Lisa M. George — Associate Professor of Economics at Hunter College
[Transcript of video]
I’m hoping to show you my process rather than to describe it in steps. Afterwards, in the panel, we can talk about things that may or may not be clear. In order to think about what observation means to an economist, I thought I should tell you a little bit at least about what economics is. Because people from the media and other places don’t always have the same perception of what economics is and what we do inside the profession.
Economics is the study of how people allocate limited resources – money, time, years of life – in a world of unlimited wants. How do you choose?
Then we look at the consequences of all these little choices from a social — and an overall perspective — for a society as a whole. A big part of economics is understanding how people respond to changing incentives. Those small incentives and small changes — what happens when we add them up to a collective response.
I study markets for news and information in other media. In my particular case, I’m an applied economist, I study media markets and I’m especially interested in how technology impacts what markets deliver for us: what we want, what we get, and the larger consequences of that.
For example, I have a paper on television that looked at the spread of television and found a relationship between the spread of television and household debt. I have another paper that looked at the national expansion of the New York Times in the 1990 and found how it sort of drove people, to some extent, away from their local papers and actually reduced voting in local elections. That’s an example of the kind of observation I would do in my work.
So the short answer to the tools and the methods of my observation is data. To start with that one, if we had to sum it up all in one word, this would be the word that I choose. But there’s a little bit more to it than that. Data has different roles in economics and economic observation, and I’ll split them in two parts. And the first part is that data shapes the questions that we ask.
And this has become especially true as more and better tools are available to look at things as a whole. Data plays a role in what questions we want study and that we think are interesting. The second part is that in the context of research design, data helps us answer those questions.
We use statistical tools, in the first part we use visual tools, we use some summary examples, and some programming. And then in the second case we need research design, which could be experimentation, it could be more statistical, it could be other things, but we use data in a very structured way to get our answer.
Although I try to shape my investigation here toward the Model 500, my instincts as an economist — and what the data is telling me — is that I couldn’t really take, at least in this project the Model 500 itself. I really look a little bit more at the telephone in America. The first observation is the who, what, when, where, why of the telephone.
What can I learn from the data that’s out there that other people have collected and put together about who owned phones? What did they do before phones? When did they get service in different parts of the country? Why did people make calls?
And it’s not an easy thing to find comprehensive data on this, and for a particular project you might want to go and gather and look at satellites and look at records. But my goal here was to observe and look at what was out in the world. I used some of these observations to shape a more important question that has been asked in a research context: “What has changed with the phone”? “What are the incentives to change behavior that came about with this object, the telephone?” And: “What were the social consequences of that change?”
And so the question that I get from this is a very good example of an economic style question, is to first say “Well, did the telephone reduce or increase the face to face interactions among people?”
This is an important question. There’s quite a lot of research on aspects of this. When I asked students this, they — of course — said it had to reduce face to face interactions. Instead of having to go to a shop to do something, or instead of having to maybe go visit your doctor you could use the phone. To ask your mother how she’s feeling, you could do this on the telephone.
This sort of first blush answer is: well, of course it’s going to reduce some face to face interactions. But a little bit of a closer thought and observation of people and history tells you, that’s not totally true, because the telephone opened up the possibility of maintaining many more relationships. Because you could lower the cost of managing relationships, of continuing them, of pursuing them. You could potentially — in a business context — talk to twenty clients instead of two .You could maintain connections to your high school classmates over the years. If you can maintain more of what we now call weak ties, the implications might be that you will in fact have more face to face interactions, more meetings, more human contact as a result of communication technology.
The implications of that are really pretty profound from the economic and social consequences. If phones led to more face to face interactions — more interconnections — that sort of suggests that telecommunications technology doesn’t make us want to live in more remote areas and commute or telecommute from these remote places. It actually makes cities even more valuable than they were before. There are plenty of modern analogs to this question. Social media, in general, we look at the same piece: did this ability to stay connected over space and over time in easier or quicker ways — does it lead to more social interaction and does that make it more desirable to be in agglomerated or urban areas or not? And so you could ask many, many questions about the consequences of face to face interactions, but I’ll give you the quick answer, because I don’t really have the time to sort of flesh out what we’ve all researched on this.
There’s pretty good evidence that telecommunications technology, communications technology in general, starting with the telegraph, with the telephone, and then social media and text and computers, increased face to face communications at a very large scale.
And you can look at business meetings, you can look at the number of dates people go on, you can look at all kinds of reactions, the number of times that you interact with relatives, and you can find these positive implications. Let’s step back for a minute.
I gave you the end goal but I want to show you some of the observations along the way of the who, what, when, where, why that kind of shaped some of my thinking about this question. Here’s a map of American telephone penetration in 1910. You see that the most densely populated parts of the country had the phone in 1910. There were fewer phones in the middle of the country. Even some pretty densely populated places, like Florida, did not really have telephone networks, and there’s a lot of history about this that we won’t talk about. This was a particularly useful illustration for me and it is telling us about the spread of the telephone relative to other technologies.
Yhis is 1950-ish right here, where I stuck the phone, but one of the interesting observations is that the telephone spread more quickly than I had thought. More quickly than many other technologies and information technologies that I knew about. If we look down here at the automobile, it spread much more quickly than the telephone. If we look to the automobile and television, there’s a really steep line for television here. This is color TV, but the regular TV Line is just as fast.
