Byline: JESSICA IRVINE
As the Federal Parliament descended into farce over the resignation of the speaker, Harry Jenkins, on its last sitting day of the year, the micro-blogging website Twitter went into overdrive. For a brief moment, Harry Jenkins topped Kyle Sandilands as the most-mentioned man by Australian users of the website.
In 140 characters or less, journalists, politicians and interested onlookers "tweeted" their observations from inside the corridors and chambers of Parliament House. Politicians spotted outside ministerial offices had their every expression scrutinised and tweeted as journalists sought to divine deeper meaning about the strategy of key players in the unfolding drama. It was political journalism on steroids.
Twitter has come a long way since emerging in mid-2006 as a medium for teenagers to broadcast what they had for breakfast (a banana smoothie, thanks for asking). It has matured into a network of more than 100 million active users, the website says, including politicians, academics, journalists and business people tweeting both their own observations and links to eye-catching stories, blogs and video clips.
As someone with a more-than-passing interest in economics, I have been struck by the thriving community of economists on the site. Some of Australia's brightest economic minds are mad keen twitterers, including John Quiggin, Justin Wolfers, Joshua Gans, Nicholas Gruen, Christopher Joye and Craig James. Big-name international economists such as Tim Harford, Greg Mankiw, Tyler Cowen, Paul Krugman, Brad DeLong and authors of the Freakonomics blog are also prolific.
Why? Economists love nothing better than when deep and liquid markets operate under conditions of perfect information. Twitter is good at this, bringing participants together to a common marketplace and transmitting information among them. Like the civic squares of old, Twitter is a place where participants come to trade information. No money changes hands, but producers and consumers of tweets can use the information available on Twitter to generate other economic benefits.
Journalists and academics derive status from being first with the news, or kudos for their witty observations. An enhanced status may help them secure a pay rise or research funding.
Consumers of tweets can also attempt to use the information to make money. Stockbroking companies are already using complex analytical techniques to gauge public mood swings on Twitter (based on the types of language people are using - happy, sad, etc) to predict share price movements. One academic paper, "Twitter mood predicts the stockmarket", has claimed an 87.6 per cent accuracy rate in using Twitter sentiments to predict US share prices.
Twitter also helps improve other markets through its role in overcoming information asymmetries and other barriers to entry. As a price discovery mechanism, there is none better. Earlier this year, while working on a story on banana prices, I asked my followers what the price was in their local area. Within minutes I was swamped with responses: 73 pence ($1.15) a kilogram in Derry, Northern Ireland; 4 riyals ($1.10) a kilogram at a Carrefour supermarket in Doha; $US2.18 ($1.98) a kilogram in Greenwich Village, New York. Unfortunately, staff at my local Woolworths don't haggle, otherwise I would have had a thing or two to say about the $15 a kilogram I was paying at the time.
Information is to the 21st century what steam power and steel were to the industrial revolution: the building blocks for knowledge and service-based economies. And Twitter is the modern ideas factory, where like minds get together from across the globe and share knowledge.
In his 2004 book The Wisdom of Crowds, the American journalist James Surowiecki observed how the outcomes of decision-making by large groups are often preferable to those of small elite groups. Wise crowds demonstrate a diversity of opinion, independence of thought, specialisation on different subjects and, crucially, a mechanism for collective decision-making. Twitter, of course, lacks any real decision-making power, but it happily meets the first three criteria. Sure, there is a lot of dross. Celebrities such as Lady Gaga and Britney Spears attract the largest numbers of followers. But big ideas can be powerful too. Well-constructed tweets, or links to blogs penned by talented individuals, can spread far and wide if picked up and "retweeted" by influential twitterers.
This capacity for "retweeting" insights from others introduces a degree of randomness into what might appear in your own news feed and exposes you to many information sources you might not otherwise have stumbled upon.
If the secret to boosting our national productivity, and hence living standards, lies in the synthesis of new and diverse ideas to come up with better ways of producing more from the same set of inputs - and surely it does - social and information networking sites such as Twitter and Facebook offer some of our best hopes for the next productivity revolution.
Twitter: @Jess_Irvine