Economics

In the News

Apps proliferate but do they actually lift productivity?

Jim Riley

12th February 2020

The idea that apps can make major changes to the behaviour of individuals is something of a pipe dream. New technology is often being applied when it is simply not needed.

The world has just witnessed the shambles of the vote counting in the Iowa Democratic caucus.

It should have been straightforward. But adding all the votes up in a consistent way took a whole week. The list of errors is as long as your arm. In some precincts, for example, the total number of votes reported exceeded the number of eligible voters.

The main source of the problem seems to have been a mobile phone app that the Iowa Democratic Party used to collect results from caucus sites.

A system was in place which had stood the test of time through many election campaigns. But it was old-fashioned. It needed to be “modernised”. Hence the app.

Many layers of modern management seem to share this obsession with technology for technology’s sake.

Financial institutions seem fixated on apps. Apps to manage day to day expenses, apps to help manage investments, apps to boost savings for your old age.

No doubt some of these have their uses. But the idea that apps can make major changes to the behaviour of individuals is something of a pipe dream.

As a further example, an elderly relative of mine is in a care home. On arrival, you used to sign the visitor’s book and enter the time of arrival. On leaving, you put the time you were leaving. With a pen. A new computer system has been installed. It takes several times longer to enter these details. As far as I can judge, virtually no visitors use it.

Nobel Laureate Bob Solow famously pronounced thirty years ago that “you can see the computer age everywhere but in the productivity statistics”.

In the 1980s, the decade to which Solow was basically referring, personal computers and fax machines were the cutting age of new technology, of the computer age. It seems like the Stone Age compared to the technology available to us now.

Yet Solow’s problem remains. Productivity growth was very low during the most recent decade, despite the massive advances made in technology.

There are clearly many reasons for this. But one of them is, quite simply, that technology is often being introduced in situations where it is quite unnecessary. As a result, people become less rather than more productive.

More generally, new technology is proliferating in areas where the potential productivity gains are not great. For example, it is convenient when buying a round of drinks to be able to tap your card rather than delve into mountains of loose change. But it is unlikely that this innovation enables more drinks to be sold in any given pub or wine bar.

Self-service check outs in supermarkets help avoid standing in long queues. But these rely on customers being willing to supply their own labour for free, rather than have paid staff scan the goods for them.

The Iowa app incident is a source of amusement. But it may be telling us something more profound about why productivity growth remains low. New technology is often being applied when it is simply not needed.

Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

Boston House,
214 High Street,
Boston Spa,
West Yorkshire,
LS23 6AD

Tel: +44 0844 800 0085

© 2021 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.