Bill's Notebook

I succumbed to the hype and joined Quora last week. Two weeks before that I joined Academia which is a social networking site for academics. Friday night I joined Eegoes because they promised to help me organize my rapidly-expanding universe of social networking sites. I had a great time building profiles, looking for people to follow (like Stephen Hawkings!), and registering my interests (game theory and the Three Stooges). I post daily on FaceBook, participate in LinkedIn discussions, and haunt the GovLoop site at least an hour a day. Add in my Twitter activity and I put in a significant amount of time and effort creating content and interacting with others.

It was from Twitter that I came upon this posting from Derek Christensen that compared Google’s latest business efforts to Tom Sawyer’s scam to get his friends to whitewash a fence for him. As Mr. Christensen points out, the key is the packaging of the onerous task into an activity that people are fighting to do. You can go swimming anytime but it’s not everyday you can WHITEWASH A FENCE! Or answer questions from other people! Or share your academic papers with other academics so easily! Thanks to my efforts and the efforts of others we are helping to make Mark Zuckerberg a very, very rich man by contributing thousands of free hours of labor to make the FaceBook community valuable to other users who in turn contribute even more free labor.

I helped make FourSquare a major success and all I got was this lousy badge?

No, I am not that cynical. I benefit a great deal from the social networks. FaceBook allows me to keep in touch with friends on a daily basis when before I would occasionally call or only see them at special occasions. Twitter is a great resource for the newest stuff in my fields and GovLoop has given me a great platform to showcase my work and to connect with a great group of professionals. My Social Return on Investment (ROI) has been much better in the last three years than at any other time in my career. I am certain others have seen similar benefits from being on social networks.

But nothing fails quite like success. 2011 looks to be the year of the social networks as more organizations and entrepreneurs compete to build the next FaceBook/FourSquare/Twitter/LinkedIn. Look at the recent hype surrounding Quora. This will be a common event all through 2011 because the barriers to entry are so low and the potential payoff is so high. In a nice weekend afternoon and with a premium account on Ning I can build a competitor to GovLoop (BillLoop?). A three-day weekend, a six-pack of Five-Hour Energy, and a hosted Drupal account and I have a very sophisticated social networking site. Just add a critical mass of members and I will soon have a movie made about me.

Why does this matter to Gov 2.0? Because 2011 will also be the year of engagement fatigue. It will seem like everyone from your local grocery to your alma mater wants you to put a profile on their site and give daily status updates while constantly asking you your opinion on a quick survey. According to neuroscience findings, 150 is the maximum number of social contacts our brains can comfortably handle. Many people have quickly surpassed that number in their online social networking contact lists. By necessity people will start scaling back so expect to see major pruning as people determine just who are the most important members of their personal networks. And woe to the social network where people have just discovered they were tricked into helping the network owner into building a valuable body of knowledge that only the network owner will profit from.

So, how do you tell if you are benefiting from a social network or just whitewashing someone’s virtual fence?

1. What’s In It For Me? Put a dollar value on your time and treat your social networking time like an investment. Is being part of this network going to benefit me by keeping in touch with friends and family? Is it going to help me build a reputation in my field? Can I make a list of at least five ways I personally benefit from being a member?
2. How Much Can I Personalize the Experience? Can I form subgroups of interests? Can I specify who I will interact with? Can I determine the level of interaction I want and not be harassed to interact more?
3. Do I Have Ownership of My Work? At various times, FaceBook and Second Life tried to alter the user agreement so that they and not the user owned the work that was contributed to their respective sites. If you are in a social networking site that tries to claim ownership of your original work and/or does not allow easy exporting of your work, then you don’t want to be a member of that site.
4. Is the Site Owned by the Community? As the site grows has the social network owner ceded more and more of decision making to the community? Is there a diversity of opinion on the site? Is it easy to question and affect decisions about community operations? Is there a formal council of members that rotates membership on a regular basis?

In 2011, I expect to see the rise of many copycat social networking sites as more people try to gain in this emerging market. There will be many beneficial sites but I fear a greater number of social-fencepainting sites will also arise. The challenge for Gov 2.0 citizen engagement efforts is to first be heard above the din of all the new sites and then to survive the coming backlash from the collapse of many of these new social networking sites. The American people are great advocates for collective action but only if the benefits are clearly visible and evenly shared.

As the first decade of the 21st Century ends, I hope that the economic events of the last thirty-five years finally loosen the hold that neoclassical economics has on public policy.  It is widely recognized that the accepted economic models that governments use to shape policy are just not empirically valid.  Today’s economies are vastly different from the industrial revolution economies that shaped neoclassical economic theory.  Yet, these theories are the basis for setting interest rates, regulating the stock market, determining the level of environmental protection, almost every aspect of government regulation (Smith 2010, p. 65).  It is time to modernize the economic theories that are used to guide government and economic policies.

