Metrics and Outcomes and Intuition, Oh My!

Well, it's Thanksgiving, and time to think about what we're thankful about. At the Social Capital Markets blog, we've started a blog roundup (#socap #thankful) and of course this first abbreviated month is about stories of thanks.

During the discussions about topics, Kevin Jones at one point said, "Quantify the good for which you are thankful. Does measuring it make it grow in your mind or memory? So what's the good of social metrics? If they take away from thanksgiving, what earthly good are they?"

As it turns out, this is a topic near and dear. (HINT: What that means is this is going to be a long, rambly post, and now you've been warned!)

 

Like many people, I grew up with two parents. One was an artist and one was a psychoanalyst. My mother was the artist and math-phobe who lived in a nearly constant state of metaphor. My father, who idolized Bronowski, had a favorite saying, "there is no good and bad, only true and false." As my parents careened towards an inevitable divorce, I felt intellectually a little bit like that old marble maze game. I was a musician; eventually I discovered how sound was produced, and tried to "understand" music, intellectually.

I spent many years trying to make sense of this conflict. At times, this meant that I struggled to tease the irrational into a rational framework. At other times, this meant that I had to let go of rational decisionmaking and fly by instinct alone. Bouncing between approaches eventually led me to realize that our secular systems, the ones that relate our home to our livelihood to our children (and their livelihood), and how manage our own and others' diseases, were broken. They're just a first approximation pulled together to help the US mobilize during World War II, and completely inadequate to deal with the complexities of multi-cultural, mobile, globally intertwined life.

So I searched for solutions, and found the concept of Intangible Assets.

What are they? Intangible assets include those things that are, literally, not corporeal. Friendship, respect, trust, love; knowledge, creativity; a resilient environment. And their utility is that it is these intangible assets that allow the production of tangible goods and service products. So building intangible assets is clearly a precursor to building a strong financial economy. As it turns out, it's precisely those intangible assets that most community organizations and non-profits are mobilized to build, and on a personal level, it's those assets (trust, love, beauty, knowledge) that inspire people to believe that life is worth living.

Back at the drawing board, then the question has been for quite a while: given that intangible assets are somewhat intuitively perceived, how do you measure changes in them? "How much do you love me?" is a dreaded question, precisely because it's intuitively known to be unanswerable! And of course we all have taken tests that didn't accurately reflect our knowledge (or struggle to design those that will reflect the learning of our students).

I have concluded that we currently can't measure intangible assets, and I don't anticipate we will ever be able to. We want to grow our social capital? Why? Are 2000 friends/colleagues/prospects better than 500? But what about quality? Longevity? Trust? Respect?

I have thought a lot about how people outside of corporate or community development life actually create and use intangible assets. It seems to me that we use them for risk management. On a personal level, we want to know a little bit about many topics so that we know where to look *just in case*.  Also, many people want to be part of a broad community in order to have access to other ways of thinking, or kinds of business opportunities, world cuisine experts, or travel tips. Similarly, most people have friends they know to call to go see a movie, to go hiking, or to discuss a book, and we feel particularly fortunate if we have people we can turn to when we feel we've made a mistake, or raw misfortune has overtaken us for a while, or we are at the end of our lives.

Also, this is why we educate children broadly: not to meet a specific projected labor demands 15-20 years in the future, but to make sure that as a society we can find young adults able to think and make decisions.

So when we talk about monetizing social capital, that misses the point. We create social capital to protect against losses. We need adequate social capital (or other intangible assets) for them to be effective at managing risk, but "counting" isn't relevant! We can count how much we have, but we'll never know the yield of that asset, because it's not about the yield, it's about the risks that have been managed. (And we don't know enough about those risks yet.)

Analogously, we count our blessings not to know how many blessings we have accumulated in the past year, but to feel the implicit protective safety of all the people who love us, all the things we've learned, the beauty of our environment.

