The Psychology of Social Media in the Great Digital Transformation

20 March 2017 | Blog Post

Health warning to our underwriting and risk manager readership! This article discuses post-modernist philosophical concepts, the new identity politics, the rise of Generation YouTube and the impact of these phenomena on a modern day integrated risk management.

Our hypothesis is that we are at a real turning point in risk management history where the so-called “enlightenment” values – in the West, at least – are supplanted by a new disruptive model fuelled by the great digital transformation. The impact on insurance risk management, as in all other areas of society, will be profound.

In a recent newsletter and white paper, Russell Group Limited outlined the impact of geopolitics on corporate risk management. One of the new risk drivers, we posited was the new-found power of social media, which has fractured news distribution outlets and driven a new kind of “extreme politics”. Paradoxically, this ‘extreme politics’ is underpinned by the extreme connectivity of today’s technology and the IoT.

Are we in a post (objective) truth age? Post-modernist philosophers have been saying as much for decades. The French thinker Jean Baudrillard has proposed the notion that, in an era dominated by electronic media and digital technologies, and where subjects are detached from the outcomes of actions (political or personal), events no longer hold any sway on the subject nor have any identifiable context.

In such an environment, events can produce indifference, detachment, and passivity in industrialised populations. The theory is that a constant stream of online appearances and references – acts of war or terror, for example - without any direct consequences to viewers or readers could eventually render the division between appearance and object indiscernible.

When Baudrillard suggested in 1991 that the first Gulf War did not take place, he was widely ridiculed and misinterpreted. What he was saying then is probably easier to understand today, though, is it not? Baudrillard imagined the "disappearance" of mankind in what is, in effect, a virtual or holographic state, composed only of appearances.

Think of Mosul in Iraq today. We see the news on MSM or SM and we are there but we are not there. We see the march and retreat of ISIS in Syria and we are there but we are not there. We are connected online but we are disconnected by geography. Then, closer to home, we see our children in their bedroom playing Overwatch on PS4 – a team-based multiplayer first-person shooter video game – and the resemblances between these war zones recreated for children’s digital entertainment is uncanny.

Modern media is aggressively social. At the same time, it’s easier to talk to people that share our values and far simpler to like people and things because they operate in a binary two-dimensional space. Communications in the three-dimensional world are slightly more complex.

According to one study, interaction with human partners requires more emotional involvement, and thus more cognitive effort, than interacting with a computer (Rilling, Sanfey, Aronson, Nystrom, & Cohen, 2004‏).

The study also shows a difference in activation strength between our reactions to human beings and computers because when “we interact with another human being, we cannot control our emotional involvement invested in the interaction process. The activation of specific brain areas is automatic once our mental radar detects another person.

“So although we may be unaware of why it so often feels easier to interact through a computer (particularly when we are feeling tired or drained), the conclusion is clear – a computer does not require cognitive or emotional involvement, making our interaction with it much easier.”

Online relationships are by definition, more casual. When we interact online we are in a sense communicating in scruffy jeans and t-shirt mode, but when we look someone in the eye in the real world and start to form a sentence we are dressed in a sharp pinstriped suit.

The quality of the human to human interaction is more complex and of a higher, more granular definition. You could say it is like the difference between digital MP3 and a vinyl record. This has important implications in the modern world. Why?

Well, what about empathy? According to the magazine Psychology Today, online interactions are devoid of emotions. One tragic example cited by the magazine involves a mother, who often exchanged text messages with her daughter, who was away at college. According to the story, mother and daughter ‘chatted’ back and forth with positive statements followed by emoticons of smiles and hearts. Later that night, the daughter attempted suicide.

The signs of depression were there, but could only have been interpreted through face-to-face communications and the sharing of her emotional state. This is a sad story of an individual, one identity. What about empathy at the global level, however? The impact of the great digital transformation on 8 billion identities has ramifications for us all.

Much identity politics flows from a broader rejection of globalisation or universalism. It is derived from the postmodern condition of fragmentation and decentering, according to some postmodernists. In today’s world of Brexit, Trump and the surge of populist movements across Europe, this argument does have some force. As one blog written earlier this year puts it:

“Capitalism drives towards totalisation (as some postmodernists might put it) in its pursuit of unlimited capital growth, markets and resources. It unifies different societies and spheres of human endeavour by subsuming them under capital’s rule. Yet, it is quite clear that the major fluctuations of late capitalism—unemployment, the roller-coaster ride of global markets—are experienced by their victims as fragmenting and decentering.”

In such an environment, the fear is that a ruthless populist, a wily nationalist backed by a party political machine or someone who seizes the reins of a party machine will exploit the febrile mood and make a grab for total control. There is a proven model for such power grabs, which are as old as humanity.

The difference today is that traditional hierarchies and structures, party politics, NGO mandates, one party states, parliamentary democracies, even theocracies have never been confronted by the frightening potential for one individual to communicate their message online to 8 billion at some time from the comfort of their living room.

Wouldn’t it be interesting if 8 billion people became aware of one You Tuber, for example, all at the same time? Extrapolate further: what if half of the global population started to “like” a single You Tuber all at the same time?

Then imagine if 1 billion people signed up and started to subscribe, watching their favourite You Tuber vlogs once a week talking about the state of the weather, what he or she had for breakfast that morning, how they really hated the new product they had just bought, who they were thinking of voting for next week – or not even voting because politicians can’t be trusted, right?

Imagine the concentrated power of a YouTuber with 2 billion subscribers? It’s not unimaginable when you consider that the top 10 highest-paid YouTube stars this year made a collective $70.5million, with the top earner raking in $15million. Swedish gamer Felix Kjellberg, known to his fans as PewDiePie, took the number one spot for the second year in a row in 2016 thanks in part to his nearly 50 million subscribers.

In a world of exponential growth in Internet traffic, faster connectivity and a still relatively immature digital medium, making the leap from 50 million subscribers to potentially hundreds of millions seem achievable. YouTube is still only 12 years old but who’s to say if it has yet had its Elvis Presley or Michael Jackson moment? Is PewDiePie at the top of the plateau or just at the start of an upward curve?

More interestingly, could the Internet megastar of 2018 be the next Great Entertainer or the next Great Dictator? That may be too fanciful for some, or the truth is, it could be a mixture of both. Either way, future Internet sensations will surely be able to grow their networks beyond anything we can imagine today over the next decade as their grasp of the levers of digital power grows.

President Donald Trump has the power to make corporates tremble with a twitch of his Twitter-happy fingers but at least he has a mandate. The future Twitter stars of the future may be able to achieve similar or greater, potentially disruptive power, supported by no mandate apart from the of their followers.

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