Introduction - Economics of Attention

For most of human history, information was scarce. Monks copied manuscripts. Libraries were precious. Gutenberg’s printing press was radical. Moreover, information moved only as fast as a human, horse or ship. Yet, by the turn of the 21st century, society had gone from a lack of information to abundance of it.

The advent of broadcast media like television and radio ensured that information was no longer short in supply. However, with the rise of the internet did we find ourselves drowning in a sea of information.

So, what is scarce now? Herbert Simon was the first to study the economics of attention. He wrote: “In an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.”

Attention, as defined by the American Psychological Association is “a state in which cognitive resources are focused on certain aspects of the environment rather than on others and the central nervous system is in a state of readiness to respond to stimuli”

This serves as a reasonable starting point to study the economics of attention. In this essay, we’ll see how attention functions in defined economic models-

1. Scarcity- The biggest problem economics tackles is the allocation of scarce resources. This means that supply is finite, as compared to unlimited demand for all things- as is the case with attention.  Supply is limited to around 16 hours per day. Moreover, number of sensory impressions that humans can be aware of at the same time is biologically limited. As a resource, attention is a flow good. It cannot be stored. This is where it differs from almost all other scarce resources. Defining attention as a resource also helps in the analysis through the demand-supply model.

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2. The market model- The most widely used model of a market, which combines demand and supply to an equilibrium, can also be applied to attention. The supply of attention is limited per person. There is no way to engineer more waking hours and hence, the quantity of supply is fixed. What has changed, however, is quality. Shortened attention spans, distractions, and notification culture arguably reduce the supply of high-quality attention even within fixed hours. On the other hand, demand of attention is forever growing. Every app, every notification, every advertisement vies for an individual’s attention. This side of the market contains professionals – designers, analysts, engineers- who explicitly try to capture your attention. The only shortcoming of this comparison is the price-signal problem. In a normal market, when demand rises, so does price. Attention, however, has no price. It is given for free, every day, billions of times. And this lack of cost hides the fact that this resource is becoming critically scarce.

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3. Opportunity cost - In theory, attention doesn’t have a price. It does have a real cost, however. This is an important concept. Opportunity cost measures that price by the alternative sacrificed, not the money spent. Every unit of attention spent has such a price. Spending time or attention at one place costs what could have been with the same resources.

   The concept of shadow price is also applied to attention. Shadow price estimates the price of something that does not have an explicit value. Moreover, when information floods the brain, attention becomes scarcer. This causes a spike in shadow price.

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4. Attention as a currency-

   This is one of the most interesting concepts studied by attention economics- how attention acts like a currency. Money is the most common modern currency. Above that, people deal in fame, power and reputation.

   Thinker Georg Simmel, however, argues that in the treatise of modern life, individuals have been uprooted from traditional social life. This leads to ‘strange eccentricities’ in which individuals derive satisfaction not from an activity itself but the attention they get due to it. The wish to be famous and successful has therefore evolved into an end in itself.

   Much like modern money, attention in itself has no value and is a means to provide valuable things- in this case, information. Unlike money, however, attention cannot be stored in a literal sense and used later. It is a flow currency.

   Social media, however, has found a way around the fleeting nature of attention. By recording, storing and making visible the amount of attention users pay- through view count, likes and comments- attention is accumulated and calcified. While this cannot be used in itself, it is an indication to how much attention something will receive in the future.

   Similarly, companies try to build the interest of customers as a capital of attention.

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