Weekly Updates
Weekly Updates
- Social media is an important part of the Fourth Industrial Revolution. However, structural change means that the world is getting more and more complex. Social media craves more simplicity. It is the succinct tweet or the short TikTok that gets attention. But the resulting soundbite economics misses much that matters to investors.
- The oversimplification of social media results in a very naïve form of economics. Tweeters take data at face value. Sentiment indices are reported as if they are reality. Job vacancy data is thought to measure all job vacancies. Economists know that neither of these things are true, but it takes more than a TikTok to explain that.
- As structural change accelerates, soundbite economics will miss significant relative changes beneath the headline. For example, inflation in New York is a little more than a third of the inflation rate in Miami. Soundbite economics misses that nuance, but the impact on relative living standards will matter for consumers, businesses, and (important in 2024) politics.
- This may create a perverse digital divide; a social media group, who has a limited and perhaps unrealistic economic view, and those who know the detail of economic reality. In the long term it is detailed economic understanding, curated by economists, that is likely to matter.
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