How Technological Progress Impacts Income Inequality

17

October

2017

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We usually associate technological progress with a better life for everyone. Most of us agree that life is better now than 2000 years ago. Yet, many of you reading this blog are likely in a privileged position and personal opinions are generally not a good way to assess the quality of life of an entire species.

Let’s look at an example. The invention of mobile phones has allowed for a more interconnected world. With economies of scale and improved production processes the prices of these devices have dropped enormously over the years. This has allowed less wealthy individuals, such as many African farmers, to purchase them. This lead to them being able to check market prices, accept payments in mobile money and communicate with middlemen more effectively (The Economist, 2016).

It sounds then like this is technological progress does indeed increase the prosperity of humanity. Jaumotte et al. (2013) came slightly more nuanced conclusion when they conducted their research for the International Monetary Fund. Although it is widely accepted that economic growth is related to technological development, their research focused on how this wealth is distributed. Their research concluded that “the observed rise in inequality across both developed and developing countries over the past two decades could be largely attributable to the impact of technological change.” They do note that these results are not definitive as their conclusions were based on a short unbalanced panel data set and with estimations that suffer from endogeneity issues.

This does lead to the question: does technological progress encourage income inequality? Usually it is the upper-class that profits from the latest technological innovations, with the lower class struggling to keep up. As mentioned before, the lower classes do receive benefits, but these are usually delayed to when a technology has been refined to the point where it becomes affordable. This leads us to reason that technological change has, so far, increased the quality of life of most people, but it increases that of the upper-class the most.

 

Bibliography

Economist.com. (2017). Cite a Website – Cite This For Me. [online] Available at: https://www.economist.com/news/middle-east-and-africa/21711511-mobile-phones-are-transforming-africa-where-they-can-get-signal-mobile-phones [Accessed 16 Oct. 2017].

Jaumotte, F., Lall, S. and Papageorgiou, C. (2013). Rising Income Inequality: Technology, or Trade and Financial Globalization?. IMF Economic Review, 61(2), pp.271-309.

 

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Cybersecurity

30

September

2017

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123456
password
12345
12345678
football
qwerty
1234567890
1234567
princess
1234
login
welcome
solo
abc123
admin
121212
flower
passw0rd
dragon
sunshine
master
hottie
loveme
zaq1zaq1
password1

If you just saw one of your passwords in this list, stop reading this and change it now. Given that this list makes up about 10% of all passwords in use, it is rather concerning. In 2016, cybercrime prevention spending was $81.6 billion. This is expected to increase to over $2 trillion in 2019. So what areas do these hacks affect? Are you personally affected, or is it just large companies?

In May of 2017, the ransomware WannaCry, a software that encrypts your documents and unencrypts them for a fee, spread through thousands of users. Although the concept is not novel, the sheer size of the attack stood out. One of the affected victims was the UK National Health Service. The reason for their infection was not that WannaCry was a state of the art software, it was simply because they were running outdated software. Another program, amongst many others, called Petya, also wreaked havoc in central Europe. Besides causing harm to individuals, many of Ukraine’s public sectors were affected, leading to major disruptions.

Not all damage is done through hacks, some are also due to negligence on the company’s behalf. An example is the improper storage used by a company named Deep Root. They improperly stored the information of almost 200 million US voters on a public Amazon server. Although this information was not abused, the fact that it was publicly accessible violates dozens of privacy laws.

Finally, some of the hacks that probably influence us the most, are political hacks. Although countries have been hacking each other for a long time, the recent hacks of the DNC and the Macron campaign did not go by unnoted. It appears that not only are our companies, private information and money not safe, but our governments are not invulnerable to such attacks either.

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Technology of the Week – Mobile Gaming Applications – Group 24

29

September

2017

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While the gaming industry has been disrupted throughout the decades, none compare to the smartphone’s introduction, which started the era of a new information good; mobile gaming applications. Today the mobile gaming market is the fastest growing segment, currently holding 42% ($46bn) of the gaming industry.

