Faces in the crowd

April 29th, 2010 by

Once upon a time, consumption was personal. Although international trade has existed for millennia, until relatively recently it was not a big part of life. People grew their own vegetables and bought goods made by the local butcher, baker and candlestick maker. Selection was terrible, but at least everything you consumed supported a friendly face.

In the modern world, trade and the outsourcing of jobs to other countries is an everyday part of life. Most of our goods are made by faceless millions in China, and the person on the other end of the helpline is more likely to be speaking from New Delhi than next-door. Not everyone likes it, but almost everyone understands it: companies tend to make more money if they move operations to countries where inputs like labor are cheaper.

The wealth of nations
Crowdsourcing platforms like Amazon’s Mechanical Turk should presumably take this basic economic principle to the extreme. With no need for the risky and expensive investment in overseas factories (or ongoing employment related expenses), crowdsourcing is a much more efficient way to source labor than outsourcing. All things being equal, “Turkers” from poorer countries like India will be able to supply their labor at much lower prices than Turkers from richer countries like the US, forcing them out of the market.

Interestingly, this assumption has so far proven incorrect. Even with the explosion of internet access throughout the poorer parts of the world, according to a recent study, over 60% of Turkers are still from the US (with 38% from India, a proportion which has increased significantly since Amazon began paying in rupees).

Part of the reason, of course, is that all things are not equal. It is still much easier for people in the US to complete tasks on Mechanical Turk than it is for most people in poor countries. They have better access to the internet, are more familiar with using it and are more likely to understand the tasks. (The Mechanical Turk is also only the largest of various crowdsourcing platforms – others such as Samasource are dominated by people from poorer countries).

Peanuts are better than nothing
But even allowing for this unequal playing field, it is still surprising that people in the US can compete with people in India. Before you pick up the phone to call Adam Smith, a simple explanation is at hand. Although most Turkers said that they are motivated by money, a common theme amongst respondents from the US is also the convenient and flexible nature of the work. The ability to choose which tasks one completes also means that workers can select tasks which they are interested in and enjoy. Rather than do a crossword while the twins take a nap, a stay-at-home father can earn a few extra dollars filling in interesting surveys.

The fact that Turkers from the US earn peanuts relative to the cost of living (a glance at the results indicate average rates of well under $2 an hour) does not seem to put them off – it is still more than they would earn watching bad TV.

In the future, as the crowdsourcing market continues to grow and access to technology spreads, we can expect an increasing proportion of people from poorer countries to become involved. But just as many traditional assumptions about the difference between rich countries and poor countries are no longer accurate, so too are assumptions about who will complete tasks which are offered up to the world.

In The Wealth of Nations Adam Smith said “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.” While crowdsourced labor may not be as visible as the village butcher and baker, it is important to remember that they are all individuals, with motivations as diverse as their faces.