The investor’s dilemma
Tech companies are blamed for problems from increasing rates of depression in young people to the rise of extremism. Fund manager Katherine Davidson considers whether a digital detox should be on the cards.
Netflix documentary The Social Dilemma makes for uncomfortable viewing for users of social media channels such as Facebook, Instagram, Snapchat, YouTube or Twitter.
i.e. pretty much all of us.
Why might sustainable portfolios need a digital detox? I see two main issues: addiction and polarisation.
My concerns: addiction and polarisation
- Opiate of the masses: addiction
Social media services have been designed to create a “dopamine-driven feedback loop”. Dopamine, the “feel good” chemical linked to addictive behaviour, is released through positive social interactions and validation from our peers. Social media delivers social stimuli like a slot machine: irregularly-timed rewards in the form of likes and other notifications.
It’s affecting the quality of our sleep and has even been linked to a higher risk of road traffic accidents. The pressure for validation and unrealistic examples displayed on social media have also been blamed for rising incidences of depression, eating disorders and suicide – especially for young people.
- Rules of engagement: polarisation
This leads to the second problem.
Engagement will be higher if the platform serves you content that you will find, er, engaging: this could be stuff you’ve previously shown an interest in or that “people like you” click on.
This is naturally going to be content that chimes with your existing view of the world and technology has ramped this up to the nth degree. This matters for society.
There have been numerous studies suggesting that political polarisation has intensified since the 1990s, especially in the US.
Social media isn’t the only reason but it’s plausibly a significant contributor.
It’s certainly true is that social media has provided a platform for damaging content and enabled, and potentially encouraged, it to spread further and wider than previously possible.
Can tech companies still be a force for good?
I see two important routes to mitigate the negative impact of technology: regulation and education.
On regulation, the environment is becoming increasingly hostile. Europe has already taken gradual steps to curtail the powers of big tech and I believe the change in administration in the US will usher in more regulatory activity.
Education is even more important in my view.
The best approach is probably the same as with other sources of potential harm like drugs and drink – talking openly and honestly about the risks. I even think there is a case to be made for putting “internet hygiene” on the school syllabus.
Do sustainable funds need a digital detox?
The Social Dilemma paints tech companies as villains destroying the very fabric of society.
I agree that the psychological effects of social media can be detrimental, with business models that feed on addiction and polarisation.
But this doesn’t mean that tech companies – and their products – are all toxic. As with many things, social media can be beneficial and enjoyable if consumed in moderation.
There’s certainly more that could be done in terms of regulation and education, but there’s a role for sustainable investors to play in holding these companies to account and encouraging positive change where possible.
A digital detox is too extreme and unrealistic. But a regular digital check-up could be just what the doctor ordered.
Any company references are for illustrative purposes only and are not a recommendation to buy and/or sell, or an opinion as to the value of that company’s shares.
The article is not intended to provide, and should not be relied on, for investment advice or research.
