Why Aren't Smartphones Making Us More Productive?

We regard smartphones as game devices, Web browsers and messaging tools. But at heart they are like all computers before them. They are efficiency engines, a means of saving time, bridging distance, reducing cost. Yet there's something bizarre going on. Even as an estimated 130 million smartphones roam the U.S. streets, economists can't quite find them.

By that I mean they can't find how these mobile devices are improving worker productivity, which computers have been doing quite ruthlessly for the last 70 years. Productivity is the reason living standards rise. It's why we have more goods and services than our grandparents could imagine. The official U.S. productivity numbers are low when compared with the stunning 3% yearly gains of the first Web era, roughly 1995 to 2004. In fact, annual productivity growth since 2004 is about 1.5%, below even the long-term average of 2.25%. It's as if a time-wasting flock of Angry Birds has buried productivity like a worm. Classically defined, an increase in productivity either reduces labor, improves output, or both. And by that measure, argues Northwestern University economist Robert J. Gordon, the iPhone "has done absolutely nothing" to improve productivity. So is there something wrong with the government numbers? Or, more intriguing, are we overestimating how these little machines can affect living standards? The answers are wonky and, inconclusive. For now, we're left in the fallible realm of impressions. Here the relevant question seems to be: Can you find an area of life and business not being affected by the devices?