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Last Updated on July 19, 2018

The Productivity Paradox: What Is It And How Can We Move Beyond It?

The Productivity Paradox: What Is It And How Can We Move Beyond It?

It’s a depressing adage we’ve all heard time and time again: An increase in technology does not necessarily translate to an increase in productivity.

Put another way by Robert Solow, a Nobel laureate in economics,

“You can see the computer age everywhere but in the productivity statistics.”

In other words, just because our computers are getting faster, that doesn’t mean that that we will have an equivalent leap in productivity. In fact, the opposite may be true!

New York Times writer Matt Richel wrote in an article for the paper back in 2008 that stated, “Statistical and anecdotal evidence mounts that the same technology tools that have led to improvements in productivity can be counterproductive if overused.”

There’s a strange paradox when it comes to productivity. Rather than an exponential curve, our productivity will eventually reach a plateau, even with advances in technology.

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So what does that mean for our personal levels of productivity? And what does this mean for our economy as a whole? Here’s what you should know about the productivity paradox, its causes, and what possible solutions we may have to combat it.

What is the productivity paradox?

There is a discrepancy between the investment in IT growth and the national level of productivity and productive output. The term “productivity paradox” became popularized after being used in the title of a 1993 paper by MIT’s Erik Brynjolfsson, a Professor of Management at the MIT Sloan School of Management, and the Director of the MIT Center for Digital Business.

In his paper, Brynjolfsson argued that while there doesn’t seem to be a direct, measurable correlation between improvements in IT and improvements in output, this might be more of a reflection on how productive output is measured and tracked.[1]

He wrote in his conclusion:

“Intangibles such as better responsiveness to customers and increased coordination with suppliers do not always increase the amount or even intrinsic quality of output, but they do help make sure it arrives at the right time, at the right place, with the right attributes for each customer.

Just as managers look beyond “productivity” for some of the benefits of IT, so must researchers be prepared to look beyond conventional productivity measurement techniques.”

How do we measure productivity anyway?

And this brings up a good point. How exactly is productivity measured?

In the case of the US Bureau of Labor Statistics, productivity gain is measured as the percentage change in gross domestic product per hour of labor.

But other publications such as US Today, argue that this is not the best way to track productivity, and instead use something called Total Factor Productivity (TFP). According to US Today, TFP “examines revenue per employee after subtracting productivity improvements that result from increases in capital assets, under the assumption that an investment in modern plants, equipment and technology automatically improves productivity.”[2]

In other words, this method weighs productivity changes by how much improvement there is since the last time productivity stats were gathered.

But if we can’t even agree on the best way to track productivity, then how can we know for certain if we’ve entered the productivity paradox?

Possible causes of the productivity paradox

Brynjolfsson argued that there are four probable causes for the paradox:

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  • Mis-measurement – The gains are real but our current measures miss them.
  • Redistribution – There are private gains, but they come at the expense of other firms and individuals, leaving little net gain.
  • Time lags – The gains take a long time to show up.
  • Mismanagement – There are no gains because of the unusual difficulties in managing IT or information itself.

There seems to be some evidence to support the mis-measurement theory as shown above. Another promising candidate is the time lag, which is supported by the work of Paul David, an economist at Oxford University.

According to an article in The Economist, his research has shown that productivity growth did not accelerate until 40 years after the introduction of electric power in the early 1880s.[3] This was partly because it took until 1920 for at least half of American industrial machinery to be powered by electricity.”

Therefore, he argues, we won’t see major leaps in productivity until both the US and major global powers have all reached at least a 50% penetration rate for computer use. The US only hit that mark a decade ago, and many other countries are far behind that level of growth.

The paradox and the recession

The productivity paradox has another effect on the recession economy. According to Neil Irwin,[4]

“Sky-high productivity has meant that business output has barely declined, making it less necessary to hire back laid-off workers…businesses are producing only 3 percent fewer goods and services than they were at the end of 2007, yet Americans are working nearly 10 percent fewer hours because of a mix of layoffs and cutbacks in the workweek.”

