The Economics of Attention and Live 8
 

July 1 2005
Counterbias.com
by Aaron Braaten
  

Our mothers told us to ‘pay’ more of it at school, children take Ritalin when they have a ‘deficit’ of it, our fathers used to (in a roundabout way) offer us a penny for it whereas Shakespeare’s Marc Antony, in the play, Julius Caesar, asked his friends, Romans and countrymen to ‘lend’ it to him. What is it?

If you read the title, then you’ve probably guessed it – attention.

In an information age, the primary commodity being traded is attention, which creates at least two distinct classes of people: those who command it and those who give it. The former are celebrities and stars whereas the latter are the fans. Information economics analyzes how these agents trade information in a market-based system. Understanding the economics of attention, I argue, is crucial in understanding the issues that Live 8 seeks to resolve, and how we can better make use of the attention generated from this monumental event.

The usual definition of economics is “the science of how society allocates scarce resources in a world of unlimited wants”. This is the paradigm of scarcity economics; a Victorian view of only so much gruel for the orphans. However, as Michael Goldhaber has pointed out, the internet is not a paradigm of scarcity, but of over-supply. The internet is overflowing with information, and even disinformation, and such an abundant over-supply, it is argued, turns the principles of economics on its head. How can an over-supply of information be inherently scarce?

It turns out that the over-supply of information on the internet has created another commodity altogether – attention. Information may be abundant, but human capacity to focus on it is limited. Executives who must clean out eighty-plus emails per day, each important, know this all too well. Therefore, attention itself is a limited commodity, and the economics of attention zeros in on how people in a society allocate this scarce resource.

In the attention economy, media is money, but not in the way you think. Money is often described in terms of what it does for us – it is a medium of exchange, a store of value and a unit of account. That word – medium – defines how and why media is money. Media facilitates the exchange of information just as money facilitates the exchange of commodities. Just as economists define money along different types of M1, M2 and M3 in terms of their speed of turnover, there are various speeds of turnover in media such as those found in print, broadcast and cyber-media.

An example of a low-turnover form of media would be a quarterly publication such as an academic journal or a book. The highest-turnover media, by contrast, is likely to be found on the internet, where RSS feeds and blogs churn out information at breakneck speeds. Media is often a unit of account for information generators, the agents of the information economy. Academics often keep track of citations and publications as a measure of their performance, recording artists track airplay and CD sales whereas bloggers examine trackbacks, comments and web statistics in their effort to catalogue the influence of the information they have generated.

Low-turnover money forms, such as precious metals or gemstones tend to store value for long periods of time, but are impractical for every day trade. Just imagine trying to buy your groceries with an ounce of gold or silver. It wouldn’t go over well. Bills of exchange and debit cards, however, are more useful for such everyday purposes, but lack certain characteristics that would enable them to store value, such as durability. Moths and mold could eat dollar bills stored under a mattress for decades whereas the institutional framework that makes debit cards so practical could change through time. Banks merge or default, change addresses and dead accounts are deleted. Now, imagine the folly of putting your debit card in a safe deposit box.

Similarly, low-turnover media forms such as periodicals or books are able to store information for long periods of time, but they are impractical for everyday exchange. When debating with someone on the merits of free trade, it is impractical to say “just read Krugman’s book, and you’ll understand”. How many people are willing to invest several hours of their time reading a book to establish whether or not a point of debate holds water? Obviously, it would depend on the importance of the debate. Shorter articles such as newspaper columns or blog entries are often better for everyday idea exchange. “Just read Seymour Hersh’s’s latest column” will often work better, especially if the referrer includes a web URL in an email or text message.

The point of the matter is that durability and the type of ideas exchanged are intertwined. Just imagine what would happen if the internet went down tomorrow. Terabytes of data would be inaccessible, but the most basic ideas for advancing society would be preserved in libraries in book and journal form. After working out a low-tech solution for tracking books, the libraries would still be there as transmitters of ideas. Now imagine if the global markets crashed and trillions of dollars worth of virtual wealth vanished overnight. The precious metals and gemstones would suddenly take on a new, likely higher value, and, after the bugs were worked out, the basis of a monetary order would still be extant.

Money is easily manipulated, and, as it turns out, so is attention. Central banks raise and lower interest rates as often as the U.S. government changes the terror alert color. Or so it seems. When the interest rate goes up, the central bank is requiring economic agents to pay more money to borrow money. When the terror alert changes color, we are being asked to pay more attention to terrorist activities.

Income inequalities exist, as do attention inequalities. At the time of writing, a Google News search for “Tom Cruise” yielded 9400 results, whereas the same search for “NPT” or “Nuclear Proliferation Treaty” yielded 578 and 7 results, respectively. Which issue is more important for the survival of humanity?

