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This site would not be the same without a daily dose of uninformed commentary on economics! In this case from a guy who (with a straight face?!?) says “…as The

This site would not be the same without a daily dose of uninformed commentary on economics! In this case from a guy who (with a straight face?!?) says “…as The Singularity approaches” ! Wow. Productivity measurement is hard. The author points to many of the difficulties. We (economists) have been aware of many of these difficulties since the 1930’s or earlier. No one in this literature thinks “hedonic adjustments get it exactly right!” to take just one example. Instead they think more along the lines of: this is the best solution we can come up with to this very hard problem. For an informed, recent survey of the difficulties and the importance of getting these questions right, try Syversen and De Loecker’s survey “an industrial organization perspective on productivity” from the recent Handbook of Industrial Organization, available for free via the NBER working paper series. Why might you care? Here is one fact from that survey: within a narrowly defined industry category, the difference in measured output from the 5th to the 95th percentiles of the productivity distribution can be a factor of 2! To emphasize: two firms with the same measured inputs, but one produces twice as much output than the other. This is visible across many industry categories. It’s a fascinating problem and well worthy of study. The original author should probably also read “the sad truth about happiness scales” from the Journal of Political Economy in 2019. Such scales are unidentified in quite a fundamental way and the results they give are essentially meaningless.

AnimalMuppet 4y ago
> The original author should probably also read “the sad truth about happiness scales” from the Journal of Political Economy in 2019. Such scales are unidentified in quite a fundamental way and the results they give are essentially meaningless. Yeah. If we're failing at measuring productivity, are we going to succeed at accurately measuring well-being? Not likely.
- pbhjpbhj 4y ago
  Perhaps, accepting the imperfections it is better to try to optimise for happiness, even if the optimisation can only be judged as to whether they're generally heading in the right direction ... perhaps if imperfect measures of happiness are improving then life improves for the many in a way that doesn't improve by measures which reflect mainly financial aspects of society. You can make a rich person 100 times richer and overall prosperity is probably decreasing. But you can't really make someone 100x happier (especial if there already relatively happy), all that money maybe made the rich person 1.0001x happier (or even <1x). Seems like given this sort of difference in happiness and financial wealth measuring the latter has a built in aspect of relative equality. For those who care about creating societies that benefit the whole population, this is an enticing possibility.
  - AnimalMuppet 4y ago
    Better to optimize for happiness? Sure, I can go there. But the title emphasizes measuring happiness, while pointing out that our measurement of productivity is flawed. But measuring happiness/well-being is going to be far more flawed. The case for optimizing for happiness and well-being does not depend on our being able to measure it more accurately.
ladyattis 4y ago
Also, I wish the author would read any of the work by Mumford regarding technics. Or Ivan Illich wrt the over adoption of specific technologies. Many of the issues I think affecting firms wrt productivity declines vs the lack of well being of employees is something we can probably measure reliably, it's probably more that firms and their shareholders don't really care that their employees are basically burning out faster than their demands on ROI and productivity.
jacobolus 4y ago
> Why might you care? Here is one fact from that survey: within a narrowly defined industry category, the difference in measured output from the 5th to the 95th percentiles of the productivity distribution can be a factor of 2! To emphasize: two firms with the same measured inputs, but one produces twice as much output than the other. This is visible across many industry categories. It’s a fascinating problem and well worthy of study. Having seen inside a few organizations of various types, I am shocked that the difference is so small.
- huitzitziltzin 4y ago
  I bet computing 1st to 99th %-ile would be even worse. Also I believe the result they cite is on average. I bet the extremes of the 5-95 comparison can get crazy. Find the “right” industry and I bet you can make it really horrible.
  - fsckboy 4y ago
    > I bet computing 1st to 99th %-ile would be even worse that's just a property of the normal distribution: if you know the difference between 5 and 95, you know the rest of the curve.
    - huitzitziltzin 4y ago
      You are misunderstanding something. The comparison they are reporting is a comparison between the 5th and 95th percentiles of the empirical distribution of measured productivities. The normal distribution has nothing to do with this.
3pt14159 4y ago
The problem I have with economists is that they pour their effort into what is trackable after waving away the softer stuff. What does it rhyme with? - Companies that pour their effort into fine tuning their websites and adverts based off of what their analytics tells them. Years later their product dies and nobody really says why. [Narrator: All the best designers and developers left as the product and company slowly turned soulless.] - City planners that make deals with builders for suburban housing which increases the tax base. Decades later they're stuck dealing with the outsized infrastructure maintenance costs for things like sewer lines without the proper density to afford them. - Prisons, schools, and hospitals get mandates from the state to include a fruit with every breakfast. Individually packaged jam fits the poorly written bill, so that's what we all get. And on and on. The point is, there are things we need to do and problems we need to address that are frustratingly hard to define and agree upon, but the answer is not to wave them away. The answer is the opposite. To head right into them and try to really make a difference without getting lazy. I could, easily, in an afternoon mention dozens of quantifiable proxies for different aspects of a good life. I'm very sure that countries with the technical prowess of Apple and Tesla are capable of achieving better instruments of our collective wellbeing. What we need are economists with courage and resolve. There is obviously something horrible going on across the world right now even if GDP keeps growing.

