10 June 2024. Ageing | Business

Ageist stereotypes backfire on you in old age // How ‘economic termites’ extract value from us all [#579]

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1: Ageist stereotypes backfire on you in old age—and how

The New Scientist had a piece in May on the science behind attitudes to ageing. Some of the findings reported are remarkable, although the piece itself is behind the NS paywall. The article, ‘Over the hill?’, is by writer and editor Clement de Pressigny.

He seems to have started researching the article because his 4-year old son was concerned that Father Christmas would forget things on his Christmas list “because he’s old”. Language reinforces this: for example “you can’t teach an old dog new tricks.” Ageism is also pervasive: the World Health Organisation says that one on every two people worldwide is ageist.

One of the effects of this is that people significantly over-estimate adverse outcomes in old age. Anna Kornandt, at the University of Luxembourg, asks her undergraduate students to guess how many of them will get dementia.

”A lot of them think, 'OK, if you're old, you will get dementia no matter what'," she says. "But in the end, for people over 90 years, it's only 30 per cent." And it is only 10 per cent of everyone over the age of 65. So, chances are, most people won't get dementia in their old age. It is the same with loneliness, says Kornadt. There is an assumption that when you are old, you are lonely. But she points out that young people are just as likely to experience loneliness.

But such stereotypes aren’t just bad for older people. They are surprisingly damaging for the people who hold them, leading to much more adverse outcomes in their own old age.

(Old people in Lisbon. Drawing: Miki, via flickr. CC BY-ND 2.0)

People don’t tend to acknowledge that they are experiencing old age until around 75. At this point negative stereotypes can become embedded.

Research by Becca Levy at Yale published with colleagues in 2009 found that

people who believed negative stereotypes about old age in their younger years had a much greater chance of having a cardiovascular event, such as a stroke or congestive heart failure, decades later.

Another study led by Levy found that buying into pessimistic concepts of old age results in a 50 per cent greater chance of being hospitalised in later life compared with people who think positively about it.

A third showed that those negative stereotypes were linked to being much less likely to recover from a disability from the age of 70 onwards.

More recent research by Levy with her Yale colleague Martin Slade also connected ageism “to a greater likelihood of being obese in old age.”

Even on memory—back to de Pressigny’s son—the evidence is mixed. Yes, the performance of working memory tends to get worse as we get older. But semantic memory, which lets is recall facts and concepts, may improve. But again, all of this is worse for people who hold negative sterotypes about ageing:

Levy’s research shows that they account for a whopping 30 per cent of additional decline in memory in people aged over 60.

And finally: the difference in negative and positive attitudes to ageing has a massive effect on both mental health and on life expectancy. Negative views of aging lead to a greater risk of depression and anxiety, and of more suicidal thoughts.

Becca Levy again:

"Individuals who have taken in more positive age beliefs from their culture tend to show an average survival advantage of seven-and-a-half years over those who have taken in more negative age beliefs."

This finding seems to be cross-cultural—this research has been replicated in Germany, China, the United States, and Australia.

These are all big numbers. So how does holding negative views get transmitted into such adverse outcomes? Becca Levy proposes three possible pathways, which, at least on my reading, would amplify each other. These are physiological, psychological, and behavioural.

Physiological: People who have negative beliefs on age show higher cortisol levels, which is the main biomarker for stress, which has a range of adverse effects. Multiple studies have shown that “being exposed to negative age stereotypes, even subliminally, increases people’s blood pressure and heart rate.”

Psychological: Stereotyping about old age becomes a self-fulfilling prophecy, limiting our views about what we are capable of as we age. Those with more positive beliefs, in contrast, are more likely to believe that can still accomplish things, which is likely to improve cognitive performance.

Behaviour: People with more positive views of ageing tend to look after their health better. They will be more physically active and will take prescribed medicine. Ageist stereotypes, on the other hand, can result in people believing that they can no longer do new things:

One study, for example, showed that after being exposed to ageist ideas, older people were more likely to ask for help to complete a puzzle. So an older person may stop doing things for themselves, with no physical or cognitive reason other than those beliefs.

