Computer Use and Productivity Growth

The December 2003 issue of “National Economic Trends” from the Federal Reserve Bank of St Louis included a cover story entitled “Computer Use and Productivity Growth”, which is only available online as a 1MB PDF. I got hooked on this publication while in graduate school studying Economics at the UW many years ago, and sometimes they have something interesting. It's a variable reinforement principle kind of thing.

Anyway, this article summarizes past computer technology investments and tentatively concludes that “the gains in TFP (total factor productivity) from the 1995-199 flurry of computer investment growth (which exceeded 40 percent per year) should peak around 2006.”

This reminds me of the age-old survivors on a desert island joke, this time with an economist as well as a couple of others (assume an engineer and an evangelist because they all start with the letter “e“ - which provides some pointless symmetry - but it doesn't really matter). Anyway, they have found a large can of food they need to open to survive. As expected, the engineer comes up with some Rube Goldberg-esque scheme like dropping a coconut onto a strategically placed rock on top of the can. And the evangelist suggests calling on God to open the can. And the economist, who has sat through this with a smug smile on his face, then says “I can solve this easily. First, we assume the can is open...”

2 Comments

  • Or, "first we assume a can opener..."

  • And, in the vein of "assumption" jokes:

    A farmer was upset that the cows were producing less milk so he engaged an efficiency expert, a physcologist, and a physicist to find out why.



    The efficiency expert looked at the problem and decided that the cows had too much room. He recommended the construction of cells 1.2 length of the average cow by 1.2 times the width of the average cow, increasing the packing factor by five, and thereby increasing output.



    The psychologist said that the cowbarn

    should be painted an uplifting green rather than the depressing

    brown.



    The physicist asked for a blackboard. When it was brought he drew a circle on the board and said "First, we'll assume cow is a perfect sphere...."

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