The case against neoclassical economics has been growing in recent years.  As Yves Smith (2010) details in her book:
1)  Economics is not a real science because it is difficult to do the empirical evidence to validate the models economist develop from their assumptions (pp. 20-21).
2)  Many of the core assumptions of neoclassicism (people are totally rational, have complete information, only act to maximize utility, etc.) have been disproved by experiments in behavioral economics (pp. 94-97).
3)  Despite the fact that they are working with faulty assumptions, economists claim that the implications derived from the assumptions are still valid because they are good approximations of reality (p. 41 and pp. 47-48).
4)  Hard sciences also use simplified models to explain phenomena but the crucial difference is that economists add unrealistic properties to validate their models.  For example, economists add the property of perfect information to make supply and demand models work (pp. 48-49).

Some economists counter by admitting that neoclassical economics has these problems but the cure is to do more empirical research.  But with more empirical research, the neoclassical assumptions are giving way to a new economic theory – complexity economics.

Eric Beinhocker (2007) surveys the rise of complexity economics in which researchers apply complexity and network theory concepts to economic activities.  The main advantage of complexity economics is that its assumptions can be empirically validated and that its findings apply to modern economic phenomena.  Thus, this is a better basis upon which to base policy decisions.

Beinhocker’s  (2007) core argument is easy to understand.  Businesses use a mixture (business plan) of physical technologies and social technologies to compete with other businesses.  The businesses that have more fit business plans out-compete businesses with less-fit business plans.  Based on this model Beinhocker details several implications for policy makers:
1)  The role of markets is to process the immense amount of information from buyers and sellers into the most coordinated and effective manner while also determining how fit a business is.  Thus free and open markets must be maintained by regulations that do not impede the flow of information available to all parties (p. 423).
2)  Government’s role is to provide and preserve the vast array of social technologies that make it possible for businesses and markets to exist.  Social technologies such as contract law, antitrust enforcement, and securities regulation (p. 425).  Therefore, government plays an important role in shaping the fitness determination role of markets (pp. 426-427).
3)  Behavioral economics indicates what kind of social programs will be more readily accepted and politically-supported.  People will support aid programs that have strong reciprocity – programs designed to help people become functionally independent (pp. 418-421).
4)  Countries that score higher on measures of societal trust also have higher economic performance than countries with lower societal trust scores (pp. 432-433).  Thus, an important role for American government is to build up social capital in the U.S. (pp. 439-440).

As the above demonstrates, government has a vital role in preserving and strengthening the U.S. economy.  The argument of neoclassical economics that government should have little or no role in market economies is a false one and has led to extreme reactions from the Left and the Right.  With a clearer understanding of government’s actual role in the U.S. economy policy makers can craft effective policies that preserve the best features of the market system while building up the necessary social capital to strengthen the economy and serve the U.S. people.  We just need to move beyond the false answers given by neoclassical economics to the insights of complexity economics.

References:
Beinhocker, E.D. (2007). The origin of wealth: The radical remaking of economics and what it means for business and society. Boston, MA: Harvard Business Press.

Smith, Y. (2010). Econned: How unenlightened self interest undermined democracy and corrupted capitialism. New York: Palgrave MacMillan.

Further Reading:
Berreby, D. (2005). Us & Them: The science of identity. Chicago: The University of Chicago Press.

Cassidy, J. (2009). How markets fail: The logic of economic calamities. New York: Farrar, Straus, and Giroux.

Lehrer, J. (2009). How we decide. Boston: Houghton Mifflin Harcourt

Pfaff, D.W. (2007). The neuroscience of fair play: Why we usually follow the golden rule. New York: Dana Press.

Schelling, T.C. (2006). Micromotives and macrobehaviors. New York: W.W. Norton & Company.

Shermer, M. (2008). The mind of the market: Compassionate apes, competitive humans, and other tales from evolutionary economics. New York: Times Books.

Stiglitz, J.E. (2010). Freefall: America, free markets, and the sinking of the world economy. New York: W.W. Norton & Company.

Thaler, R.H., & Sunstein, C.R. (2009). Nudge: Improving decisions about health, wealth, and happiness. New York: Penguin Books.

Ubel, P.A. (2009). Free-market madness: Why human nature is at odds with economics – and why it matters. Boston, MA: Harvard Business Press.

