Why the Economic Payoff From Technology Is So Elusive

Description:  Your smartphone allows you to get almost instantaneous answers to the most obscure questions. It also allows you to waste hours scrolling through Facebook or looking for the latest deals on Amazon.  But for several years, economists have asked why all that technical wizardry seems to be having so little impact on the economy.

Source: NYTimes.com

Date:  June 5, 2016

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But for several years, economists have asked why all that technical wizardry seems to be having so little impact on the economy. The issue surfaced again recently, when the government reported disappointingly slow growth and continuing stagnation in productivity. The rate of productivity growth from 2011 to 2015 was the slowest since the five-year period ending in 1982.

One place to look at this disconnect is in the doctor’s office. Dr. Peter Sutherland, a family physician in Tennessee, made the shift to computerized patient records from paper in the last few years. There are benefits to using electronic health records, Dr. Sutherland says, but grappling with the software and new reporting requirements has slowed him down. He sees fewer patients, and his income has slipped.  read rest of story

Questions:

1. Why isthe Economic Payoff From Technology Is So Elusive?

2.  Can you think of any industries or examples where the payoff from technology has been felt?Why?  or why not?

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61 thoughts on “Why the Economic Payoff From Technology Is So Elusive

  1. Megan Thurlow

    I think that the most predominant reasons that the economic payoff of technology has been so elusive is because the integration of these systems initially will cost a lot of money. That of which many people are reluctant to invest in. Another reason is because of the amount of time it takes to learnt these new systems and use them confidently. Although both of these problems should subside with time as the benefits of using these technologies will eventually provide a larger economic payoff than the initial cost. Efficiency should also increase beyond initial productivity which will lower costs in the long run.

    Instances in which economic payoff have actually been felt are numerous. Netflix for example began with only shipping movies to its customers. Now their profits are much greater as they have completely switched to online streaming. Amazon, Google, Apple, Ebay, and Alibaba are all other examples of organizations that have seen payoff from technologies. This may be because they began to adopt them much earlier than other companies, and are now well versed in the technology they use.

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  2. Arjan Arends

    Perhaps the biggest reason that the economic payoff of technology is so elusive is due to the ever changing ability and functions of the technology. Before the newest smartphone is released, its developer is already working on the next model. Our ability to understand and use technology lags behind the release of the technology and before we are comfortable and used to new software or devices there are already new ones on the market. We cannot therefore exactly measure our economic gains for adopting the technology except for maybe considering it a cost of doing business in the modern global world and realizing that without adopting it, our business would fall behind and become obsolete.
    An industry that has felt the payoff of adopting technology is the agriculture industry. Farmers today can plant and harvest thousands of acres of land and generate phenomenal yield with fewer and fewer inputs because of a combination of technology in seed development, irrigation, and equipment. A young child can now drive a heavy piece of equipment for a lower wage than an adult and do just as good of a job due to the GPS technology that nearly every farmer is adopting. The seeds that bio-ag companies supply us with allow us to grow a crop with a high yield and not have to worry about weeds growing in between. Farmers that have not adopted the technology have fallen behind so fast in even one generation as they are still farming the same amount of land they were twenty years ago and not keeping up while their neighbour who invested in the technology can now farm twice as much with similar input costs.

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  3. Austin Brady

    The economic payoff from technology is elusive for several reasons. Economic gains lag behind technological gains because when a new technology is introduced, people are still learning how to use it effectively and have to go through the learning curve. As mentioned in the article, this has been true for both the internet and the electric motor. Obviously when the first internal combustion engine was rolled out, the world didn’t change overnight. It took a few years for automobiles to catch on and business to start changing. The same goes for all these brand new technologies coming our way in this millennium. The other point the article states is that not every industry is investing large sums into technology to boost growth and productivity. It goes on to say that “if lagging industries do not catch up, we will not see much of a change in national economic statistics”. Hopefully these experts are right, and we see an improvement in growth and productivity in the next several years.

    One of the best examples I can think of would be the oil and gas industry. The technology they are using is helping these companies be way more productive and efficient. For example, new technologies in engineering and geology have allowed oil and gas producers to drill horizontally and create pad sites with multiple wells on them, going in every direction. Another way it has helped the oil and gas industry (and many others) is the document management system. The energy industry requires a lot of paperwork, and electronic file systems have increased productivity by cutting time digging through physical files.

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  4. Sam Gleim

    Society is so caught up in needing to see results right now, that is does not take the time to appreciate the little things. The Internet was only created approximately 30 years ago and look at how much we have utilized it. It was the main aid to globalization. Digital innovation has helped advance the medical field beyond comprehension. These are all profound milestones. Yet, as a society we always seem to be seeking more and more. The economic payoff from internet technology is elusive due to the fact that we just discovered it. You have to walk before you run. Patience is a virtue.
    I completely agree with Brynjolfsson and McAfee on the cyclical lag between the arrival of a technology advancement and the effective use of it. In regards to the digital discovery, we are in that stated lag. All the ups and downs associated with the application of the internet and its accompanying wonders are continually increasing our knowledge. As of this moment, society may not have perfected its use of the technology and created a 100% efficient and effective plan for the economy. However, we are working towards it.
    The pessimist-economist Gordon is seeking “big economic gains of breakthrough,” perhaps he should study the social media industry. The industry that shows the most payoff from technology is the social media industry. We have created an entire new industry from the advancement. It allows advertisers to pin point the ads people want to see based off of individuals divulging information and publicizing it. It has connected people around the world more than anyone could have forecasted and increased the information sharing. It has substantially increased news cycle speed as well. All these, in my opinion, are breakthroughs from the digital advancement. Go back to the books Gordon.

