Harford “Down with mathiness!” June 6.

ONE: Harford writes: Paul Romer holds “I point to specific papers that deserve careful scrutiny because I think they provide objective, verifiable evidence that the authors are not committed to the norms of science.” and suggests: “that Nobel prize winners should be ejected from academic discussion because of their intellectual bad faith.”

If Romer is right about the first he is obviously right about the second. But I would like to take it even further than that. The Nobel prize is often exploited to the tilt by some of its winners to further opinions that bear no relation to the specific achievement for which they won it. That could also qualify as intellectual bad faith. They got the prize, they got the money, but they did not get the right to sell other nonsense as of Nobel prize quality to innocent bystanders. If the winners do not make clear when they simply opine like any other professional, their Nobel prize should be recalled, for the good of society.

TWO: By allowing banks to hold different percentages of capital against different assets depending on their ex ante perceived credit risk, and therefore allowing banks to be able to obtain higher risk adjusted returns on equity with some assets than with others; the regulators completely distorted the allocation of bank credit to the real economy. And that clearly is not a minor thing… that can bring down an economy and a society.

And the explanation the regulators give for what they did can be found in a mumbo-jumbo document where some monstrous mistakes can be identified, even though these hide behind what would be too much mathiness for any layman. As far as I know, tenured financial professors have not questioned it… and that alone should be reason enough to revoke their status.

Think of it this way. Suppose those who fabricate compasses did not like that ships where navigating western waters and decided to introduce some weights which tilted the directions more in favor of ships going to eastern waters. What would happen if teachers in seamanship did not even refer to this distortive compass manipulation when educating the captains to be licensed? Should those teachers not have their own license revoked?

@PerKurowski