The last twenty years of the Internet, summed up in one chart

Posted on April 27, 2011 by Peter Sahui

A couple of weeks back, I linked to a chart which I said encompassed half of human history. I’ve now stumbled upon its counterpart for the history of the Internet. This chart from Wired Magazine ( “The Web is Dead, Long Live the Internet”), dated August 2010, sums up the last 20 years in the evolution of online traffic: from the days of FTP and newsgroups, through the rise of the Web, and now the boom of video traffic. Worth a look, even if its title is rather melodramatic.

 

The missing half of the picture is the absolute amount of data that each medium represents. I’ll keep an eye out for a chart that would represent that…

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To what extent do we cherish the fruits of our labour?

Posted on April 23, 2011 by Peter Sahui

Have you ever cherished an object you put together with your own hands – no matter how simple it may be, or how clumsy the job you did?

 

A new working paper* indicates that people place a higher monetary value on objects they successfully assembled than they do on objects made by others. The basic premise is effectively empirical confirmation of common sense, but that is still perfectly valid – common sense, after all, is not necessarily correct. And the researchers’ findings weren’t limited to that. Here were some of the other highlights:

 

  • Aesthetic appeal alone apparently does not explain the phenomenon: the researchers ran their experiments with objects that ranged from purely functional (IKEA boxes) to decorative (origami animals and Lego sets);
  • The amount people were willing to pay for origami animals they’d made themselves was almost equal to the amount third parties would pay for origami made by experts;
  • Success mattered. Participants who successfully assembled the product valued it significantly more highly than those who left the last steps undone, or those who had to take the object apart again;
  • Even people who didn’t identify themselves as DIY-ers were willing to pay more for objects that they had completed themselves; and
  • This phenomenon only applied once people had actually assembled something: respondents to a survey, who had not built anything yet, said they’d pay more for preassembled products than for those that required some assembly.

 

The researchers pose a number of follow-up questions; for example, would the same phenomenon apply to “big ticket” items as well? And they muse as to whether it could explain the sunk-cost effect (willingness to throw good money after bad) and “not invented here” syndrome.

 

All in all, an interesting piece of reading – and it made me reflect on my own time with Lego, miniatures kits, and (sadly unaesthetic) high school crafts projects…

 

* “The ‘IKEA Effect’: When Labour Leads to Love”, by Michael I Norton (Harvard Business School), Daniel Mochon (University of California, San Diego) and Dan Ariely (Duke University).

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The history of the world, in a few charts

Posted on April 17, 2011 by Peter Sahui

Never mind a picture being worth a thousand words. This one chart, from The Economist, is ostensibly about various nations’ percentage share of the world economy through the last 2,000 years. But look more deeply, and the chart will effectively tell you half the history of the world. The collapse of the Roman Empire shows up in the decline in Italy’s share of GDP between 1 and 1000 AD; the Industrial Revolution and eventually the rise of the United States show up in the explosion in the West’s share of GDP after 1820. And plenty of ink has been spilled about the resurgence in the share of GDP accounted for by China and India, after 1970; our most recent reminder came in the form of this week’s meeting between the leaders of Brazil, Russia, India and China – the “BRICs”.

 

The other half of history, I think, can be represented by the absolute level of GDP per capita. I have used the late Professor Maddison’s data (which you can find on his home page) to create these two charts:

Historical GDP per capita - log scale

 

Historical GDP per capita

 

The first (log 10 chart) is better at showing up the differences within the earlier period, while the latter is better at showing the sheer magnitude of the transformation of human life in the last 200 years.

 

This all begs the question, “Why?” Why did nations industrialise, and why did some do so faster than others? This is one of those topics where I know just enough to realise that, in fact, I don’t know a lot – there is a tremendous amount of scholarship in the field, of which I have just been able to scratch the surface. Nevertheless, over coming weeks and months,  I plan to post reviews of books by various authors who attempt to answer that question.

 

I look forward to exploring these ideas with you.

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Two books on Asia: Monsoon by Robert Kaplan; When Asia was the World by Stewart Gordon

Posted on April 12, 2011 by Peter Sahui

Welcome to my reading review! Asia is a pivotal continent – home to some of the world’s largest nations and some of its most dynamic. Recently I picked up two books on the region, Robert Kaplan’s Monsoon and Stewart Gordon’s When Asia Was The World, and my take on them is below.

 

Please note I am not an expert in the topics covered by these books; rather, my perspective is that of an interested lay reader.

 

Monsoon: The Indian Ocean and the Future of American Power, by Robert D. Kaplan (2010) – This book is about the history and contemporary geopolitics of the Indian Ocean, from East Africa to the Indian subcontinent and Southeast Asia, as seen through the lens of the author’s travels. If you’ve done any reading on these topics, none of the concepts the book discusses will be radically new: these range from the “string of pearls” (Chinese naval facilities around India, in the likes of Burma, Sri Lanka and Pakistan); to China’s reliance upon oil shipments through the Straits of Malacca; to the nature of Islam in Indonesia; to the historical trade and cultural links between the countries in the region. However, the book could well add some interesting colour. If, however, you haven’t read about these topics and you were looking for a decent introduction, you could probably do a lot worse than starting with Monsoon.