This means that more and more companies are trying to do less with more, and that means squeezing two or three people’s worth of work from a single employee in some cases.

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According to Irwin, “workers, frightened for their job security, squeezed more productivity out of every hour [in 2010].”

Looking forward

A recent article on Slate puts it all into perspective with one succinct observation:

“Perhaps the Internet is just not as revolutionary as we think it is. Sure, people might derive endless pleasure from it—its tendency to improve people’s quality of life is undeniable. And sure, it might have revolutionized how we find, buy, and sell goods and services. But that still does not necessarily mean it is as transformative of an economy as, say, railroads were.”

Still, Brynjolfsson argues that mismeasurement of productivity can really skew the results of people studying the paradox, perhaps more than any other factor.

“Because you and I stopped buying CDs, the music industry has shrunk, according to revenues and GDP. But we’re not listening to less music. There’s more music consumed than before.

On paper, the way GDP is calculated, the music industry is disappearing, but in reality it’s not disappearing. It is disappearing in revenue. It is not disappearing in terms of what you should care about, which is music.”

Perhaps the paradox isn’t a death sentence for our productivity after all. Only time (and perhaps improved measuring techniques) will tell.

Featured photo credit: Pexels via pexels.com

Reference

More by this author

Tucker Cummings

Writer and social media professional sharing productivity tips on Lifehack.

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Published on April 16, 2019

How Self Care Can Help You Live Your Best Life

How Self Care Can Help You Live Your Best Life

When was the last time you did something for yourself?

Whether it was deciding to treat yourself with a little something or travel for some R&R, how often do you practice self-care?

Well, as good as above sounds, there’s a common misconception that many of us have about self-care: that it’s only about indulgence and enjoyment.

However, self-care goes far beyond indulgence. It’s actually about respecting your mind and body, understanding its limits, and being able to take care of every part of yourself, in a holistic way.

And, you really don’t have to go to extreme measures or do anything specific–like meditating or following a plant based diet–in order to practice self-care. You just have to make sure that what you’re doing is in your best interests.

So how can you make that happen?

Below are a few proven methods that will help you become a better version of you. Follow through with these regularly and you’ll be well on your way to living your very best life.

Listen to Yourself

The bulk of self-care is knowing yourself.

This means knowing your body’s limitations, and being in tune with your feelings, emotions and thoughts. So it’s important, then, to know who you are and what you want to do in life, in order to truly say that you know yourself. 

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What is your purpose?

Have you ever thought about this question?

Your purpose doesn’t have to remain the same throughout your life. What you found a purpose in at age 19 would likely be different at age 49.

In your current situation, think about the different roles that you have – as a working professional, a spouse, a partner, a parent, etc.

Do you feel like you are fulfilling your purpose through any of these roles?

All you have to do is ensure that what you’re chasing is meaningful to you; this will bring focus and motivation as you strive to achieve your goals.

If you have your purpose defined, then that’s awesome! You know what drives you and why.

But, if you don’t feel like you have a purpose nailed down, it’s good to start by asking why.

For example, why are you working in your particular job or industry? If the reason is vague or unclear, then your motivational energy will be the same. In which case, you may find yourself not having a direction for where you’re headed in life.

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If you’d like to learn more about finding your purpose, then I recommend you check out this article:

How to Get Motivated and Be Happy Every Day When You Wake Up

Seek Out Continuous Education

Now, this may seem less common when you think of self-care, but lifelong learning is incredibly useful and an important component of taking care of yourself.

It’s Super Practical

Lifelong learning is extremely practical these days and does not require as much effort as it may have in the past. Long gone are the days when you could only find information on something by visiting a library. In this day of the internet, anything you can imagine is at your fingertips.

You don’t need to physically go to a learning institution to learn. You can watch Youtube videos to learn new skills, take online courses to earn a degree, and scroll through an endless amount of articles, books and journals from reputable news and informative sites.

