Productivity and context

Just listened to Econtalk with Bob Lucas, Nobel Laureate and professor of economics at the University of Chicago, on economic growth. Naturally they also touched on productivity. It was almost funny how they avoided one conclusion. It was on the tip of my tongue as the ending of many sentences.

They talked about a person raising chickens in Indonesia, producing about 50 eggs per chicken per year and having to pick them himself. They asked themselves the question why he did not use modern technology to produce 300 eggs a year. Lucas answer was the lower cost of labor in Indonesia and he stated that this cost is determined by people working in factories in the cities. Lucas: "Economic growth is always associated by a move out of agriculture and into the city environment."

Then the host Russ Roberts asked Bod Lucas why an unskilled immigrant makes so much more money as soon as he (illegally) crosses the US border. Or in other words why he suddenly becomes more productive, while his human capital did not change. Lucas said that it is about cooperation with other people, how productive you are, e.g. as a busboy, depends on the quality of the waiters and of the cooks. Furthermore, the richer people in America are willing to pay more for a dinner.

Roberts then notes that it is a beautiful and interesting problem, that he is probably not more intelligent than his dad, but his standard of living is much higher. Lucas avoids answering, but states: "The other thing is: How many people are competing with you at your level?" "Don't drop out of high school!"

The answers hint at the following: Context is very important in determining productivity and wages. In the two examples, the farmer and the immigrant, context determines their wage, not their skill, not their education, not their human capital. For the farmer it is important that other people get better wages in the city, for the immigrant is is important where he works.

Productivity thus cannot be determined by looking at a person, it is not defined at the level of a person. Scientifically put: it is a nonlinear computation, not a linear one. In the latter case you could isolate one element, one person. Strictly speaking productivity is only defined at the global level. It is still reasonably well defined for nations and probably for large companies. (Even the productivity of companies is determined strongly by their network of partners and institutional factors.) Thus it is also not possible to compute how much a worker should earn. It is up for negotiation. And you certainly cannot claim that someone deserves to earn a certain amount.

Of course, the employee does need to work and often needs skills. Lets not start a nature-versus-nurture-type debate. Productivity is determined (almost) 100% by context and 100% effort. Just as an organism is determined 100% by nature (genes) and 100% by nurture (environment; context) and you can only split these two factors for a given variability in the environment.

It is thus very well possible that top managers get better salaries because they have a better bargaining position, not because they are more productive as it often stated in the media. Doubling the salary of all workers would be a problem to a company. However, a company does not go bankrupt because their CEO gets a double salary; there is only one CEO and there are basically no market forces to reduce it until it becomes extremely excessive. That may be an important reason for the differences in salaries, rather than skills.

Further reading

More posts on economics.

Sleep and diversity

In an interesting article on sleep in traditional societies on Science News (which is not the news section of Science), Bruce Bower states that people used to sleep in groups and that differences in sleeping time where an advantage as it provided better protection for the sleeping group.

... sleep typically unfolds in shared spaces that feature constant background noise emanating from other sleepers, various domestic animals, fires maintained for warmth and protection from predators, and other people's nearby nighttime activities.

In traditional settings, however, highly variable sleep schedules among individuals and age groups prove invaluable, since they allow for someone to be awake or easily roused at all times should danger arise, Worthman holds.

Thus a diversity of sleep schedules may be well adaptive, may have been selected for by evolution as it provides better protection. It would be great if modern society would allow people to follow these natural needs, instead of forcing a fixed schedule on early birds and night owls.

By the way, the circadian sleep-wake cycle itself is an example of variability in the activity level. Science still wonders why we sleep. It may well be related to this variability, which allows one to be more active during the day; while at night the reserves are filled again and repairs are performed. A remaining question would still be why you need to close your eyes for this, which is dangerous.

Sleeping without mattress

I found the article linked on the page The Ergonomics of Sleep: Why a Hard Surface can Provide Sweet Dreams. This page argues that sleeping on a mattress is a recent invention and may not be ideal for everyone. To me it makes sense to use traditional behavior as Null-hypothesis; modern ideas are often useful (for instance, hygiene and vaccinations), but should be tested. Thus one week ago, I removed my mattress to see it this works for me and slept on the wooden panel below, but I did add an exercise mat and a comforter (German: Bettdecke) as cushioning. It is definitely not comfortable, but I sleep well, wake up much more alert and it is easy to get out of bed.

What makes it uncomfortable is that your weight is mainly born by your bones. If you sleep on your back your weight is on your heels, pelvis, shoulder blades and skull, on your side it is on your ankle, pelvis and shoulder, on your front the tops of the feet, the knees, pelvis, ribs (man) and collar bones. May there be a reason why exactly these places have no padding, no fat nor muscle? The reduced pressure on the weak body parts could maybe be beneficial for the circulation. Lying in a dimple on a mattress could change your posture (round back) and consequently your breathing.

I am curious what other people experienced and know about this topic; please leave a comment.

Further reading

More posts on paleo (diet and lifestyle topics inspired by evolutionary thinking).

Paleo and fruitarian lifestyles have a lot in common

A comparison of the main ideas and recommendations of these two lifestyles.

Natural cures for asthma?

Some ideas for natural ways, which helped me cure or reduce asthma.

Is obesity bias evolutionary?

A critical comment on an article, which states that humans have an intrinsic propensity to eat too much.

Freedom to learn

Forcing children to learn stifles their innate motivation to teach themselves and may thus be counter productive.

