3 ms·

The Uber example is a great one. From 2009 to 2015, Uber didn't do much to increase the amount of value a driver could create per dollar spent. It did somewhat:

by natrius 11y ago

The Uber example is a great one. From 2009 to 2015, Uber didn't do much to increase the amount of value a driver could create per dollar spent. It did somewhat: Uber drivers can charge less than taxi drivers due to higher utilization and regulatory avoidance. But at the end of the day, drivers were still putting in the same amount of work to move a passenger. UberPool and UberHop are actually productivity increases. A single driver can provide 2-4 trips worth of value with about 1 trip's worth of work. However, that's just going to drive the cost of trips down. If Uber and its drivers end up not increasing their revenue per driver trip, the productivity statistics would look the same even though drivers are moving four times as many people! My layman's interpretation could be wrong, but it really just looks like we're using productivity wrong. It's useful to compare companies and countries at a particular point in time, but if you use it to compare the 2000 world to the 2016 world, it's probably not going to tell you useful things.

SilasX 11y ago
>The Uber example is a great one. From 2009 to 2015, Uber didn't do much to increase the amount of value a driver could create per dollar spent. It did somewhat: Uber drivers can charge less than taxi drivers due to higher utilization and regulatory avoidance. But at the end of the day, drivers were still putting in the same amount of work to move a passenger Seriously? UberBlack didn't increase the usage factor[1] of existing black cars? UberX drivers didn't have higher usage factors than regular cabs? Because I'm pretty sure the initial selling point of Uber to limo drivers was "hey, fill in gaps between your scheduled rides", which pretty much only works if it increases the usage factor. And a higher usage factor means higher productivity. [1] ratio of "time spent driving a passenger" to "total time working (including idle)", my own term, don't know if there's a standard one
- natrius 11y ago
  I don't think idle driver time shows up much in productivity statistics. The productivity per car increases, but I don't think we collect enough data to be able to amortize those existing limos over the time that UberBlack has existed. We'd only see fewer limos purchased over the years or lower prices of limo rides. Probably the latter, because the labor is most of the cost of a ride. Productivity goes up when customers pay the same price for the same value that can now be produced with less labor, but technology has been driving prices down. Technologies used to take much longer to spread. Cotton gin early adopters made way more money than people who did it the old fashioned way, and it took a while for everyone to get on board and drive the cotton prices down with competition. These days, technology gets adopted so fast that adoption is the cost of survival: prices will drop instantly and you won't be able to keep up. My hypothesis is that the speed of adoption these days hides productivity increases. Productivity growth only measures profit from temporary advantages over competitors, and those advantages have become so temporary that people don't take profit from them. Another hypothesis is that business strategies have just changed. Instead of using technology to increase profit, we now use it to lower prices and increase market share. Our productivity statistics aren't measuring how much abstract value labor can provide. It's measuring our business practices.
  - SilasX 11y ago
    But this has (or properly should have) shown up in productivity stats, and people raved about it from day one: UberBlack (then just "UberCab") made it fantastically cheaper -- in both dollars and effort -- to hire a black car on short notice. That cost savings is a productivity gain, achieved from better employment of a resource (the car and driver time) that had to be purchased anyway; an appropriate metric ("cost to hire black car on X minutes notice and Y minutes of invested labor by requester") would have captured it. Ditto for UberX: it made greater use of a resource whose fixed costs had already been paid for other reasons, and allowed labor to be "kicked into gear" for very short shifts that labor-employers otherwise aren't able to make use of. That's also a productivity increase, and should rightly appear as such.
    - natrius 11y ago
      We agree! Our productivity statistics don't seem to be measuring what we think of as productivity. We're getting better at producing things, but since it's not making us more profitable, we can't see it in numbers.
YokoZar 11y ago
>UberPool and UberHop are actually productivity increases. A single driver can provide 2-4 trips worth of value with about 1 trip's worth of work. However, that's just going to drive the cost of trips down. If Uber and its drivers end up not increasing their revenue per driver trip, the productivity statistics would look the same even though drivers are moving four times as many people! In this scenario, you need only 1/4 the drivers, and some fraction of those 3 newly unemployed people will eventually do other work. That is the productivity growth.
- natrius 11y ago
  Productivity is roughly customer payments divided by the costs of doing business. If prices drop, Uber and drivers can collect the same amount of payments with the same costs of doing business. Fewer drivers could be used, but that won't increase our productivity statistics. In the plain English sense, productivity went way up! We're just measuring something else.
- qq66 11y ago
  You wouldn't necessarily need only 1/4 the drivers. The reduction in prices would increase demand for transportation by some amount. If that amount is less than 4x, you would see an industry employment decrease, but if it was more than 4x, you would see it increase, just like how auto industry employment increased as cars were able to be made for cheaper and cheaper prices.
- deleted 11y ago
  [deleted]
goalieca 11y ago
Here's an example from my trip to Paris. We speak to the concierge at the hotel explaining we need a lift to the airport at 8am the next morning. They call us a taxi service which is actually more like a long van. The van stopped at various hotels along the way. Old technology..
williamcotton 11y ago
You're so wrong it hurts. Please go find any economist on the planet and they'll be happy to explain why your layman's interpretation is wrong. In the meantime, please read my other comments in this post, as I don't need to keep making the same arguments, but also read the comments on Tyler Cowen's blog: http://marginalrevolution.com/marginalrevolution/2016/03/the-new-brookings-paper-on-the-productivity-slowdown.html http://marginalrevolution.com/marginalrevolution/2016/03/the... http://marginalrevolution.com/marginalrevolution/2016/03/productivity-slowdown-or-measurement-problem.html http://marginalrevolution.com/marginalrevolution/2016/03/pro... http://marginalrevolution.com/marginalrevolution/2016/03/how-much-are-free-apps-worth.html http://marginalrevolution.com/marginalrevolution/2016/03/how... Marc Andreessen is not an economist and he's also an investor in the companies that he is saying are providing mysterious new productivity that "old economics" can't measure. Come on, you've got to be able to recognize these kinds of conflicts of interests...

