In Abundance: The Future is Better
Than You Think, Peter H. Diamandis and Steven Kotler discuss what abundance
means and how we have moved from a linear to an exponential society. Linear growth is when growth increases
by the same rate each time whereas exponential growth increases at an expanding
rate. The authors claim that over
the past 150,000 years humans have evolved in a world that was “local and
linear,” but today we are experiencing an environment that is “global and
exponential.” In the past, change
was extremely slow, but now with the wealth of information available we have
emerged into a fast growing society.
Because this new pace of change is new to us, our brains have difficulty
comprehending it. We also fall
prey to the “hype cycle” which is that we have inflated expectations of a new
technology and are disappointed when the product doesn’t live up to the
excitement. Therefore, we
“literally have a blind spot for technological possibilities underlying our
vision of abundance” (35). The
authors believe that technology can make the once scarce now abundant. For example, Masdar City sits on the Persian
gulf which is entirely salt water.
If we could create technology for desalination, we would have plenty of
water to combat the problem of water scarcity. Few sources are truly scarce, but mainly inaccessible. Diamandis and Kotler think that we now
actually have the ability for abundance due to three new forces. The first is the newfound power of the
do-it-yourself innovators. The
second is using wealth to solve problems with the rise of philanthropy. The third is transforming the “poorest
of the poor” into an emerging market force. In terms of poverty, abundance is “not providing all with a
life of luxury, but a life of possibility” (13), which can now be possible. We now have the ability to do things we
don’t even understand by utilizing the “collective brain.” There are eight fields thought to be
growing exponentially: biotechnology, computational systems, networks and
sensors, artificial intelligence, robotics, digital manufacturing, medicine,
and nanotechnology (57). Ray
Kurzweil stated that progress and technology are exponential. He believes we are at a crucial point,
the “knee of the curve,” where exponential growth becomes explosive and notes
that the rate of exponential growth is growing exponentially. The ability to sustain future
generations and solve today’s global problems are right at our fingertips.
Sustainable Development
Cognitive Biases
A cognitive bias is a pattern of
deviation in judgment, whereby inferences about other people and situations may
be drawn in an illogical fashion.
There are eight common types of cognitive biases. The first, confirmation bias, is a
tendency of people to favor information that confirms their beliefs or
hypotheses. For example, if one
believes that the world is in a hole to deep to climb out of, any information
that confirms this idea will be remembered. A second bias is negativity bias which is the psychological
phenomenon that humans recall unpleasant memories better than positive
memories. For example, remembering
9/11 instead of your friend’s birthday party. A third type of cognitive bias is anchoring which describes
the human tendency to rely too much on the first piece of information when
making decisions. Anchoring causes
people to make future judgments based on their previous anchor of information. For example, at the end of the
nineteenth century, London was covered in horse manure and because of
anchoring, people could not imagine any possible solutions. A fourth bias is hindsight bias which
is the ‘knew-it-all-along’ effect.
This is the idea that after an event occurs it is seen as being more
predictable than before the event occurred. For example, rooting for the underdog in a race and when
that team actually wins claiming you were certain they were going to. A fifth bias is self-serving bias which
when individuals attribute success to internal factors, but attribute failures
to external factors. For example,
applauding yourself for getting an A on your English paper while blaming your C
in Math on a bad teacher. A sixth
bias is belief bias which is the tendency to accept all conclusions that fit in
with one’s system of beliefs, without challenging what one is actually agreeing
with. For example, accepting that
some good ice skaters are not professional hockey players while rejecting the
claim that some professional hockey players are not good ice skaters. A seventh cognitive bias is fundamental
attribution error which is the tendency to overestimate the effect of
personality and underestimate the effect of the situation in explaining social
behavior. For example, when
someone trips you, blaming it on his or her rude personality rather than
believing it was an accident. An eighth
final bias is framing which refers to a set of concepts and theoretical
perspectives on how groups perceive and communicate about reality. For example, answering a survey
question differently based on the wording. Cognitive biases relate to the future of abundance because without
these biases we could accurately assess the probability of future outcomes, but
we do not have “the temporal flexibility nor the neurological capacity to
analyze the data” (Abundance page 29).
Our decisions that we make regarding issues such as poverty and water
scarcity are hampered by these subconscious biases.
Malthusians vs. Cornucopians
Malthusianism is based on ideas by
Thomas Robert Malthus which he documented in An Essay on the Principle of Population in 1789. Malthus believed that unchecked
population growth is exponential while the growth of the food supply is arithmetical. This theory therefore calls for
measures of population control.
One way he believed to reduce the population was through moral
restraints such as abstinence and delayed marriage. The second population method he documented was through
premature death such as disease, starvation and war. Neo-Malthusianism refers to people who agree with Malthus
and the need for population control to ensure sustainability. Opposite to Malthus’ views are those of
cornucopians who believe that there is enough matter and energy on Earth to
allow unlimited room for growth.
Cornucopians are considered futurists who believe that progress of
material items will be met by advances in technology. The term is often used in a derogatory way to describe
someone who is overly optimistic about resource availability for the future.
