Diminishing Marginal Returns to Swans

September 24, 2011 4 Comments

Which is more beautiful?  This:

Many Swans

Or this?

Two Swans

When we lived in Connecticut, a pair of swans took up residency in a pond behind our house.  They were extremely territorial, so we didn’t get too close, but they were beautiful to look at from afar.

One spring, they were joined by what appeared to be their extended family; about thirty additional swans showed up.

Thirty+ swans were not as beautiful as two swans.  Swans had become a commodity, and each one was no longer a unique work of nature’s art.

We had experienced diminishing marginal returns to swans.

From wikipedia:

In economics, diminishing returns (also called diminishing marginal returns) is decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.

Put more simply, we appreciate two swans more than zero swans.  But after some number of swans arrive, we appreciate each swan less than the previous swan.

The graph might look something like this, where “input” is the number of swans, and “output” is how much we appreciate each additional swan:

After the "X," each additional swan is less impressive.

We experience diminishing marginal returns with a lot of things in life.  The first slice of pie is delicious, but the fourth or fifth might not be so enjoyable.  The first 90 minutes Lord of the Rings: Return of the King were incredible, but even the impressive graphics aren’t that great at minute 200.

In most cases, there is a point at which we can have too much of a good thing.

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Choosing between Strawberry, Raspberry, and Blueberry

June 21, 2011 5 Comments

Have you ever been overwhelmed by a restaurant menu with far too many options?  The Cheesecake Factory is notorious for this — they hand out a Bible-sized booklet of different dishes you can choose from.  Most of us feel a little lost examining these menu treatises.  How can we possibly decide on what to eat when there are so many options?

There’s a faction of behavioral economists who think that too much choice is a bad thing; we, as humans, don’t know how to optimize our choices when presented with more than six or seven options. Are they right?

Economist Sheenya Iyengar (I wrote about her here), is a popular proponent of this idea.  Her book, which I’m failing to make my way through right now, details the most popular study backing up the too-much-choice assertion.  It’s frequently cited as proof of the negative consequences of too much choice.

She and psychologist Mark Lepper set up a jam-tasting booth at a grocery store in California.  Sometimes, shoppers were offered six varieties of jam, and at other times, they were offered 24.  Either way, they were then offered a voucher to buy jam at a discount. The results? Shoppers presented with an assortment of 24 jams were 1/10th as likely to buy some than those who were shown only six jams.

A few weeks ago, I had the pleasure of meeting British Economist, and one of my personal heroes, Tim Harford.  He’s written one of my favorite economics, books, called “The Undercover Economist.”  He’s got a new book out now, “Adapt: Why Success Always Starts with Failure,” (This book is the main reason I’ve put Iyengar’s down – I find Harford a much more compelling writer.)

Harford disagrees with the idea that too much choice is debilitating, and wrote about it on his blog.  In a post titled “Given the choice, how much would you like?” he quickly surveys the field of research, including followup studies that have been done, and concludes,

The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.” Perhaps choice is not as paradoxical as some psychologists have come to believe. One way or another, we seem to be able to cope with it.

My guess is that we have a “choice muscle,” that we can train and teach to deal with larger number of choices.  Like with any other muscle, practice will improve our ability to use it.  If we practice at deciding between a large number of options, we certainly can’t get any worse at it.

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Robert Tercek – Information + Transformation

December 4, 2010 8 Comments

I promised not to post on every single speaker at Humanity + this time around, but Robert Tercek’s talk was just too thought-provoking and intriguing to skip over.

According to his bio, Tercek is “one of the world’s most prolific creators of interactive content.  He has created breakthrough entertainment experiences on every digital platform, including satellite television, game consoles, broadband Internet, interactive television and mobile networks.   His expertise spans television, telecommunications and software.”

His premise was that the intersection of information technology and human biology is going to herald a new era of human development.  Tercek noted that we’re currently in the “Era of B.S.” – where B.S., he said, stands for Before Singularity.

However, Tercek noted, perhaps we’re looking at the development of humanity through the wrong lens.  The media tends to portray the future in terms of “before” and “after.”  That is to say, right now, we’re “before” some mysterious, magical, transforming event, and after this event, humanity will enter an era that is unrecognizable and will have virtually nothing in common with humanity as we know it today.