The paleo culture

After the Ancestral Health Symposium 2012, as discussion started about the sometimes self-centred culture of the paleo community

Good ideas, motivation and economics

Steven Johnson recently wrote the book Where Good Ideas Come From: The Natural History Of Innovation. In this book he argues that good ideas mostly do not come as a sudden spark out of the blue, an epiphany, but rather grow slowly over time by combining ideas. His recommendation for finding good ideas is to create a diverse network with people with very different interests to increase the chance of seeing a new combination. The latter is similar to recommendations from creativity books to read broadly. Also personally, I like to read about a broad range of topics; reading just meteorology papers, it is highly unlikely that I will get an idea a colleague did not yet have. On the other hand, you do need to know your field to know what contribution is needed. Johnson also advices to write up your ideas and ideas of others and to discus them freely. Another advice from Johnson to organizations is to give employees the freedom to explore wild ideas in part of their time.

In the last chapter of the book and in an article for the New York Times, he answers the question why most good ideas come from amateurs and academics rather than solo entrepreneurs or private corporations. His answer is that the commercial guys are handicapped by keeping their ideas secret.

That may be part of the answer. Another is likely that people are not that much motivated by money when it comes to such complex cognitive tasks. As Daniel Pink explains in a talk at TED and in a beautifully made animation, offering people more money will increase their productivity for simple manual tasks. However, for tasks needing only a little cognitive skill people actually often perform worse if they are given a large monetary reward. Daniel Pinks equation: Motivation = autonomy + mastery + purpose.

Another indication that people are not solely motived by money, but also by concepts such as fairness comes from academic economics, from experimental micro-economics. The deviation from mainsteam economics (the neoclassical synthesis), with its concept of a homo economicus, who only cares about monetary gain, is beautifully distilled in a classic simple economic game, the ultimatum game.

In the ultimatum game, person A get to divide a sum of money. Person B has to agree with this division. If B doesn't, no one gets any money. When I first read about this game, I was wondering why it was interesting; people would simply split 50/50, wouldn't they. However, then it was explained that if B would be a good homo economicus, he would accept any offer, because it is better to receive something as getting nothing. Person A knows this and will only offer the smallest possible amount. As expected, reality looks very different. If Person A does not offer at least 30 to 40 percent, it is quite likely that B rejects the offer. Typically A offers 50 percent. This also happens if A and B do not know each other, if the game is only played once, and the results is similar in any culture or group. This game and many similar ones have led to the conclusion that humans have a innate sense of fairness.

This is a combination of three ideas. It is not yet sufficient to derive a new economic theory, but it might be a start. Do you have any ideas that together may make this network of ideas more fruitful?

Further reading

More posts on economics.

More posts on creativity.

Is obesity bias evolutionary?

On the Huffington Post and on his own blog, David Katz, MD, asks the important question why so many people are obese nowadays. His answer does not sound convincing, he argues that there a bias toward obesity is an evolutionary advantage.

This might have been possible, but a simple calculation shows that this is unlikely. A man who is 100 kg too heavy and 50 years old, to a first approximation ate 2 kg per year too much. Two kilograms of fat is 1400 Cal and thus comparable to what one eats in 4 days to one week, depending on your, height, weight and level of activity. In other words, this man ate only about one or two percent more than he should have. You may increase this number somewhat to account for the fact that a larger body also needs more energy. Still the additional amount eaten by an overweight person is small and will be hardly noticeable in day life.

In the times that humans were hunters and gatherers, it should have been easily possible to eat a few percent more than usual. The year to year variability in the availability of resources is large; on the negative side think for instance of floods, droughts and grasshopper plagues. A human that is able to survive in a bad year, should easily be able to hunt or gather double his need in good years. One would expect the maximum amount of food a person can find is much more than a few percent more than the average needed. Otherwise, a human with a bit of bad luck would soon starve to death and be removed from the gene pool.

Against review - Against anonymous peer review of scientific articles

Being a scientist and a friend of science, I hope that the abolishment of the anonymous peer review system will end power abuse, reduce conservative tendencies and in general make science more productive, creative and fun. This essay has two parts. First, I will discus and illustrate the disadvantages of the peer review system by a number of examples, and then I will give some ideas for reforms inside the review system.

The quality of reviews

The peer review system is there to guarantee a high quality standard for scientific papers. If all scientists were rational, selfless and fully objective beings with unlimited amounts of time, this system would be a good idea to find errors before publishing. However, if you put real scientists into the equation, scientists that are normal humans, your get a low quality of review and a system that is prone to power abuse.

Honorary authorship of scientific articles

In their statement on scientific dishonesty the German science foundation (DFG) explicitly writes that honorary authors are unwanted. More specifically, they write that a co-author should have done more than just provide a desk, or write and lead a project or deliver data. In their view, every author should be 100% accountable for the entire content of the article. In this way, they hope that the co-authors check each others work more carefully.

The library network - from book archiving to knowledge facilitator

The amount of knowledge had doubled every 10 to 15 years for the last two centuries (Price, 1953); well at least the annually number of published articles does. The number of books is also increasing rapidly. In Newton’s times it was hard to get the right books, nowadays it is hard to select the right books. This changes the role of the scientific library. At the same time, information technology - powerful databases and the internet - open up new opportunities to find relevant information.

This document describes three ideas that will hopefully make the university book collections much more valuable. These ideas are can be linked to the fundamental thoughts behind the success of Amazon, Napster and Google.

On the philosophy of language

A philosophy of language (Martelaere, 1996) is a science that is build on reason alone. In the natural sciences, it is generally accepted that one can only do fruitful research by combining reason and experiments, as your theory determines how you see your experiment, and experimenting without theory normally leads to experiments that are not informative. In the same way, philosophy will be most useful if it starts with the current societal consensus and improves upon it by making the premises clearer and the reasoning more logical.

The language philosophers see language as a limiting factor; limiting our thinking and limiting our perception of reality. Here, I would like to argue that languages are flexible enough, have evolved to allow for creative statements about the complex reality, that languages are no important limitation in our understanding of the world and ourselves.