by natrius 11y ago

SilasX 11y ago

>The Uber example is a great one. From 2009 to 2015, Uber didn't do much to increase the amount of value a driver could create per dollar spent. It did somewhat: Uber drivers can charge less than taxi drivers due to higher utilization and regulatory avoidance. But at the end of the day, drivers were still putting in the same amount of work to move a passenger Seriously? UberBlack didn't increase the usage factor[1] of existing black cars? UberX drivers didn't have higher usage factors than regular cabs? Because I'm pretty sure the initial selling point of Uber to limo drivers was "hey, fill in gaps between your scheduled rides", which pretty much only works if it increases the usage factor. And a higher usage factor means higher productivity. [1] ratio of "time spent driving a passenger" to "total time working (including idle)", my own term, don't know if there's a standard one

natrius 11y ago
I don't think idle driver time shows up much in productivity statistics. The productivity per car increases, but I don't think we collect enough data to be able to amortize those existing limos over the time that UberBlack has existed. We'd only see fewer limos purchased over the years or lower prices of limo rides. Probably the latter, because the labor is most of the cost of a ride. Productivity goes up when customers pay the same price for the same value that can now be produced with less labor, but technology has been driving prices down. Technologies used to take much longer to spread. Cotton gin early adopters made way more money than people who did it the old fashioned way, and it took a while for everyone to get on board and drive the cotton prices down with competition. These days, technology gets adopted so fast that adoption is the cost of survival: prices will drop instantly and you won't be able to keep up. My hypothesis is that the speed of adoption these days hides productivity increases. Productivity growth only measures profit from temporary advantages over competitors, and those advantages have become so temporary that people don't take profit from them. Another hypothesis is that business strategies have just changed. Instead of using technology to increase profit, we now use it to lower prices and increase market share. Our productivity statistics aren't measuring how much abstract value labor can provide. It's measuring our business practices.
- SilasX 11y ago
  But this has (or properly should have) shown up in productivity stats, and people raved about it from day one: UberBlack (then just "UberCab") made it fantastically cheaper -- in both dollars and effort -- to hire a black car on short notice. That cost savings is a productivity gain, achieved from better employment of a resource (the car and driver time) that had to be purchased anyway; an appropriate metric ("cost to hire black car on X minutes notice and Y minutes of invested labor by requester") would have captured it. Ditto for UberX: it made greater use of a resource whose fixed costs had already been paid for other reasons, and allowed labor to be "kicked into gear" for very short shifts that labor-employers otherwise aren't able to make use of. That's also a productivity increase, and should rightly appear as such.
  - natrius 11y ago
    We agree! Our productivity statistics don't seem to be measuring what we think of as productivity. We're getting better at producing things, but since it's not making us more profitable, we can't see it in numbers.

YokoZar 11y ago

>UberPool and UberHop are actually productivity increases. A single driver can provide 2-4 trips worth of value with about 1 trip's worth of work. However, that's just going to drive the cost of trips down. If Uber and its drivers end up not increasing their revenue per driver trip, the productivity statistics would look the same even though drivers are moving four times as many people! In this scenario, you need only 1/4 the drivers, and some fraction of those 3 newly unemployed people will eventually do other work. That is the productivity growth.

natrius 11y ago
Productivity is roughly customer payments divided by the costs of doing business. If prices drop, Uber and drivers can collect the same amount of payments with the same costs of doing business. Fewer drivers could be used, but that won't increase our productivity statistics. In the plain English sense, productivity went way up! We're just measuring something else.
qq66 11y ago
You wouldn't necessarily need only 1/4 the drivers. The reduction in prices would increase demand for transportation by some amount. If that amount is less than 4x, you would see an industry employment decrease, but if it was more than 4x, you would see it increase, just like how auto industry employment increased as cars were able to be made for cheaper and cheaper prices.
deleted 11y ago
[deleted]

goalieca 11y ago

Here's an example from my trip to Paris. We speak to the concierge at the hotel explaining we need a lift to the airport at 8am the next morning. They call us a taxi service which is actually more like a long van. The van stopped at various hotels along the way. Old technology..

williamcotton 11y ago

You're so wrong it hurts. Please go find any economist on the planet and they'll be happy to explain why your layman's interpretation is wrong. In the meantime, please read my other comments in this post, as I don't need to keep making the same arguments, but also read the comments on Tyler Cowen's blog: http://marginalrevolution.com/marginalrevolution/2016/03/the-new-brookings-paper-on-the-productivity-slowdown.html http://marginalrevolution.com/marginalrevolution/2016/03/the... http://marginalrevolution.com/marginalrevolution/2016/03/productivity-slowdown-or-measurement-problem.html http://marginalrevolution.com/marginalrevolution/2016/03/pro... http://marginalrevolution.com/marginalrevolution/2016/03/how-much-are-free-apps-worth.html http://marginalrevolution.com/marginalrevolution/2016/03/how... Marc Andreessen is not an economist and he's also an investor in the companies that he is saying are providing mysterious new productivity that "old economics" can't measure. Come on, you've got to be able to recognize these kinds of conflicts of interests...