Instead, Tercek suggested, we should look at societal development on more of a continuous scale; humanity is evolving constantly.  While there are a few technological developments that have profoundly impacted this developmental process, such as speech, writing, and print, it isn’t necessarily reasonable to suggest that there will be one single moment that will completely transform humanity.

From my perspective, Tercek’s main takeaway message was that value is shifting away from products – physical objects – to data, or virtual objects.  According to Tercek, the U.S. sales of virtual goods will exceed $2 billion in 2011.

As a quick aside, this relates directly to the idea of value shifting away from products towards anything else less tangible: intellectual capacity, creativity, time, services, etc.

Tercek’s talk included a lot of great statistics and specific examples, as well as a dearth of historical information.  He referenced the impending internet of things multiple times.  Not only that, but he was an excellent presenter – enthusiastic and compelling.

Some attendees mentioned that Tercek’s talk didn’t have a lot of new information.  However, Tercek’s talk did exactly what it was supposed to do – get the audience excited about the future, and especially the future that includes the next two days of discussion about transhumanism, futurism, artificial intelligence, technology, and more.

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Digital Assistants

November 9, 2010 1 Comment

On the blog a few weeks ago, we looked at information overload.  I predicted the development what I called Information Secretaries, or Digital Assistants to help us cope with the increasing amounts of information we’re requested to digest and synthesize on a daily basis.

Turns out that, on the fringe, at least, these sorts of tools are already starting to become available.

Slate’s Farhad Manjoo wrote about his expedition to find an electric tea kettle.  With no time on his hands, he employed the services of a virtual assistant.

I outsourced the task to Fancy Hands, a Web site that will take on your most unpleasant tasks in return for a small fee. Within a couple of hours of submitting my request, Carolynn, a Fancy Hands assistant, got back to me with my options. She’d called up both the kettle manufacturer and my local Macy’s and found out each company’s return policies. Macy’s, Carolynn told me, would take back the kettle even without a receipt or a box; all I had to do was go to the store and ask for Joe in the housewares department.

Fancy Hands isn’t alone in the virtual-assistant business. Many such services have popped up over the years—there’s also TimeSVR, Ask Sunday, and TaskRabbit.

So, the assistants may not be software or hardware – they’re still real people.  But it may not be long until we have technology advanced enough to do these sort of tasks for us.

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Thinking about Thinking Recap

October 22, 2010 1 Comment

In the Information Overload series, we discussed the concept of distilling information down to manageable, bite-sized summaries.  In the Thinking about Thinking series, we talked about the need for deep thought and fleshed-out ideas.

For those of you in the Information Overload camp, here’s a summary of everything we talked about in the Thinking about Thinking series.  For those if you who want to read more, click through to read the entire series, in all of its glory.

  1. Thinking About Thinking. In this introductory post on how technology is rewiring our brains, we looked at some of the reasons this series is worth your time to read.  These included our increased penchant for multitasking, the ability of internet use to change our mental processes, and our affinity for each new electronic notification text message.
  2. Do We Really Need Deep Thought? The media we consume is decreasing in size, and, thus, depth of information.  Does that mean our thoughts are adjusting accordingly?  Most scientific breakthroughs actually do require deep thought – the “Ah-ha” moment is a myth.
  3. Are We Addicted? Our Brains On Technology. This post looks at the science behind addiction, and how some of that science shows our brains react to technology in the same way they react to other addictions.
  4. The Opposite of Technology. Studies show that being in – or thinking about – nature causes our brains to make connections.  Conversely, being in or thinking about man-made environments, like cities and highways causes our thoughts to become scattered and jumbled.
  5. Getting off of Social Media. This post took it one step further, and  looked at organizations and people who are turning off their technology and social media connections.  We borrowed the term Countertrend – a social backlash to a trend – to describe the phenomenon.
  6. Conclusion: Circuits and Cerebellums. In this final post, we talked about some suggestions for dealing with all of this technology.

On Monday, I’ll be attending FailCon 2010. According to the website, “FailCon is the premier conference on start-up failures and how to prepare and recover from them.” Panelists include representatives from Etsy, the New York Times, Formspring, Twitter, Zappos, and more.  Look forward to posts about failure – then subsequent success.

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