Opportunity Cost Versus Cognitive Overload

30 years ago, world’s population was 5,2 billion humans. Today is a little over 7.8 billion.

30 years ago, we started to connect to each other using what we later called “the Internet” (the first seeds appeared around 1990, but it’s true the mainstream tools appeared 5-10 years later).

There is an interesting correlation between these two metrics.

Linear Space Versus Logarithmic Connections

For starters, we are occupying a lot more space and we are using a lot more resources than we used to just 30 years ago. In absolute numbers, 35% more. At a scale measured in billions, 35% is an incredibly big number, especially for such a tiny time period – in historical terms, 30 years is just a blink of an eye.

The strain that we’re putting – just by merely existing – on our environment is enormous. By “environment” I’m not referring only to the actual physical environment, with all the potential consequences on climate change, but also on our own network of connections, as individuals. Because we are so many (and because we became so many so fast), it’s becoming increasingly difficult to form predictable relationships with each other. This has a direct impact on the potential revenue we can generate – it’s simply more difficult to engage in predictable work processes. Or, in layman terms, to get a predictable, stable job.

Which, in turn, affects our overall capacity to live and enjoy living.

Opportunity Cost And Cognitive Burden

Simply put, it’s way more difficult to take advantage of opportunities. Not because it’s harder to be where the opportunity lies (if you read my article about geo-arbitrage, then you know it’s actually easier to move around), but because we have a much steeper learning curve just to access that opportunity.

We are closer, physically, to each other, but we are more and more apart, from a cognitive point of view.

I realized this the other day, when a friend asked me to give him some tips about one of those DVD Media that I’m using, specifically Hive. He’s a very smart guy, very flexible mentally, and yet, we still spent a few good hours just to give him a basic understanding of the platform.

I’m sure there are many other scenarios in which the cognitive burden just to understand some platform, some job, or some tool, will be just as big, if not bigger, for me too.

It’s like the speed at which we form cognitive systems is logarithmic, whereas our evolution in this physical space is still linear.

And this happens not only in niche systems, like I mentioned above, where dedicated platforms, or highly skilled jobs or tools need more and more mental effort just to be understood at a very basic level, but also in mainstream tools, like money.

This financial paradigm is changing right in front of our eyes, just like the information ecosystem was changing 30 years ago, with the rise of the Internet. I still remember how, back then, some Nobel prize winners were very vocally against this “passing thing”, which was the Internet, a thing which “would never create anything valuable”.

And yet, 20 years later, we live in the times of Google, Facebook, Amazon and Apple, to name just the most important ones.

We’re seeing the same thing with crypto-currencies. It’s a 10 year old phenomenon already, which is starting to become mainstream (just like the Internet needed about 10 years to hit the masses too) and yet, many people – and I know a lot of intelligent, sensible people like that – are not only skeptical, but downright aggressively against it, touting it as a mega-scam, ponzi scheme, or whatnot.

The cognitive overload in front of this new type of money may, indeed, be just too much for some of us.

But this fact alone wouldn’t stop the change from unfolding.

Those Nobel prize winners had all the right to disregard the Internet revolution, but that didn’t stop that revolution to happen.

There’s a huge opportunity cost in ignoring this financial revolution, one that makes the cognitive overload to just being acquainted to its new rules, well worthy.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.