AnimalMuppet 4y ago

> The original author should probably also read “the sad truth about happiness scales” from the Journal of Political Economy in 2019. Such scales are unidentified in quite a fundamental way and the results they give are essentially meaningless. Yeah. If we're failing at measuring productivity, are we going to succeed at accurately measuring well-being? Not likely.

pbhjpbhj 4y ago
Perhaps, accepting the imperfections it is better to try to optimise for happiness, even if the optimisation can only be judged as to whether they're generally heading in the right direction ... perhaps if imperfect measures of happiness are improving then life improves for the many in a way that doesn't improve by measures which reflect mainly financial aspects of society. You can make a rich person 100 times richer and overall prosperity is probably decreasing. But you can't really make someone 100x happier (especial if there already relatively happy), all that money maybe made the rich person 1.0001x happier (or even <1x). Seems like given this sort of difference in happiness and financial wealth measuring the latter has a built in aspect of relative equality. For those who care about creating societies that benefit the whole population, this is an enticing possibility.
- AnimalMuppet 4y ago
  Better to optimize for happiness? Sure, I can go there. But the title emphasizes measuring happiness, while pointing out that our measurement of productivity is flawed. But measuring happiness/well-being is going to be far more flawed. The case for optimizing for happiness and well-being does not depend on our being able to measure it more accurately.

ladyattis 4y ago

Also, I wish the author would read any of the work by Mumford regarding technics. Or Ivan Illich wrt the over adoption of specific technologies. Many of the issues I think affecting firms wrt productivity declines vs the lack of well being of employees is something we can probably measure reliably, it's probably more that firms and their shareholders don't really care that their employees are basically burning out faster than their demands on ROI and productivity.

jacobolus 4y ago

> Why might you care? Here is one fact from that survey: within a narrowly defined industry category, the difference in measured output from the 5th to the 95th percentiles of the productivity distribution can be a factor of 2! To emphasize: two firms with the same measured inputs, but one produces twice as much output than the other. This is visible across many industry categories. It’s a fascinating problem and well worthy of study. Having seen inside a few organizations of various types, I am shocked that the difference is so small.

huitzitziltzin 4y ago
I bet computing 1st to 99th %-ile would be even worse. Also I believe the result they cite is on average. I bet the extremes of the 5-95 comparison can get crazy. Find the “right” industry and I bet you can make it really horrible.
- fsckboy 4y ago
  > I bet computing 1st to 99th %-ile would be even worse that's just a property of the normal distribution: if you know the difference between 5 and 95, you know the rest of the curve.
  - huitzitziltzin 4y ago
    You are misunderstanding something. The comparison they are reporting is a comparison between the 5th and 95th percentiles of the empirical distribution of measured productivities. The normal distribution has nothing to do with this.

3pt14159 4y ago

The problem I have with economists is that they pour their effort into what is trackable after waving away the softer stuff. What does it rhyme with? - Companies that pour their effort into fine tuning their websites and adverts based off of what their analytics tells them. Years later their product dies and nobody really says why. [Narrator: All the best designers and developers left as the product and company slowly turned soulless.] - City planners that make deals with builders for suburban housing which increases the tax base. Decades later they're stuck dealing with the outsized infrastructure maintenance costs for things like sewer lines without the proper density to afford them. - Prisons, schools, and hospitals get mandates from the state to include a fruit with every breakfast. Individually packaged jam fits the poorly written bill, so that's what we all get. And on and on. The point is, there are things we need to do and problems we need to address that are frustratingly hard to define and agree upon, but the answer is not to wave them away. The answer is the opposite. To head right into them and try to really make a difference without getting lazy. I could, easily, in an afternoon mention dozens of quantifiable proxies for different aspects of a good life. I'm very sure that countries with the technical prowess of Apple and Tesla are capable of achieving better instruments of our collective wellbeing. What we need are economists with courage and resolve. There is obviously something horrible going on across the world right now even if GDP keeps growing.