Industry Disruption
Market Size
Nowadays most smartphone owners have at least one game downloaded, no matter their demographics; for example, almost half of all mobile gamers is female. Moreover, since smartphones were developed with simplicity in mind, players without gaming experience were able to access the gaming world effortlessly. In a nutshell, mobile gaming applications enabled a larger group of potential gamers and, subsequently, increased the game industry’s market size.

Developers
The games’ development changed drastically as well. Due to fixed costs decreasing and distribution costs becoming nearly negligible, small developer teams seized the opportunity to enter the market. Thus, the need for large, expensive development teams, such as in the console market, was eliminated. Established names such as Nintendo, are holding their market position due to their brand recognition and other marketing efforts.

Pricing
Firstly, price versioning is used in two different manners. On the one hand, the same game can be bought for different prices depending on its platforms. For example, the cost of Fifa for Macs differs from Fifa for iPhones.
Secondly, the same game can also be sold by offering different versions; Rovio offers 17 versions of Angry Birds on the AppStore.
Thirdly, mobile gaming sellers make use of personalized pricing through in-game offers based on the player’s behavior.
Fourthly, the brand of phone/tablet influences games’ prices. While the AppStore usually charges higher prices than the Google PlayStore.

Additionally to cross-industry pricing strategies, freemium and ad rewards are two that are only present in the mobile gaming industry. Freemium allows the player to download the game for free and then offers in-app purchases. For advertisements, players are being rewarded for watching them instead of skipping, increasing companies’ revenue.

Portability
Portable games already existed with consoles such as Gameboy, however, smartphones increased portability significantly. For the first time, games could be played on phones people were already bringing with them, thus, eliminating the need of a separate console for gaming.

Future disruptions
Firstly, emerging countries have a market of potential gamers that has not been completely tapped into. The hardware base exists, registering a 200% growth in smartphone shipments between 2014-2018 with customers slowly starting to adopt games on their mobiles. Secondly, “touch esports” is becoming more important as mobile usage increases, graphics on mobile devices are improving, and online play becomes more reliable. Vainglory, a competitive mobile game, released only 3 years ago, has already sprouted several professional leagues worldwide. Lastly, VR/AR, a technology that is in its infancy, could revolutionize the entire perspective on mobile gaming. However, only 1 in 10 developers admitted to working on an AR/VR project at this year’s GDC hinting at a slow adoption rate.

 

 

 

Bibliography

 

EY (2015), ‘Riding the new wave of digital growth’, EY,  [online] available at

<http://www.ey.com/Publication/vwLUAssets/EY-riding-the-new-wave-of-digital-growth-infographic/$FILE/EY-riding-the-new-wave-of-digital-growth-infographic.pdf> [accessed 29 Sep. 2017]

 

Ismail N. (2017), ‘After a decade: the impact smartphones on the gaming market’, Information Age, [online] available at

<http://www.information-age.com/decade-impact-smartphones-gaming-market-123465785/> [accessed 29 Sep. 2017]

 

Mason M. (2013), ’Demographics breakdown casual, mid-core and hard-core mobile gamers’, Developers Magmic, [online] avaliable at <http://developers.magmic.com/demographic-breakdown-casual-mid-core-hard-core-mobile-gamers/> [accessed 29 Sep. 2017]

 

McDonald E. (2017), ‘The global games marker will reach $108.9 billion in 2017 with taking 42%’, Newzoo, [online] available at <https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/> [accessed 29 Sep. 2017]

 

Porter M. (2017), ‘Touch esports bring competitive gaming to mobile phones’, Vice,  [online] available at <https://sports.vice.com/en_us/article/aeb7k8/touch-esports-bring-competitive-gaming-to-mobile-phones> [accessed 29 Sep. 2017]

 

Shapiro, C., and Varian, H. 1998. Pricing Information. In Information Rules: A Strategic Guide to the Network Economy. Cambridge, MA: Harvard Business School Press.

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