Apr 25th 2013

Exceptions Become the Rule

by Esther Dyson

Esther Dyson, CEO of EDventure Holdings, is an active investor in a variety of start-ups around the world. Her interests include information technology, health care, private aviation, and space travel.

NEW YORK – Long ago, I worked as an analyst on Wall Street. The first company that I analyzed was Federal Express, which at the time had not yet shipped its first package. 

The idea behind FedEx was simple and compelling: The cost of complexity was higher than the cost of air transport, so the company would ship all its packages overnight to Memphis, Tennessee. By radically simplifying the myriad combinations of start and end points – the only routes were to and from Memphis – all of the packages could be delivered the next day reliably.

All of that has changed, thanks to developments in information technology. With today’s powerful computers, we can look at massive amounts of information and simulate complex situations, making pretty good predictions about many things: What will traffic flows look like on Tuesday at 5:00 in the afternoon if we put a detour at this highway intersection? What percentage of people on this drug will get better – and, more interestingly, which particular individuals will respond positively, and which ones are likely to be harmed? 

Indeed, with the ability to make reliable predictions, we can put people and things into categories, whether market segments, disease risks, likely loan defaulters, potential purchasers, and so on. That’s big data.

But now we can also do “small data.” We can treat many things, even packages, like individuals. The exceptions – whether individual genotypes, individual privacy preferences, or digital rights to use content in specific contexts – have become the rule. We don’t need to guess at everyone’s privacy preferences or settle for one-size-fits-all policies. 

Over time, we will be able to figure out which people, based on their genotype, will be helped or harmed by a particular drug, or how children can learn best with personalized feedback, or how to produce furniture and clothing in a world of 3D printers and real-time modeling. And so on. Would you like your customized car seat in leather or cloth, sir?

The market will rise to the challenge. People who care about something will be able to specify their preferences to an extremely precise degree and get exactly what they want. For others, actually setting those preferences or defining what they want may take more attention than they care to devote to the task. So the design challenge of the future will be to create good defaults with easy editing/customization tools for those who care. 

But this change will raise challenging social and political questions as well, particularly concerning privacy preferences and health care – both already controversial issues.

Of course, no one can define or guarantee privacy. But individuals could get the opportunity to control the use of their data – and entities that want to use it could negotiate with them. Currently, Web advertisers and publishers say that their businesses depend on their ability to track people and collect and resell the data that they gather. They argue, further, that it is too complicated to respect individuals’ preferences, too difficult to tell them how their data is being used, and pointless to treat them as individuals.

Yet, somehow, the data collectors can manage to record individuals’ purchase histories, their airline seat preferences, and so on. There is no reason why they could not also record how and by whom each piece of such information can be used. 

Indeed, millions of people now do set specific privacy preferences within Facebook, opt out of being tracked, and the like. At the same time, they gladly share data with vendors and even track their own data – whether airline mileage or steps walked, check-ins at their favorite venues (especially if they can earn discounts or special offers), or their movie, music, or book purchases.

Now suppose that you could tell people to whom you had sold their data. Most people would not care, but those who did would appreciate the transparency and perhaps want a little share. Suppose you started a business that managed data on behalf of the users. 

That is not such a crazy idea – the airlines, among other companies, are already doing it to some extent. United, American, and British Airways all know my travel patterns on their airlines, and help me manage both my past trips (and related rewards) and my future reservations. Mint does the same for my financial data; WellnessFX for my blood biomarkers. A new start-up called Moven plans to track small payments so that you can see in real time how you are sticking to or deviating from a budget.

All of this works well in markets for goods and services, where people who want choice can pay for it. Businesses can treat customers as individuals, and give them the amount of special consideration that they are willing to pay for. Companies can also decide not to serve certain customers, focusing on the most profitable segments.

But this approach does not work for things that the government (that is, other people’s taxes) pays for. In the public sector, the one-size-fits-all approach still prevails. In democracies, each citizen gets one vote. So shouldn’t everyone get the same benefits? 

Yes, we tax rich people more and give poor people some more benefits, and that is contentious enough. But consider all of the qualitative services and conditions for which individuals have different preferences, needs, and outcomes that are now more predictable. If we can predict individual outcomes, what is an individual’s responsibility, and what remains a collective task?

These questions will become especially acute in areas such as education and health care. For example, we treat children differently in school according to their potential – as we understand it. But, if we help some children “to realize their potential,” are we thereby limiting the potential of others? 

Likewise, how do we allocate health-care resources? What responsibility do individuals have to modify their behavior in response to their individual vulnerabilities and predispositions? And, most important, who – if anyone – should impose that responsibility?

