Discover more from Klement on Investing
Good old times, innovation edition
Douglas Adams once developed a set of rules that he thought describe our reaction to technology:
Anything that is in the world when you are born is normal and ordinary and is just a natural part of the way the world works.
Anything that is invented between when you are fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
Anything invented after you are thirty-five is against the natural order of things.
Well, it turns out that he was pretty much spot on, at least according to a study by Adam Smiley and Matthew Fisher who investigated how people react to technological innovation. They conducted a series of experiments asking people how they assessed different technologies invented at different times before and after their birth.
For example, in one study, they asked 804 Americans to rate if a particular invention had a positive or negative influence on society overall. They asked each person to rate a series of inventions from the last 60+ years. Among them were inventions still in use today (the microwave, invented in 1955, ultrasonic electric toothbrushes, invented in 1992, or the Xbox 360, invented in 2005) as well as inventions that have become obsolete by now (transistor radios, invented in 1954, disposable film cameras, invented in 1986, or Tamagotchis, invented in 1997).
I suspect some readers will not know what Tamagotchis and the like are just like some of the participants in the experiment did not know that. Thus, for every new technology, participants were given the year of their invention and a link to the Wikipedia entry on the technology. Then, they were asked to rate how each technology influenced society on a scale from -3 (negative influence) to +3 (positive influence).
The chart below shows the average rating technologies got dependent on how old the participant was at the time of its invention. The red line is a simple linear fit while the black curve is a more sophisticated fit.
How people rate inventions made during their life
Source: Smiley and Fisher (2022)
What the study shows is that the older people are when they are confronted with new technology, the more negative they rate the technology’s influence on society. Once people turn 50 or more, they really don’t like any new technology that much.
I put it to you that this also influences how investors think about specific investments and what biases they have for or against them. Cryptocurrencies and blockchain technology were mostly popular as an investment with people younger than say 35, in my experience, while older people stayed away from that. Investing in the internet is something that is totally fine with people up to the age of 60 now but people older than that often are reluctant to invest in companies that are active in this space. And if we talk about desktop and laptop computers, I think most people are now comfortable investing in a company like Microsoft or IBM. These have become old tech by now.