The attention economy seems grossly misled in its allocation of value. But is it, really? A similar search for those same terms in the JSTOR academic database showed the opposite to be true. “Tom Cruise” yielded 51 results whereas searches for “NPT” and “Nuclear Proliferation Treaty” yielded 1300 and 18 results, respectively.

Just as different people groups organize themselves around different money-forms, the same holds true for media. Investment dealers tend to hang out where there are large numbers of computers used in trading hedge funds and futures contracts, whereas mafia bosses tend to hang out where there are large concentrations of small, unmarked bills.  Similarly, tweed-wearing professors congregate wherever there are large concentrations of academic journals and books, whereas slick metrosexuals appear closer in proximity to more glossy publications.

The solution to income inequality is to transfer money from the ‘haves’ to the ‘have-nots’, either through charity or government intervention. In the economist’s utilitarian framework, there is little, if any, room for altruism. Donors typically give money for the benefits of appearing generous or buying media attention. Witness several Tsunami aid donors in recent memory who called press conferences to publicize their generous donations to the Red Cross.

Whatever happened to Tsunami Aid coverage in the media? Once governments stepped up and pledged over $6 billion in aid, the problem was solved. In a consumer society, money buys a solution, pill, suppository or salve for whatever the ailment may be. However, the Asia Development Bank has reported that over $4 billion of this aid has not been received. Furthermore, a recent Oxfam report stated that most of the aid that did flow went to the rich.  Pledging all that money has possibly left us bankrupt when it comes to paying attention. Most of the previous discussion has dealt with the similarities between money and media. Here is where they differ.

Live 8 has tremendous potential to draw attention to some of the most pressing issues in Africa such as AIDS, Malaria and ethnic warfare. Live 8 represents a transfer of the attention ‘haves’ to the attention ‘have-nots’ as the people who often are at the top of a google news search lend their attention to the subjects found at the top of a JSTOR search.

Economists often perform unsavory calculations in an effort to measure certain things, and if you are easily offended, then please keep reading. (If I told you not to read, you would continue reading anyway). Approximately $6 billion in aid was pledged for tsunami aid, and at least a quarter-million deaths invoked that response. Let’s double that figure to 500,000 as a measure of the expected deaths from the tsunami due to the after-effects of disease. Even with that figure, roughly $12,000 per tsunami death was pledged, which is roughly equivalent to three year’s GDP for a resident of Indonesia. Mind you, only 1/3 of that has technically been received. However, over a million deaths due to malaria occur each year around the world, and according to the UN, 80% of these deaths are in Sub-Saharan Africa.  I’ll leave it up to you to decide how many millions per year die in Africa because of AIDS. This is the ‘Silent Tsunami’.

Imagine what could be accomplished if the aid/death ratio applied by the west in the form of aid to the tsunami-ravaged nations were applied to Africa. It would seem that this is the solution. But it’s not. As Bob Geldof has said, “we don’t want the people’s money, we want them”.

Don’t give your money to Africa just because Bob Geldof said so. He, nor do they, want it. If you think that your government’s gift of money to Africa will probably end up in a corrupt government’s pocket, you are probably right. But if people paid attention instead, they would have realized that Botswana outranks Malaysia on Transparency International’s Corruptions Perceptions Index.  Suriname, Trinidad & Tobago as well as Ghana outrank Thailand and Sri Lanka in terms of corruptions perception whereas many more African nations outrank Bangladesh and Indonesia, two nations near the bottom of the scale.  Our perceptions of corruption are no excuse not to give; rather, we must pay attention and find out what the residents of a particular African nation think about corruption in their own country.

Africa is poor because we in the West have not examined the economics of how we allocate our attention. Already, pundits and cultural critics are at pains concerning the demographic appeal of the acts featured at Live 8, and some have called for younger artists. Others have cited the corruption excuse for not giving aid to Africa. These critics, under no uncertain terms, are the Paris Hiltons of the global landscape, the undeserving, ignorant rich. Every excuse will be cited not to give money:  “Bob Geldof has insulted our leaders”. “Artists are ideologues”. “African leaders are corrupt”. “We don’t want to make promises we cannot fulfill”.

Forget all this, and remember one thing: your humanity. Africa needs your attention, not your money; this is the point of Live 8.

Aaron Braaten is a graduate student of Economics at a university north of the 49th. He wants to be an Economist (not "Communist") and he runs the Grandinite blog. A "Grandinite" is a resident of Grandin, which is the name of Aaron's neighborhood.