The Attention-Deficit-Disorder Economy

[Commentary] I went back to the text of a speech "Growing Fast and Slow" given by Andrew Haldane, the Chief Economist at the Bank of England, that is causing a bit of a stir across the pond. What caught the attention of British reporters wasn’t Haldane’s discussion of neoclassical growth theory, or the role of education in the industrial revolution, but a bit about the rise of the Internet, and how it may be hindering material progress.

The main issue is a neurological one, Haldane suggests. Technological advances, and the ubiquity of always-on media, may be undermining one of the key psychological prerequisites for economic growth: patience, and the willingness to put off current gratification for future gains. Rather than promoting thrift and deep thoughts, technology may now be crunching attention spans and accentuating “short-termism,” which Haldane identifies as an increasingly pervasive force in many areas of contemporary society, from reading habits (he mentions Twitter), to sports, to finance.

In response to this suggestive line of reasoning, of course, there are counterarguments that can be made. If people are getting more impatient, and this is leading to less saving, shouldn’t long-term interest rates be going up rather than falling to historic lows, as they have done in the past decade? The rise of short-termism in financial markets and labor markets may reflect political and institutional developments, such as deregulation and the rise of shareholder activism. Perhaps attention spans aren’t getting shorter at all, but are merely being refocussed on digital, rather than analog, objects.