 

You can buy Monsoon from Amazon here.

 

When Asia Was The World: Travelling Merchants, Scholars, Warriors and Monks Who Created the “Riches of the East”, by Stewart Gordon (2008) – This book is a collection of ten vignettes, mostly about individuals (the “merchants, scholars, warriors and monks” of the title): Jews and Muslims, Chinese and Portuguese and more, from the founder of the Mughal Empire to the traveller ibn Battuta, across almost 1,000 years. One vignette discusses what the contents of a shipwreck in the Java Sea tell us about the trade networks of the time, and the final vignette discusses the region as a whole. I found some of the people chronicled to be much more interesting than others, but on the whole, I liked the book as a source of insight as to how the world worked, who went where and why, how kings treated honoured guests and how ordinary people made their living in those days. This one is going on my reference shelf.

 

You can buy When Asia was the World from Amazon here.

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Could rainfall help explain why some societies are democratic and others, not?

Posted on April 10, 2011 by Peter Sahui

A number of authors have argued that geography has been a decisive, or the decisive, factor explaining differences between human societies. Probably the most famous in mainstream circles is Jared Diamond, who argues in Guns, Germs and Steel that Eurasian societies came to dominate the world because they benefited from a greater number of, and more easily domesticable, crops and beasts of burdens. Now a new, and particularly interesting, example has caught my eye – this draft paper* argues that moderate levels of rainfall (550 to 1300 mm per year) are associated with stable democracy. (You can watch this interview on Bloomberg, with one of the authors of the paper, to get a quick overview of the research.) How does this work?

 

Well, say the authors, rainfall determines the economics of agricultural production. The economics of agricultural production determine social structures and the diffusion of wealth and power through pre-industrial society.  And when these are at levels that allow for “high levels and broad distributions of human capital”, societies ultimately develop institutions (such as – and I’m putting words in the authors’ mouths here – a strong and well-educated middle class)  that are conducive to democracy.

 

How does rainfall affect the economics of agricultural production? Too low, the authors say, and societies end up with wealth being concentrated in the hands of the elite who control the water. Too high, and the crops available are hard to store or subject to extreme economies of scale, leading to large plantations worked by landless labourers. But just right and the family farm becomes economically viable, allowing ordinary farmers across the society in question to invest in their human capital.

 

Furthermore, this apparently holds true when controlled for a host of other variables:

 

We also show that this finding is robust to controlling for possible confounders, such as GDP per capita, income inequality, the percentage of the population that is Muslim, ethnic fractionalization, linguistic fractionalization, the percentage of the population that is Arab, the prevalence of malaria, colonial heritage, natural resource income (the “resource curse”), and regional fixed effects. In fact, we find that many of these well known correlates of democracy lose statistical significance once we condition on rainfall. Moreover, unlike many of these other correlates, rainfall is exogenous.

 

I’ve skimmed the paper itself and taken a more thorough look at this opinion piece by Amity Shlaes on Bloomberg, which was how I found out about the paper in the first place. I am not an expert in the areas that the paper covers, but it makes a lot of intuitive sense to me, and I think it’s well worth a look for anyone interested in the topic area.

 

* “Rainfall, Human Capital and Democracy”, by Stephen Haber of Stanford University and Victor Menaldo of the University of Washington.

Posted in History, Societies | 1 Comment

Thinking of a happy childhood – some potential unexpected benefits

Posted on March 22, 2011 by Peter Sahui

Could simply recalling happy childhood memories make us more likely to act ethically and helpfully? Quite possibly yes, judging by a working paper* released last week. To quote Harvard Working Knowledge’s executive summary:

 

  • Through four experiments, the researchers show that triggering childhood memories induces feelings of moral purity in adults, which leads them to behave pro-socially—that is, to do kind, ethical things that benefit others.
  • Recalling childhood memories also can lead adults to judge (and punish) unethical behavior more harshly than they would have otherwise.

 

What were these “kind, ethical things”? Per the abstract:

 

In Experiment 1, participants instructed to recall memories from their childhood were more likely to help the experimenter with a supplementary task than were participants in a control condition, and this effect was mediated by self-reported feelings of moral purity. In Experiment 2, the same manipulation increased the amount of money participants donated to a good cause, and self-reported feelings of moral purity mediated this relationship. In Experiment 3, participants who recalled childhood memories judged the ethically-questionable behavior of others more harshly, suggesting that childhood memories lead to altruistic punishment. Finally, in Experiment 4, compared to a control condition, both positively-valenced and negatively-valenced childhood memories led to higher empathic concern for a person in need, which, in turn increased intentions to help.”

 

Almost as interesting was some of the earlier research cited by the study:

 

“Similarly, Aarts and Dijksterhuis (2003) showed that people automatically lowered their voice when they were shown a picture of a library, indicating that merely seeing the photo activated situational norms that one should not speak loudly in a library.”

 

You can check out the full text of the working paper here. I’m usually interested by research as to what makes us think and act the way we do (perhaps this is why behavioural finance fascinates me?), and this was no exception.

 

* “Memory Lane and Morality: How Childhood Memories Promote Prosocial Behavior”, by Francesca Gino of Harvard Business School, and Sreedhari D. Desai of Edmond J. Safra Center for Ethics at Harvard University.

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