The Economics of Social Production Benkler, Chapter 4 Presentation by Mindy McAdams
Productive Behavior Is Changing <ul><li>Why do people participate in nonmarket production? </li></ul><ul><li>“ Why now, wh...
What Motivates People to Produce? <ul><li>Titmuss-Arrow debates (blood banks) </li></ul><ul><li>Extrinsic reasons vs. intr...
Review: Inputs Needed <ul><li>… for production of information goods today </li></ul><ul><li>Human factors:  Time , creativ...
Modularity and Granularity <ul><li>Tasks ( parts  of a project) can be broken down into modules </li></ul><ul><li>The size...
 
Amazon’s “Mechanical Turk”
Modularity and Granularity (2) <ul><li>The Web makes modular tasks  easy to distribute </li></ul><ul><li>Also  easy to sha...
“The Memory Hole” site
Transaction Costs and Efficiency <ul><li>Scarce resource No. 1: Human creativity, time,  and  attention (rival) </li></ul>...
Transaction Frameworks <ul><li>Markets (buy it on the open market) </li></ul><ul><li>Firms (get it from within a cartel or...
Nonmarket Real Estate?
 
Structures of Transactions <ul><li>Characteristics:  </li></ul><ul><ul><li>Market transaction must be “crisply” delineated...
Efficiency of Social Sharing <ul><li>Identify the best person for the job </li></ul><ul><li>May be  substantially   less e...
When Is It Not Effective? <ul><li>When the  means of production  required are expensive, or hard to get access to (e.g., l...
Social Production &  Market-based Businesses <ul><li>Social production makes use of time and energy that would usually be ...
Social Production &  Market-based Businesses (2) <ul><li>Social production poses real  threats  toward (some) market-based...
Social production changes the system. The more it changes the system, the more important it becomes to the system .
User Innovation Networks <ul><li>Can function entirely independently of manufacturers when: </li></ul><ul><ul><li>At least...
User Innovation Networks <ul><li>If the  first two  conditions hold but the  third  (low-cost distribution) does not: </li...
The End Benkler, Chapter 4 Presentation by Mindy McAdams
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Economics of Social Production

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Professor Mindy McAdams's presentation about Chapter 4 of Yochai Benkler's 2006 book The Wealth of Nations

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Economics of Social Production

  1. 1. The Economics of Social Production Benkler, Chapter 4 Presentation by Mindy McAdams
  2. 2. Productive Behavior Is Changing <ul><li>Why do people participate in nonmarket production? </li></ul><ul><li>“ Why now, why here?” </li></ul><ul><li>Is all this sharing efficient ? </li></ul>
  3. 3. What Motivates People to Produce? <ul><li>Titmuss-Arrow debates (blood banks) </li></ul><ul><li>Extrinsic reasons vs. intrinsic </li></ul><ul><li>Social reputation or face </li></ul><ul><li>Loyalty or friendship </li></ul>
  4. 4. Review: Inputs Needed <ul><li>… for production of information goods today </li></ul><ul><li>Human factors: Time , creativity, wisdom, knowledge, culture </li></ul><ul><li>Computers (for production) </li></ul><ul><li>Networks (for distribution) </li></ul>
  5. 5. Modularity and Granularity <ul><li>Tasks ( parts of a project) can be broken down into modules </li></ul><ul><li>The size (length of time needed) can be more or less “fine grained” </li></ul><ul><li>Granularity is a measure of module size </li></ul>
  6. 7. Amazon’s “Mechanical Turk”
  7. 8. Modularity and Granularity (2) <ul><li>The Web makes modular tasks easy to distribute </li></ul><ul><li>Also easy to share the outcomes (products) of a difficult task with millions of other people </li></ul><ul><ul><li>E.g., “The Memory Hole” -- information retrieved from the U.S. government via FOIA requests </li></ul></ul>
  8. 9. “The Memory Hole” site
  9. 10. Transaction Costs and Efficiency <ul><li>Scarce resource No. 1: Human creativity, time, and attention (rival) </li></ul><ul><li>Scarce resource No. 2: Computer and communication resources (rival) </li></ul><ul><li>Public good: Information, knowledge, culture (nonrival) </li></ul>
  10. 11. Transaction Frameworks <ul><li>Markets (buy it on the open market) </li></ul><ul><li>Firms (get it from within a cartel or group or corporation, to which I belong) </li></ul><ul><li>Social networks (get it for free from my neighbor) – remember the intrinsic motivations! </li></ul>
  11. 12. Nonmarket Real Estate?
  12. 14. Structures of Transactions <ul><li>Characteristics: </li></ul><ul><ul><li>Market transaction must be “crisply” delineated </li></ul></ul><ul><ul><li>Social exchanges are not “crisp” at all </li></ul></ul><ul><li>Social systems are not cost-free </li></ul><ul><li>Pricing of human time and talent varies widely across professions and locations </li></ul>
  13. 15. Efficiency of Social Sharing <ul><li>Identify the best person for the job </li></ul><ul><li>May be substantially less expensive </li></ul><ul><li>Tap into people’s social/psychological motivations </li></ul><ul><li>Provide a sustainable alternative to ( not a replacement for) market transaction systems </li></ul><ul><li>Utilize (not waste) human creative capacity </li></ul>
  14. 16. When Is It Not Effective? <ul><li>When the means of production required are expensive, or hard to get access to (e.g., large machinery) </li></ul><ul><li>When the raw materials are expensive, or hard to get access to (e.g., steel) </li></ul><ul><li>When technology or systems do not permit sharing </li></ul><ul><li>When people have no time to spare </li></ul>
  15. 17. Social Production & Market-based Businesses <ul><li>Social production makes use of time and energy that would usually be wasted in a purely market system </li></ul><ul><li>The effect on market activities is not neutral, however </li></ul>
  16. 18. Social Production & Market-based Businesses (2) <ul><li>Social production poses real threats toward (some) market-based activities and enterprises </li></ul><ul><li>Understand these threats -- and we will understand why certain policies and laws are pushed forward (and who would benefit?) </li></ul><ul><li>Contracts vs. “cloud” (role of predictions) </li></ul>
  17. 19. Social production changes the system. The more it changes the system, the more important it becomes to the system .
  18. 20. User Innovation Networks <ul><li>Can function entirely independently of manufacturers when: </li></ul><ul><ul><li>At least some users have sufficient incentive to innovate </li></ul></ul><ul><ul><li>At least some users have an incentive to voluntarily reveal their innovations, and </li></ul></ul><ul><ul><li>Diffusion of innovations by users is low cost and can compete with commercial production and distribution </li></ul></ul>-- Eric von Hippel (2002)
  19. 21. User Innovation Networks <ul><li>If the first two conditions hold but the third (low-cost distribution) does not: </li></ul><ul><ul><li>A pattern of user innovation and trial and improvement will occur within user networks, followed by -- </li></ul></ul><ul><ul><li>Commercial manufacture and distribution of innovations that prove to be of general interest </li></ul></ul>-- Eric von Hippel (2002)
  20. 22. The End Benkler, Chapter 4 Presentation by Mindy McAdams

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