The telephone took quite a bit longer. We had half the country with 60 percent by 1950. It depends a little on how you measure it, like some people had access to telephones without having a telephone. The when is important. Here’s a more fleshed out picture of that graph with our presidents at the bottom, some economic recessions, and some additional technologies and other inventions, but basically we’re here.
The same picture emerges that the telephone took a while to spread across the country compared to many other objects. One of the conclusions from this — I guess this counts as observation for me — is that telephone technologies are special in that their benefit increases with the number of other people who have a phone. They’re network devices. A radio — as soon as there is a program — you can buy a radio. And of course, a radio is more interesting when there’s better programming on but it doesn’t really matter how many of your neighbors have a radio to make it worthwhile. Network industries are different in that their benefits to people grow as more people are connected. That leads them to spreads more slowly at the start and quickly later.
There is some interesting data on 3-1-1 calls in New York. It’s hard to figure out what people did talk about. I really would have loved to have known — statistically in 1950 when this phone was out — what was the nature of those conversations. If I would pursue any further research on this project, it would be to try to learn systematically about that. Not just anecdotally but systematically: “what were people talking about?”
This is a great picture. I’ll have to say it was a little kind of underwhelming. What it really tells you is what the topics of New York City 3 1 1 calls are over a 24 hour day. And it’s really very beautiful, but I don’t think you needed the hundreds of hours that probably went into this to know that starting in the evening people start complaining about noise. And then in the morning they start complaining about construction. It’s a very nice picture, but in the end I don’t think I learned very much from this. I also wanted to compare – so in order to say: “all right what was American about this object?” I wanted to compare it a little bit to what I could see in the world. We are working with a little limited time scope — this is 1960 and you can see the darker colors here are places that had higher phone penetration. US had over 50 percent at this period, measurement depends. The white space is shows where we don’t have data.
We can look at the world in 1960, and North America, the English speaking world, had very heavy phone penetration. And then we can jump to 1975. We just have reporting from the former Soviet republics. And again the U.S., even though I found telephone penetration to be somewhat slow in the U.S., it turns out that it was much faster due to a somewhat better regulatory — a somewhat more like market oriented system. In European countries there was more nationalization of phone service. In part to protect investments that had been made by governments in the telegraph and they didn’t want to waste their telegraph investments by having to move towards the phone. That really slowed growth in a lot of ways. There were a lot of consequences to that slower process.
We can fast forward to 2016 and — in terms of landline telephones — there’s still a lot of the world that had very low telephone penetration. You can also look at these countries, many of them, not all of them are less urbanized. There has been a span of research in economics that shows how mobile phones allowed many places to jump ahead. They weren’t really stuck with these expensive networks that required governments and infrastructure, and so mobile phones have spread extremely rapidly in the developing world. Many places in Africa really never even got landlines or just had them in very low proportions. So mobile phones are now changing the economies in many parts of the world in the same way that this phone was changing the US in the 1950s: enabling more face to face connections, allowing business to expand. African economic growth is really taking off because now people can really maintain business relationships in a way that was difficult before the communications technologies. In that sense, we can observe the past a little bit by looking at other places in the present.
I started with the question of: “can we say did phones increase urbanization?” I will just show you a few suggestive elements of this. If you don’t know Hans Rosling, you should write his name down and google him, because he’s probably one of the greatest data visualizers that exists, and we use his teaching tools in economics. But part of what he did was bring a lot of graphic design to simple tools to try to change the world for the better. If you can learn who he is you will be ahead of the game. But I made just some simple two way pictures of telephone, fixed telephone subscribers per 100 people and urbanization, the share of populations living in cities. What we can see is 1975 — there is low to middle phone penetration in a lot of areas in the world. As time goes by — here’s our snapshot in 2000 — we can see clearly we were moving along the telephone penetration curve and we’re also moving up in the world on this urban penetration curve. This is not a causal link by any chance, but these bigger bubbles are bigger countries and we’re seeing more countries getting more communication technology, becoming more urban.
There is actually some data directly on this on the paper that inspired my talk the most. A paper on the telephones’ increased urban agglomeration and their role in the size of cities. What we see is that the move toward urbanization was happening well before the phone. Maybe we can think about the phone is accelerating it somewhat, but the urbanization trend is not a slam dunk relationship. We can also look at this once we control for income, it’s hard to say whether this is phones themselves or this is people getting more wealthy.
Just to let you know a bit more about this answer — that the role of the telephone in the death of distance in American society and worldwide — is kind of wrong. It sounds great but it’s not right. New technology reduces the burdens of distance but, in doing so, it increases the number of weak ties we can maintain, the number of people we can stay connected to, and that actually leads to even more face to face interactions that were possible before, and those overwhelm the distance effects. This kind of technology, that bridges distance in some ways, also brings us closer. I have a reference slide if you want to look this up, Gaspar and Glaser the “Information Technology and the Future of Cities”. It’s a classic — I think it’s from the 90s — you can take a look at those.
Lisa M. George
Lisa M. George is an empirical applied economist specializing in industrial organization and political economy. Her research focuses on the economics of media markets, spanning traditional and new media. Professor George has published in top economics journals including the American Economic Review, Journal of Political Economy and Journal of Industrial Economics. She is Associate Professor of Economics at Hunter College, and a member of the Doctoral faculty at CUNY’s Graduate Center.