The bright side of wrong

Elizabeth Corcoran gives a great argument in the ongoing debate about technology’s effect on our minds.  She makes an important point- “I keep wondering why we lump all “technology” into the same basket. By doing so, we ignore the most important distinction of all: whether we are sponges for absorbing other people’s ideas, or whether we’re making our own.“

She gives an example of how children learn more when they are given tools to create content rather than tools that just deliver content.  Now, she talks about technology in the classroom but this equally applies to technology in the workplace.  Think of the training that consists of delivering content (lecture, PowerPoint, brown bag talk, etc.) versus the training where people are encouraged to play with the new software program or tool.

I consider the basis of learning to be the creation of mental models.  You cannot just transmit your mental model completely to me; I have to create one unique to my own mind.  You can give me information to build the model and you can create experiences that will shape the mental model but the final product is still through my unique mental processes.  But every mental model starts with engagement.  Thus, this is why allowing people to make content rather than absorb content is the key to effective learning.

Nick Carr, who criticizes the Internet while reaping the benefits of having such a great platform to push his neo-Luddite views, has published a book warning us all that online links are destroying our brains.  It takes a brave person to ignore the evidence that the Internet is actually good for our brains but Carr has made a great living by being the quotable tech contrarian.  But if Mr. Carr is concerned about threats to our minds, then I have news of the most diabolical threat to the modern brain.

The morning commute. “In 2008, scientists at the University of Michigan did a very clever study illuminating how this activity led to dramatic decreases in working memory, self-control, visual attention and positive affect. Other studies have demonstrated that people who are less exposed to this activity show enhanced brain function. They are better able to focus and even recover more quickly in hospitals.”  As we walk down the city street (or drive down U.S. 1), we constantly are fighting to keep our attention focused while being distracted by neon signs, people who suddenly switch direction in front of you, and that really attractive jogger.  The mind is constantly scanning for dangers but we keep pulling it back to focus on our path.

Another good argument for teleworking. 

It’s basically the disappointment of expecting a cool toy on Christmas morning and you actually receive a pair of sensible pants.

Three interesting articles on memory.  The first is from the Frontal Cortex and it is a great summary of the second article which is an eight-part series on Slate’s experiment in altering political truths.  What Slate has done is to create four political myths and then inserted them into news stories (like 1984’s Ministry of Truth).  Then, Slate surveyed their readers to determine who picked up on the fakes.

Many readers picked out the fakes.  But, of the ones who didn’t, they were sure they remembered the incident.  The numbers rose when people were shown faked photos of the mythical events.  In some cases, people had elaborate memories surrounding the faked event.

Why does this happen?  Because, as Frontal Cortex explains, we reconstruct our memories every time we remember something.  And the more we remember something, the less accurate it becomes as we reconsolidate the memory.  We start adding new interpretations to remembered events and we add details that were not possible at the time of the memory.

Why isn’t memory a fixed and unchanging mental construct?  One possible answer could be in the third article – “Modeling the mobility of living organisms in heterogeneous landscapes: Does memory improve foraging success?”  This research article describes how foraging animals who inject some randomness into their search are seven times more effective than foragers who rely on their memory of past finds when both are searching in a changed landscape.

So, could reconstructing memories give us an advantage by allowing us to incorporate later experiences and thus we have a better understanding of past events that can guide us in current problem solving?  Are our imperfect memories a way to inject randomness into our thought processes and make us more effective thinkers?

This is why it is always a good idea to make notes when we need to remember something important or significant.  I have found that revisiting a journal entry from years past is always surprising because my memory of the event usually differs from what I wrote at the time.  Even photos can be a great check on our memories.

Unless you do have a photo of you meeting Bugs Bunny at Disneyland.  Then you know that someone has faked the photo.

After several studies on why lying is an important advantage in personal mental development, we have research that describes how cooperation evolved from our social need to punish cheaters.  To me, this is a great example of game theory in that what benefits us personally would not benefit society if adopted by everyone.  So, we are willing to tolerate leaders who lie well as long as the society benefits but we curb the leader’s self-interest once society suffers.  Fascinating dynamic tension in play here.

“After studying 1,200 children, researchers from the Institute of Child Study at Toronto University, found that kids can be confirmed to have developed ‘executive functioning‘, when they are able to keep the truth at the back of their mind so their fib sounds more convincing.”

Fascinating story on NPR about the “trust” hormone (oxytocin) and one researcher’s findings that trust in the government is related to the amount of stress someone feels at the time.  According to the study, trust in the government is at an all time low because of the stress people feel due to the recession.  When college students were given a squirt of oxytocin they reported feeling more trusting of other people.  From this trust, they also reported less distrust in the government.

So, by promoting wellness and lowering the national stress level, could the government also be promoting better citizen engagement?