Copyright: Project Syndicate, 2013.
www.project-syndicate.org

 


This article is brought to you by Project Syndicate that is a not for profit organization.

Project Syndicate brings original, engaging, and thought-provoking commentaries by esteemed leaders and thinkers from around the world to readers everywhere. By offering incisive perspectives on our changing world from those who are shaping its economics, politics, science, and culture, Project Syndicate has created an unrivalled venue for informed public debate. Please see: www.project-syndicate.org.

Should you want to support Project Syndicate you can do it by using the PayPal icon below. Your donation is paid to Project Syndicate in full after PayPal has deducted its transaction fee. Facts & Arts neither receives information about your donation nor a commission.

 

 

Browse articles by author

More Current Affairs

Jan 24th 2020
EXTRACT: "........while over 80% of the ECB scheme buys government and other public sector bonds, a huge chunk still goes into corporate bonds and other assets. At the time of writing, the ECB holds €263 billion worth of corporate bonds – a very significant amount in relation to individual firms and the sectors in question. According to the ECB, 29% of these bonds were issued by French firms, 25% by German firms and 11% each by Spanish and Italian firms. As at September 2017, the sectors they came from included utilities (16%), infrastructure (12%), automotive (10%) and energy (7%)."
Jan 17th 2020
EXTRACT: "Thanks to cutting-edge digital technology, cars are increasingly like “smartphones on wheels”, so manufacturers need to have access to the latest patented 4G and 5G technologies essential to navigation and communications. But often the companies that hold the patents are reluctant to license them because manufacturers will not accept the high fees involved, which leads to patent disputes and licensing rows."
Jan 13th 2020
EXTRACT: "Recent polling from Pew Research demonstrates how the public’s attitudes toward the US and President Trump have witnessed sharp declines in many nations across the world. In Europe, the Americas, and the Middle East favorable attitudes toward the US went from lows during the years of George W. Bush’s presidency to highs in the early Obama years to lows, once again, in the Trump era. And in our Zogby Research Services (ZRS) polling we found, with a few exceptions, much the same trajectory across the Middle East."
Jan 13th 2020
EXTRACT: "In the absence of a declaration of war against Iran, the killing of a foreign official – by a drone strike on Iraqi territory – was possibly illegal. But such niceties do not perturb Trump. The evidence is that Trump’s decision was taken without consideration of the possible consequences. The national security system established under Dwight D. Eisenhower, designed to prevent such reckless measures, is broken to non-existent, with ever-greater power placed in the hands of the president. If that president is unstable, the entire world has a very serious problem."
Jan 9th 2020
EXTRACT: "It is possible that Trump’s reverential base won’t be sufficient to keep him in the White House past 2020. But such ardent faith is hard to oppose with rational plans to fix this or that problem. That is why it is so unsettling to hear people at the top of the US government speak about politics in terms that rightly belong in church. They are challenging the founding principles of the American Republic, and they might actually win as a result."
Jan 7th 2020
EXTRACT: "If anything has become clear in our recent Zogby Research Services (ZRS) polling in Iraq, is that most Iraqis are tired of their country being used as a playground for regional conflict, especially the conflict between the US and Iran. In fact, our polling has shown Iraqis increasingly upset with the role played by both the US and Iran in their country. Majorities see both of these countries as having been the major beneficiaries of the wars that have ravaged their nation since the US invaded in 2003. "
Jan 5th 2020
EXTRACT: "Under his [Suleimani's] leadership, Iran helped Hezbollah beef up its missile capabilities, led a decisive intervention to prop up Syrian President Bashar al-Assad, supported the Houthi rebels who have been waging a war against Saudi-led forces in Yemen, and backed a wave of resurgent Shia militias in Iraq. According to Gadi Eizenkot, who completed his term as the Israel Defense Forces’ chief of general staff last year, Suleimani had plans to amass a proxy force of 100,000 fighters along Syria’s border with Israel."
Dec 31st 2019
EXTRACT: ".....stunning technological progress during the 2010s makes it possible to cut GHG emissions at a cost far lower than we dared hope a decade ago. The costs of solar and wind power have fallen more than 80% and 70%, respectively, while lithium-ion battery costs are down from $1,000 per kilowatt-hour in 2010 to $160 per kWh today. These and other breakthroughs guarantee that energy systems which are as much as 85% dependent on variable renewables could produce zero-carbon electricity at costs that are fully competitive with those of fossil-fuel-based systems."
Dec 31st 2019