    Reply
  5. Tomara Noga

    The economic payoff from technology is so elusive because it is difficult to track the productivity compared to the the technology. With technology advancing so fast, people who haven’t necessarily been around it long and are just getting introduced may have a hard time getting used to the constant update and learning how to use them on top of their already busy lives. Robert J. Gordon, an economist at Northwestern University has stated that these technological breakthroughs are nothing like those of the past such as electricity, cars, planes and antibiotics. This doesn’t mean that it won’t become something as big as those, but like optimists have said people just need time to learn how to properly use technology advances like this. Just because people are having a hard time utilizing technology now, it doesn’t change that this can bring out more useful information in a shorter period of time leading to higher productivity.

    Being raised on a farm, I can definitely see that the agriculture industry has benefited from implementing technology. I look at how things used to be done, eg. small things like checking pivots. My dad used to have to wake up in the middle of the night and physically go out and check they were still running compared to now; he can simply go on his IPhone and check. We also use GPS for nearly every part of our operation. Rather than having to make sure my brother is planting every row evenly, GPS now pinpoints exactly where the seed has to go in the field and this helps to create less misses and prevent double seeding. I also think the automotive industry has benefited greatly from these advances, because if you compare cars to 20 years ago, we have many features that were nonexistent, like: heated seats, automatic windows, sunroofs, etc. Car companies are constantly in a race to find new technology to beat out competitors and be most attractive to consumers.

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  6. Lina Zhang

    The economic payoff from technology is so elusive because measure the exact growth of economics that are contributed by technology is very hard. With the fast revolution in technology products, people need to spend time on getting used to new technology products. Some of people who gets tired of trying new technology products, they will just stuck with the old ones. In the article shows the troubles Dr. Sutherland was facing with the new technologies. Dr. Sutherland trains the voice recognition software for six months, changed to a tablet computer from a desktop. His revenue declined about 8 percent where they were four years ago, with the purchases of new technology systems, Dr. Sutherland spent millions of dollars and didn’t feel like there was an increase in profit, even though he liked the display of information to the patients.
    Industry where the payoff from technology has been felt is online marketing companies. Companies like Ebay, Amazon, and Alibaba, since their business are based on the use of internet and technology, bringing in new technology systems could help them to input more data, or allow their customers to experience the website a lot fast. Also the use of chatbots or voice recognition searches can help their customers to shop easier on their websites, this decrease the costs toward their customer supports departments.

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  7. Evelyn Savolainen

    1. Why is the Economic Payoff From Technology Is So Elusive?

    The economic payoff from technology is so elusive due to a combination of factors. Technology is continually evolving. With the constantly changing set of technological tools to use, there is a learning curve for employees involved. Although technology is designed to make processes more efficient, it takes time for the effects to be felt in cost reduction; users of the technology have to become comfortable in using it. After employees have time to get comfortable with new technology, they can often be much more efficient.

    2. Can you think of any industries or examples where the payoff from technology has been felt? Why? or why not?

    Industries where the payoff from technology has been felt include social media companies. They provide companies with a wealth of information about the consumer at a relatively low cost. Additionally, the adoption rate of new social media companies if successful can be felt seemingly overnight. Notably, a good examples of a social media success includes Facebook. There is all sorts of information on social media sites that individuals willingly divulge; it is useful for companies when coming up with new products or marketing strategies.

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  8. Chiaki Kitsuki

    To answer the first question, there are a lot of reasons why the economic payoff from technology is so elusive. But one of the biggest factor is that it is quite difficult for us to measure the economic payoff accurately. Without saying, our society has become more likely to reply on internet technology. Because of this, our environment has been changing frequently, which inevitably face the problem of obscurity of the economic payoff standard. Another reason can be that technology makes the firms’ management slower. To explain more specifically, sometimes the companies feel difficulty in utilizing new technologies. Nowadays, applying new technologies is very significant because the cost-reduction, effective tasks can be highly expected. Moreover, in order to compete with other companies, it is indispensable for them to use more technologies. In order to overcome this problem, hiring people who know about technology well and can make a full use of it.

    Reply
    1. Blake Furgeson

      The Economic Payoff from technology is so elusive since there are a lot of factors that are a part of the situation. First is has been shown that it takes some time for the economy to catch up to the technology developed to be able to use this technology in a profitable way. Technology continually changes which makes it difficult to accommodate into the economy. Plus, the technology being used is only as good as the individual who is using it. If an individual does not possess the ability to use the technology it is useless. When doctors were introduced to electronic record storing it took them time, at first, to educate themselves on how to use the technology efficiently to enhance their ability to help the patients.
      An industry that the payoff from technology has been felt would be the marketing industry. Since there is an ever growing amount of data about consumers it makes the market for these companies more profitable as these companies are able to provide more information about the consumer. Businesses are able to connect to the consumer much easier with all the data that is provided to them as consumers become more attached to technologies such as the internet. This industry has enjoyed large profits from such services, for example Google has enjoyed huge revenues from their service of Key Word search.

      Reply

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