Then if, having counted our blessings, we have lost something so dear that we still despair, we know we should take time to grieve and restore our mental and spiritual health. Or, if instead we feel the year has been futile and distressing, we resolve to "get out more," "take a class," or build whatever intangible asset we instinctively crave, so that we have *enough* of that specific thing -- whether it's trust or physical health -- for us to feel it manages risk adequately. We're not longer overwhelmingly lonely, or feeling marginalized by our lack of current knowledge.

And for that understanding, I have many, many friends and colleagues to thank.

My deepest gratitude and love to the people in my life.

Comments

[Greg Berry]

Jessica, good piece. Your distinction around measuring vs. "spending" social capital is an important one. I also appreciate the risk management frame of reference.

I think your argument would be further buoyed by the realization that social capital can be an actor in relation to financial capital. The simplest example is your credit score: act in a trustworthy and consistent manner (as defined by the credit rating agencies), and you have more access to financial capital (most of the time). Although that's a very literal example, many intangible social capital balances have a similar affect, whether to find work, gain access to an investment opportunity, or other opportunities. When considered as a multiplier of financial capital, social capital can have more measurable value, without having to be "spent" directly, which we agree is a ludicrous concept.

[Jessica Margolin]

Greg,
Yes, absolutely! Thank you for pointing out that complex issue in a simple way.

With the credit score, the idea that past un/dependability is a reflection of character illustrate what happens when we don't keep track of enough information to really understand the data.

Clearly someone who is struggling in a low paying philanthropic position (or even a teacher) but subject to illness, or with the birth of a sick child, is unable to perform financially in a way that would be visible as "dependable." Yet, they're dependable citizens in the sense they make productive choices, they contribute overall to the investment in society, and as such are worthy of leniency in their credit "score." If luck were to find them, they'd use it responsibly. (And THAT is what Microfinance was originally about.)

This would be unlike, say, a high-flying greedy executive who makes a lot of income but spends it even faster. (Nevertheless, the flamboyant person throwing money around might have a fleet of sycophants - so it's not obvious what's going on until reputation is apparent, including the reputations of responsibility and demonstrations of collaborative behaviors of those who are related to the greedy central figure.)

Thankfully we're leaving the period of time where we've had to create abstract indicators of trustworthiness and dependability from blindly recorded behaviors! Our ability to track and process data is now at the point where it can be useful...if we gather it correctly.

[Soccapital]

Hi Jessica. Love this post. In part because I can relate to working hard to impose rational frameworks onto irrational and intangible things (in fact, similar to you, I went from being a music student in college to realizing I was more interested in the science and mathematics of music (check out Past Life Melodies by Sarah Hopkins for an amazing illustration of overtones)). You must be an INTP or INTJ? Either way, we sort of epitomize the human need to reduce uncertainty in this regard, despite our recognition of its inevitable existence.

As far as social capital as an intangible asset... I often think of its value in terms of its ability to lower transaction costs. In some cases, I think you're right to express this as risk management (i.e. when social capital is understood as trust). I also agree with Greg's comment that it can be understood as lowering transaction costs in terms of search costs(i.e. being plugged into a network provides more ready access to business opportunities). My intuition says these are two distinct distinct benefits of social capital, one more quantifiable than the other.

Anyway, very much an interest of mine, as well, and something I have far from figured out. Actually, I have two posts coming out this week that touch on the topic. I'd love your feedback.

Mike Shoemaker

[Soccapital]

Would appreciate your feedback - http://bit.ly/7G3KgO

[Jessica Margolin]

Thanks, Mike!
Actually I waver between F & T, but usually am an ENFP (although Jamais Cascio thinks I'm an ENTP, and I value his perception!)

I absolutely agree with you both - there's a measureable upside of a social network in terms of lowering transaction costs (sometimes down from infinity, in the sense of "it's who know you...")

On the other hand, there are research pieces that show that searching your network will bias your result more than a more objective search, and there are negative results such as nepotism, etc., that actually the objectivity of financial valuation *solves*... so, really all I can conclusively say is that it's complicated.

I look forward to reading your post.

-Jessica