Levy believes that ageism is actually getting worse in the face of a worldwide ageing population, perhaps exacerbated by intergenerational competition over social and economic resources. Her recent book, Breaking the Age Code, looks worthwhile.

Nancy Morrow-Howell, at Washington University, St Louis, says that ageist prejudices are hard to dislodge. Unlearning that can take a lot of one-on-one work. But simply increasing awareness can also help:

Morrow-Howell encourages older people she works with at the National Centerto Reframe Ageing in the US to understand what is really behind the belief that they are "too old" for something. Is it a health issue? Is it desire or preference? Is it because of social factors? "We just have to keep separating age as the primary driver," she says.

Another way to reduce ageism is to increase meaningful interaction between the generations. Reciprocity matters here: the interaction should involve working towards a common goal. In cultures where multiple generations live together, this is easier to achieve. This might be why, in the UK, “Black people and those of Asian ethnicity generally outlive white people.”X

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2: How ‘economic termites’ extract value from us all

Matt Stoller's particular interest in his newsletter BIG is in the way that monopolies have extracted--and continue to extract--value from the economy, in a transaction that benefits investors and asset owners and harms users and customers. He's particularly interested in the American economy, but many of the things that are happening are seen in other economies as well.

He calls the companies that practice this type of extraction "economic termites". One termite is irritating, but you can live with it. When you have lots of them soon enough the whole building starts to collapse. Economic termites are

instances of monopolization big enough to make investors a huge amount of money, but not noticeable enough for most of us... Economic termites describes where these same forces get into the mostly unseen business foundations of our society and profiteer.

(A drywood termite. Image: Pest and Diseases Image Library. CC BY-NC 3.0 US)

Stoller sees this behaviour as related to Cory Doctorow's theory of "enshittification", which I have written about here before, and Yves Smith's less developed notion of "crapificaton". Taking these together, it seems that we are starting to piece together a description of the political economy of extraction in 21st century economies that are underpinned by digital architectures.

The story here is that we are a long way away from the theory that was popular in the 1990s, when the world wide web was young, that falling transaction costs would increase competition and reduce costs.

When I talk about "extraction", I am drawing on the model popularised in Geoff Mulgan's book The Locust and the Bee. He argues that markets in capitalist economies always include two types of firms: those with productive models, which create value, and those with extractve models, and that the balance swings between them. As societies, we can also influence this through law, regulation, and social values. At the moment, the balance is tilted heavily towards extraction.

One of the distinguishing features of economic termites, at least by Stoller's account, is that they tend to insert themselves into the business-to-business economic architecture. This means that their activities are harder to see, and their effects are often diffused through other actors. But this is the effect:

a sense that stuff just costs more and is more difficult, for no discernible reason.

I'll pick up a couple of his examples here from the building sector. We see these termites in the tech sector, of course, but also in sectors such as industrial gases.

Autodesk

Autodesk is a software company that provides computer aided design in the building and construction sector, typically on big projects.

Stoller quotes a Wall Street analyst who praised the stock by, effectively, describing all the features of termite behaviour:

“Like other software suites providing extensive support for customer workflows, ADSK's offerings can demand premium prices due to their prevailing market dominance. When juxtaposed with the overall expenses of a construction project, which might reach millions of dollars, the cost of these products remains relatively minor.”

There are rivals in the market, but the switching costs are just huge:

“The switching costs associated with CAD software are gargantuan, a reality incumbents leverage more or less mercilessly.”

And Autodesk uses this market power to limit the development of the market to its own advantage. Stoller quotes an email about Autodesk from a reader:

“I have personally been bullied by Autodesk while CTO at a design firm using predatory practices that dictated pricing unlike any software contract I've negotiated in my 30 year career... I continue to hear stories from all leaders in the industry with aspirations to create a sustainable, human centered built environment, but limited by pricing and poor quality of a single tool".