When you’re constantly pushing yourself to learn and take up new things, your mental health also improves. Research shows that an active and engaged mind is responsible for diminishing age-related memory loss and improves overall cognitive abilities.

Your Confidence Will Skyrocket

You’ll also have improved self worth as it teaches you to step outside of your comfort zone, which will undoubtedly improve your confidence.

You’ll also connect better with others by expanding your knowledge base. Learning exposes you to a multitude of new ideas and perspectives that you may have otherwise never considered. This also increases your adaptability. Whether it’s at work or just wanting to adapt to society, your peers, and loved ones, life long learning prepares you to take on new challenges.

You’ll Be More Desired in the Job Market

Another obvious reason for continuous education, is that your employability will also increase.

With the ever changing economy, and huge influences from technology, social media, science etc., job descriptions today are moving targets. Assignments and roles change so quickly in response to changing business demands, it becomes a Herculean task to keep a job description database current.

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In years past, stability was a characteristic of the world of work. Procedures, information, jobs, and organizations were established and provided continuity. Education was completed in the first 14 to 22 years of one’s life, followed by a long career occasionally punctuated by short-term job training.

Today, however, jobs, companies, and technology are disappearing and being created simultaneously. To remain current and maintain a competitive advantage in the human capital marketplace, an individual is challenged to continually learn.

People return to school at every age to enrich their skills and knowledge for their current positions. Some even prepare themselves for new jobs or career changes, moving them forward into new opportunities and technology.

We can be assured that we will be challenged to continue to learn new tasks and information throughout our lives. Successful careers belong to flexible, curious learners who are prepared for opportunities because they know themselves and where they make their best contribution. As Peter Drucker, the father of modern management stated,

“Knowledge is choice.”

Lifelong learning also increases social awareness and perspective. To genuinely understand and empathize with others, increase social awareness, and foster strong interpersonal relationships, it’s important to seek out new perspectives. Enhancing the skills that positively impact emotional intelligence can bring even greater happiness and success, both personally and at work; and, this is all part of self-care.

Improve Your Habits (Both at Work and at Home)

Now, the last piece of advice I want to introduce to your self-care regimen, is to improve your habits.

Habits define who you are, and are built up over time. You are what you eat is a great example of this. If you make it a habit to eat foods that nourish your body, rather than make your body feel bad, then you will be much healthier overall.

Good Habits Allow You to Reach Your Goals

Since habits dictate your days and nights, such as waking up every morning to get to work before a certain time, or brushing your teeth before bedtime every night, they play a major role in whether we do or do not reach our goals.

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When you form habits that allow you to progress towards your goals, you’re automatically living a purposeful day, everyday.

Habits Make Your Time a Priority

How do you spend your free time? Do you opt to lounge on the couch watching Netflix passively, or do you engage in activities that support your purpose in life?

It’s natural to waste a lot of time during the day, but fostering good habits will make you set a pattern for how you spend your time and give you the choice of what you choose to spend your time on. By improving your habits, you’ll find that you can be a LOT more productive. When you create good habits, you become more efficient with your time and a lot less is wasted.

This in essence creates an overall positive influence on your life, allowing you to treat your mind and body well, which is why improving your habits are so important to self-care.

Your Well Being Comes First

We live in such a fast-paced society, where we are often so caught up in our work, families, maintaining our social lives, our studies and everything in between. It’s an understatement to say that life can get a little overwhelming at times.

If you’ve ever watched the safety video onboard a plane, you’ll know that they always ask for a parent or adult to put on the safety mask first, before tending to the child. This may sound selfish, but the fact is that if you truly want to ensure the child’s safety, then your safety needs to come first so that you can protect and care for the child without complications from your end.

The same goes for self-care. We need to ensure that our well being is priority, so that we can be the best for the people around us.

Listening to yourself, practicing lifelong learning and improving your habits are steps that you can take to ensure you’re constantly in the best state of mind, alongside the indulgence and rest that you reward yourself with.

Featured photo credit: Photo by Raychan on Unsplash via unsplash.com

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