EXTRACT: "Predicting the next crisis – financial or economic – is a fool’s game. Yes, every crisis has its hero who correctly warned of what was about to come. And, by definition, the hero was ignored (hence the crisis). But the record of modern forecasting contains a note of caution: those who correctly predict a crisis rarely get it right again. The best that economists can do is to assess vulnerability. Looking at imbalances in the real economy or financial markets gives a sense of the potential consequences of a major shock. It doesn't take much to spark corrections in vulnerable economies and markets. But a garden-variety correction is far different from a crisis. The severity of the shock and the degree of vulnerability matter: big shocks to highly vulnerable systems are a recipe for crisis. In this vein, the source of vulnerability that I worry about the most is the overextended state of central-bank balance sheets. My concern stems from three reasons."
Dec 14th 2019
EXTRACT: "Conspiracy theories about sinister Jewish power have a long history. The Protocols of the Elders of Zion, a Russian forgery published in 1903, popularized the notion that Jewish bankers and financiers were secretly pulling the strings to dominate the world. Henry Ford was one of the more prominent people who believed this nonsense."
Dec 13th 2019
EXTRACT: "In previous British elections, to say that trust was the main issue would have meant simply that trust is the trump card – whichever leader or party could secure most trust would win. Now, the emerging question about trust is whether it even matters anymore."
Dec 5th 2019
EXTRACT: "Europe must fend for itself for the first time since the end of World War II. Yet after so many years of strategic dependence the US, Europe is unprepared – not just materially but psychologically – for today’s harsh geopolitical realities. Nowhere is this truer than in Germany."
Nov 23rd 2019
Extdact: "The kind of gratitude expressed by Vindman and my grandfather is not something that would naturally occur to a person who can take his or her nationality for granted, or whose nationality is beyond questioning by others. Some who have never felt the sharp end of discrimination might even find it mildly offensive. Why should anyone be grateful for belonging to a particular nation? Pride, perhaps, but gratitude? In fact, patriotism based on gratitude might be the strongest form there is."
Nov 20th 2019
Extract: "Moody’s, one of the big three credit rating agencies, is not upbeat about the prospects for the world’s debt in 2020 – to put it mildly. If we were to try to capture the agency’s view of where we are heading on a palette of colours, we would be pointing at black – pitch black."
Nov 17th 2019
Extract: "Digital money is already a key battleground in finance, with technology firms, payment processing companies, and banks all vying to become the gateway into the burgeoning platform-based economy. The prizes that await the winners could be huge. In China, Alipay and WeChat Pay already control more than 90% of all mobile payments. And in the last three years, the four largest listed payment firms – Visa, Mastercard, Amex, and PayPal – have increased in value by more than the FAANGs (Facebook, Apple, Amazon, Netflix, and Google)."
Nov 14th 2019
Extract: "Trump, who understands almost nothing about governing, made a major mistake in attacking career public officials from the outset of his presidency. He underestimated – or just couldn’t fathom – the honor of people who could earn more in the private sector but believe in public service. And he made matters worse for himself as well as for the government by creating a shadow group – headed by the strangely out-of-control Rudy Giuliani, once a much-admired mayor of New York City, and now a freelance troublemaker serving as Trump’s personal attorney – to impose the president’s Ukraine policy over that of “the bureaucrats.” "
Nov 4th 2019
Extract: "Trump displays repeated and persistent behaviours consistent with narcissistic personality disorder and antisocial personality disorder. These behaviours include craving for adulation, lack of empathy, aggression and vindictiveness towards opponents, addiction to lying, and blatant disregard for rules and conventions, among others." The concern is that leaders with these two disorders may be incapable of putting the interests of the country ahead of their own personal interests. Their compulsive lying may make rational action impossible and their impulsiveness may make them incapable of the forethought and planning necessary to lead the country. They lack empathy and are often motivated by rage and revenge, and could make quick decisions that could have profoundly dangerous consequences for democracy.
Oct 31st 2019
EXTRACT: "......let’s see what happens when we have less money for all the things we want to do as a country and as individuals. Promises and predictions regarding Brexit will soon be tested against reality. When they are, I wouldn’t want to be one of Johnson’s Brexiteers."
Oct 21st 2019
EXTRACT: "Were Israel to be attacked with the same precision and sophistication as the strike on Saudi Arabia, the Middle East would be plunged into war on a scale beyond anything it has experienced so far. Sadly (but happily for Russian President Vladimir Putin), that is the reality of a world in which the US has abandoned any pretense of global leadership."
Oct 20th 2019
EXTRACT: "Europe also stands to lose from Trump’s abandonment of the Kurds. If, in the ongoing chaos, the thousands of ISIS prisoners held by the Kurdish-led Syrian Democratic Forces escape – as some already have – America’s estranged European allies will suffer. Yet Trump is unconcerned. “Well, they are going to be escaping to Europe, that’s where they want to go,” he remarked casually at a press conference. “They want to go back to their homes." "