Portfolios of the Poor: Summary
Many people may think that the poor
spend all their money as soon as they earn it, but Portfolios of the Poor by Daryl Collins, Jonathan Morduch, Stuart
Rutherford, and Orlanda Ruthven document how the poor manage their money. They found that the poor are frustrated
by the difficulties they encounter trying to save their money in reliable
ways. Therefore, implementing
financial tools for the poor would improve their lives greatly. To analyze the money management of the
poor, a case study was done on Hamid and Khadeja, a married couple living in Bangladesh. Hamid was a reserve driver of a
motorized rickshaw and Khadeja stayed home, their average monthly income
equivalent to seventy dollars.
Although a fifth was spent on rent and a lot was spent on basic necessities,
about two to thirty dollars a month were saved for minor shortfalls and for
their parents. By closely
analyzing this family, it was found that much more saving is done by the poor
than shows up on large surveys because much of the saving is not done officially
in banks, but through family and at home safe keepings. When the family needs to make a larger
expenditure, the three common courses of action they can take are either, go
without it, raise money by selling assets, or use past or future income to fund
the expense. It is argued that the
poor, due to the uncertainty and irregularity of their income, need financial
services more than anyone else. It
was found that among the author’s sample of 250 families, “no household used
fewer than four types of [saving] instruments during the year.” The concerns the poor face with saving
money is first, the risk factor of disease or bad weather halting their income
and second, the types of things the poor want to buy such as new furniture or
health services, require a large amount of money at one time. The financial diaries proved why the “shift
from an exclusive focus on microcredit to the broader microfinance is an
important and welcome advance.”
Poor households have shown that they would utilize more reliable
financial partners, so we must work to get that for them.
Poor Economics: We Can Help
Poor
Economics by Abhijit V. Banerjee and Esther Duflo calls for people to not
be discouraged by the enormous issue of poverty. A study they did where they showed students different fliers
with information about the poor and then asked for donations confirmed the idea
that while people’s first thought is to be generous, they often rethink and
decide there is no point since the problem of poverty will never be
solved. The book emphasizes that
the most important factor to solve poverty is where the aid given by
individuals or nations to poor countries goes rather than where the money comes
from because poverty is not solely about a lack of income, but rather a poor
person not having the capabilities to reach his or her full potential. The chapter concludes by determining
that poverty is a trap when opportunity expands dramatically for those can
invest just a bit more than others.
For example, a farmer who needs fertilizer. Although the farmer may be able to buy half a bag of
fertilizer himself, he will only reach a real agricultural boom when he
receives a full bag, which is where aid could be of large help. Poverty may seem like a permanent part
of our nation, but it does not need to be.
8 Steps to Happiness
The article If Money
Doesn’t Make You Happy, Then You Probably Aren’t Spending it Right by
Elizabeth Dunn, Daniel Gilbert, and Timothy Wilson explains how people often
misuse money while attempting to buy what they think will make them happy. A reason as to why people squander
their money on things that will not make them happy is because they often
wrongly forecast how future events will occur. The first principle for spending money is to buy experiences
instead of things. One reason
experiences are better than things is that we adapt to things quickly in
contrast to a memory that can continue to provide delight years after the
actual experience. Experiences are
also more likely to be shared with others which provides a higher level of
happiness. The second principle is
to help others instead of yourself.
Social relationships are argued to be universally essential for
happiness. The third principle is
to buy small pleasures instead of few big ones. Since we adapt to things quickly it seems it would be more
beneficial to buy a variety of small pleasures than few large purchases. The fourth principle is to buy less
insurance. Research shows that
humans are less fragile than they think and cope well with traumas. This research proves that buying
extended warranties on products may be “unnecessary emotional protection.” The fifth principle is to pay now and
consume later. Buying quickly can
often rack up debts and also eliminates anticipation which is another source of
happiness. People report high
levels of happiness when anticipating experiences. The sixth principle is to think about what you’re not
thinking about. This means that
people often ignore unpleasant details when imagining products, therefore
creating a bias of the degree of happiness that the purchase will give. The seventh to beware of comparison
shopping. Comparison shopping may
distract consumers from elements of a product that may be important to their
happiness. The eighth and final
principle is follow the herd instead of your head. Research shows that a good way to predict how much we will
enjoy something is to see how much someone else enjoyed the same experience or
product. Money can buy happiness,
if we use it the right way.
What Is Poverty?
Absolute poverty, also knows as
extreme or abject poverty, measures the number of people living under a certain
income threshold which is now $1.25 a day. Relative poverty on the other hand is comparing individuals
income with the average income. There
are currently over 1 billion people in the world living in extreme poverty. The poverty threshold was originally
developed in 1963 by Mollie Orshansky by taking the cost of the US Department
of Agriculture’s economy food plan for families of three or more and
multiplying that number by three.
It was determined to multiply the cost by three since the Agriculture
Department’s 1955 Household Food Consumption Survey found that families spend
an average of one third of their total income on food. Poverty thresholds are now updated by the
Census Bureau by using the Consumer Price Index which measures changes in the
price level of a market basket of consumer goods and services purchased by
households. The thresholds are
mainly used for statistical purposes.
Poverty Guidelines are another form
of the federal poverty measure.
The guidelines simplify the poverty threshold so that programs such as
Head Start, the Food Stamp Program, and the Children’s Health Insurance Program
can use the poverty guideline to determine financial eligibility for these
resources. These programs aim to
give benefits such as education and healthcare to families who cannot afford
them.
Sources:
Subscribe to:
Posts (Atom)