His experience is not unique. In 2020 some heavyweight British-based architects wrote an open letter to Autodesk about its high prices and lack of innovation. Costs had increased by 70% to the end of 2019. Firms dependent on the software, they said,

have been faced with, among other things, ever-changing licensing models, aggressive sales tactics in enterprise licensing, and a lack of understanding of the business dynamics within the industry that the company serves.”

Assa Abloy

Staying in the construction sector, the Swedish company Assa Abloy makes locks and smart locks that are used in a high proportion of commercial and industrial buildings. Its market power has come from an aggressive acquisition policy--it has bought more than 300 companies in lass than 30 years, including--in 2023--a merger with Spectrum Brands, who had an "industry leading Kwikset line of business".

Smart locks had been a competitive business--until the merger. Prices had fallen by 9% between 2018 and 2023 as smart lock output doubled. At the turn of the year Assa Abloy raised prices in successive months bteween December and January.

It's worth noting that the US Antitrust Division had challenged the merger, but instead there was a court-negotiated settlement--involving the disposal of some brands to a smaller competitor--that allowed the merger to proceed

LinkedIn

But the list goes on. We don't think of LinkedIn as a monopoly because as users we don't buy from it. But LinkedIn--owned by Microsoft--is a classic two-sided platform. Users provide data to it for free, because of perceived professional or career benefits, and LinkedIn provides access to this data through 'sourcing software' to professional recruitment businesses. To professional recruitment companies, it looks like a monopoly:

“LinkedIn is the only dominant social professional network, with 1 billion public resumés,” I was told. “They have no true competitors in ‘sourcing software’ for recruiters searching to attract passive job candidates for most all veins of corporate work.”

There's enough evidence of market power. Last year increased its fees to professional recruiters by 174%. Microsoft protects its monopoly through litigation.

I haven't discussed Verisign here, but in some ways it is the most egregious example. It has a legal monopoly on the registration of domain names in the US, and has slowly hiked up the annual registration fees in the US--currently at $10.26 per year. It doesn't seem like a lot, and (as with other examples here) it is a tiny cost compared to the cost of running a website. But: Stoller estimates that if this went out to tender a winning bid would be of the order of $2 per registration.

He makes this judgement because Verisign is the most profitable company on the US stock exchange, with operating margins of 67%. (In competitive markets, well-run firms will have margins of between 10-15%). Inevitably, that profit was spent on stock buybacks--to the tune of $882 million in 2023. These are great for asset holders, and terrible for everyone else, which is a classic feature of extractive markets.

It's worth understanding how we got here, which is basically that four decades ago the US decided on a narrow legal description of competition and competition law that meant that you had to be able to prove consumer harm to win a monopoly case. A bit later on, the Antitrust Division "stopped bringing monopolization cases".

After twenty years of not bringing cases, business executives realized the best way to run a business was to create a tollbooth in some mostly unnoticed part of society. So now, each supply chain is made up of a bunch of different bottlenecks, too small to notice.

One of the more unsung aspects of the Biden Administration is that it cares about monopoly and competition, and the Federal Trade Commission is run by Lina Khan, who has a different theory of market power, which is slowly being tested in the courts.

The cases discussed by Stoller have some common features, which also means that it would be easier to restrain the termites with a bit of political will:

Most of these firms use the tactic of building a network or standardizing a business on their platform, and then denying necessary scale to their rivals through technical, contractual, or business tactics. They often use exclusive contracts. They also often rely on expansive patent, copyright, or trademark claims, sometimes government sanctions for their market power. They are ‘capital light,’ usually in opposition to the new industrial policy goals of ‘bending metal.’

Stoller largely sees law and regulation as the route to addressing this in the United States, with help from a bit of media amplification. But I wonder if we need to change the language here. Market power is wrong even if it isn't associated with a monopoly, and our network- and platform-enabled economy has also enabled all sorts of market power. That should be the focus here.

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j2t#579

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