Self-driving cars are rapidly becoming a reality. In fact, we would have self-driving cars now if it weren’t for the randomness introduced by human drivers and pedestrians. One solution to this problem would be restricted lanes for autonomous vehicles only. Self-driving cars can communicate among themselves and coordinate in ways that human drivers are (alas) unable to. Autonomous vehicles don’t get tired, they don’t get inebriated, and they don’t get distracted. These features of self-driving cars will save millions of lives in the coming years.
It is a wide-ranging essay. Here is more:
Back in 2000, about 80 billion photos were taken worldwide—a good estimate since only three companies produced film then. In 2015, it appears that more than 1.5 trillion photos were taken worldwide, roughly 20 times as many. At the same time the volume exploded, the cost of photos fell from about 50 cents each for film and developing to essentially zero.
So over 15 years the price fell to zero and output went up 20 times. Surely that is a huge increase in productivity. Unfortunately, most of this productivity increase doesn’t show up in GDP, since the measured figures depend on the sales of film, cameras, and developing services, which are only a small part of photography these days.
In fact, when digital cameras were incorporated into smartphones, GDP decreased, camera sales fell, and smartphone prices continued to decline. Ideally, quality adjustments would be used to measure the additional capabilities of mobile phones. But figuring out the best way to do this and actually incorporating these changes into national income accounts is a challenge.
Did you mean wisdom or “wisdom”?
A reasonable, albeit uncharitable, interpretation of the comment about self-driving cars looks like this: “In fact, we would have self-driving cars now if it weren’t for [humans].”
Reminds me of Matthew Winkler’s comment while still editor-in-chief at Bloomberg, “It’s not the computer, it’s the human!”
The incredible complexity of driving/driving culture seems completely lost on someone (Hal Varian) who has a huge incentive to make driving seem simple.
I don’t see the problem here, at least in the context of the larger essay. Have you seen the Google car’s model of the world? The video of it responding to unforeseen circumstances, like a person on a motorized wheelchair chasing ducks across the street is instructive. It is incredibly complex. While there is reason for scepticism with all new things, you fail to provide a specific one.
Productivity isn’t measured in photos though. It is measured in costs saved (of the 80B) and in benefits generated (of the 1.5T) which is apparently not that much or the economy would be that much larger.
Actually you’ve completely missed the point. Varian is pointing out a weakness of using GDP as a measure of total output, because GDP falls when cost savings are achieved. The photo itself is an end objective. Just because my photos have no market value to you, doesn’t mean that their value to me has fallen due to the cost dropping.
“Household production, ad-supported content, transaction costs, quality changes, free services, and open-source software are dark matter as far as GDP is concerned, since technological progress in these areas does not show up directly in GDP. “
Nor should they. That is not what gdp is meant to measure. Yes, people often want to use gdp as a substitute for welfare but it isn’t and shouldn’t be. We may be better off with a lower gdp, but that is more rationalization than evidence. Lower costs should transfer spending to other categories, not diminish it. Greater benefits should apply to business as well as individuals. Innovation is double edged, destroying the old as well as creating the new, and it is only the net that matters for gdp, as opposed to welfare.
Very wise indeed, especially his GDP dark matter metaphor. It is somewhat ironic that his first main channel, “data collection and analysis”, no longer captures what intuitively seems to be enhanced productivity.
A challenge sort of like unscrambling an egg..
I take a good number of pictures on my smart phone, but I do this primarily because its free. If each picture cost even $0.01 I would take a lot less. So are those extra pictures worth 20x the value of the earlier pictures?