A simple theory of service sector productivity

It is often about time, says Diane Coyle in the FT:

In many retail industries, higher productivity means faster service. There are many routine services where getting more for less requires less time to be spent performing them. This applies to parts of many sectors of the economy. There are past examples — think of the impact of the washing machine on doing the laundry or the ATM on taking money out of the bank — but now we are seeing much more automation in new areas such as legal search, scrutiny of medical tests and buying train tickets online. There is surely much further to go as artificial intelligence advances.

Of course a lot of service sector transactions aren’t so much about product quality as simply having a barrier removed from a basic enjoyment of life.  How long did it take the CVS clerk or the DMV to serve you?

Should this point make us feel better or worse about the biases in productivity statistics?  If nothing else, traffic congestion has become worse.  On the other hand, with smart phones and iPads, waiting in line never has been better.

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