[In-Depth Look] A New Real Variable: Human Being

Published 15 Jul.2020 12:40(KST)

Updated 15 Jul.2020 12:45(KST)

open/close

20th-century economics, which built economic models based on data grounded in solid theoretical foundations, seemed irrefutable. However, the real economy did not behave as economists predicted, and in some cases, economic phenomena that occurred were only described in textbooks afterward, essentially following the events. This means that powerful hidden variables affecting the real economy were not identified.

In 2002, an event shook the foundations of economics. Daniel Kahneman, an emeritus professor at Princeton University and a psychologist rather than an economist, challenged and proved the assumption that all humans make rational choices. Professor Kahneman was awarded the Nobel Prize in Economics for this achievement and is recognized as the founder of behavioral economics. This marked the moment when emotional decision-making by people emerged as a new variable in economics.

In reality, humans often make irrational decisions to avoid risks, which can easily lead to misguided crowd psychology. To explain and predict socio-economic or scientific phenomena, interdisciplinary convergence such as the combination of economics and psychology is accelerating. It is no coincidence that humans’ irrational judgments have been utilized in the fierce marketing strategies of coffee specialty shops. These results are likely the outcome of extensive research and numerous experiments.

This is the story of Starbucks’ Siren Order. When you go to a supermarket, you have to line up to borrow a cart. At banks or public institutions, you take a number and wait in an invisible queue. To get tested for COVID-19, you must maintain social distancing while lining up. Before COVID-19, airports were also places that caused stress with long, stepwise queues. Even after death, people lie in coffins waiting in line at crematoriums.

People’s neurosis about lining up is universal. Starbucks’ Siren Order is a successful case of officially using the public etiquette of queuing as a business process by allowing “cutting in line.” If you order in advance from the office, you can receive your coffee immediately without waiting. It offers both the taste of coffee and the thrill of cutting in line. Although it exploits fundamental human nature for marketing, rather than being criticized, it has become a model that competitors follow.

Have you ever ignored the directions given by your car’s navigation system? What was the result of ignoring a device that provides guidance based on maximum traffic information? Most cases of ignoring the guidance occur when the driver is familiar with the route, so the outcome was probably not bad.

Then, can we fully trust the information provided by current artificial intelligence (AI)? Probably not yet. The variable of experience exists. People tend to blindly trust their own decisions based on experience. Sometimes, even if they are wrong, they are satisfied. However, soon there may come a stage where humans become addicted to or heavily dependent on systems equipped with AI.

At that time, human decision-making will unquestioningly follow AI’s information or instructions. Once such symptoms become widespread and undesirable social phenomena occur, the effort and cost required will likely far exceed those of COVID-19.

Paul Doherty and James Wilson, senior executives at the global management consulting firm Accenture, used a striking phrase in their book Human + Machine (Cheongmungak, 2019): “In science, experiments that fail to prove a hypothesis are not called failures but data.” Since sufficient data from failures models the path to success, they defined a new perspective on future data.

If the clich?d variable of “human” is newly defined and datafied, the relationships with all existing variables will change. If the difference between two and three dimensions is said to be as vast as heaven and earth, the emergence of a new variable is similarly significant.