Beyond the productivity paradox

Productivity is a simple concept. It is the amount of output produced per unit of input. While it is easy to define, it is notoriously difficult to measure, especially in the modern economy. In particular, there are two aspects of productivity that have increasingly defied precise measurement: output and input. Properly measured, output should include not just the number of widgets coming out of a factory, or the lines of code produced by a programming team, but rather the value created for consumers. Fifty years ago, tons of steel or bushels of corn were a reasonable proxy for the value of output. In today's economy, value depends increasingly on product quality, timeliness, customization, convenience, variety, and other intangibles.