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Eugen Tarnow


      Facebook - a drag on productivity?

      Eugen G Tarnow  June 2 2017 09:42:24 PM
      By Eugen Tarnow, Ph.D.
      Avalon Business Systems, Inc.

      The New York Times wrote that "Facebook Has 50 Minutes of Your Time Each Day. It Wants More.".  

      That translates into 100 hours a quarter.  

      Facebook is able to make $20 per US user for those 100 hours.  

      That translates into $0.20 per hour.  

      Suppose the advertisers spend 10% of their revenue marketing.  If Facebook ads are of average utility then the advertisers make $2 per hour.  One hour of your Facebook time is then creating $2.20 value for others.

      Thus an hour worth $20 is transformed into an hour worth just $2.20:

      Image:Facebook - a drag on productivity?

      Data scientists and data engineers working for Facebook attempt to keep your attention within Facebook.  

      That also means they are trying to remove 89% of the value you could derive from your time.

      The Zuckerberg proposal of a "Universal Basic Income" seems to be in line with this - the UBI would remove much of the competition for attention allowing Facebook to get more user time.

      What did we forget?  Can the consumer surplus save the equation?  If would seem that we would need a very large consumer surplus.

      It seems that this is a relatively new issue.  Video games and Netflix binge watching seems to fall in the same category - both are designed to keep the user from leaving and probably do not make much money per hour either.

      As always, I reserve the right to be wrong.

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