How technology is driving inequality

Inequality is one of the major political topics of our times. Rather like a Shakespearean tragedy, the current splits in the high command of the Conservative Party have many themes. But an important one, and the ostensible reason for Iain Duncan Smith’s resignation, is the treatment of the working poor, a concept which until fairly recently seemed to have been banished forever.

Like sending ten year olds up chimneys, the idea that people in work would not really have enough money to cope belonged to the distant past – well, to the depression years of the 1930s rather than the child labour of Dickensian times, but it was all a very long time ago.

Increasingly, this is no longer the case. A snippet from the arts world illustrates the point. The famous actor Robert Lindsay is president of the Royal Theatrical Fund, a charity which helps struggling actors. In the Sunday Times, he is quoted as saying that “there are household names who are now earning so little, people stop them in the street and ask for their autographs, but the spotlight has gone out for them”.

A survey of nearly 1,800 British actors by Casting Call Pro in 2014 found that no less than 75 per cent of them had earned less than £5,000 during the previous year. Only 2 per cent had earned more than £20,000, a figure which itself is only approximately what someone on the Living Wage in London and working 40 hours a week would make.

A key driver of rising inequality is technology. Fears abound that robots and artificial intelligence will destroy up to half of all existing jobs, but history suggests they will be replaced by completely different ones. The problem is more subtle. The stupendous proliferation of data and information in cyber society is changing fundamentally the way in which people make choices.

In more mature markets, such as the fast-moving products in supermarkets, consumers are still able to operate in ways described in the economic textbooks. They are familiar with the different brands and their various qualities and are able to compare prices. So they make choices essentially on the features of each of the various alternatives on offer, as “rational” choice theory says they should.

But in other contexts, people are bombarded with so much information that it is literally impossible to process it in this way. Eric Beinhocker of the Institute for New Economic Thinking estimated that, in New York City alone, consumers are presented with a potential 10bn different choices every day. They have to find some different way in which to navigate the maze. A good rule of behaviour is just to choose something which is already popular: you think other people have done the work for you, and have decided it is a good choice.

This self-reinforcing behaviour drives highly unequal outcomes. Things become popular simply because they are popular. Footballers, actors, film directors who are thought to be good get a bigger and bigger share of the pie. In cyber society, everyone loves a winner.

Paul Ormerod

As published in CITY AM on Wednesday 23rd March 2016

Image: Scales of Justice by James Cridland licensed under CC BY 2.0

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Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.