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The Rise of the Attention Economy

MOSCOW – I was recently posed the following question: “The most important way in which the Internet and online social media are changing our world is [fill in the blank].” My standard answer is that it changes the balance of power between individuals and institutions. But this was a sophisticated audience of economists and students, gathered for the 20th anniversary of Moscow’s New Economic School. I needed new material.

So I challenged the audience to consider the following: For much of human history, there was no economy based on trade and fungible goods. People operated in small groups and fended for themselves. Scarcity was self-limiting: If you could not grow or catch your own food, you died (or moved). Specialization, trade, and pricing – not to mention religions and (economically) unproductive religious institutions, mass production, mass media, and big government – are all recent developments.

Our current world is a mix of people still subsisting with almost no external income, people generating (and consuming) surpluses, and other people consuming surpluses generated by others. Commodity prices spread worldwide, though influenced by local conditions and constraints (including tariffs and other protectionist measures in China, Russia, America, and elsewhere).

Many activities that were previously performed “for free” (often within a household), such as sex, home maintenance, and care for the sick and elderly, are now frequently outsourced and counted as economic output. In general, it is fair to say that these activities are performed more efficiently as a result: People whose skills are worth, say, $50 per hour spend more of their time earning $50, rather than performing chores “worth” $10 or $20 per hour.