Attention Markets and the Allocation of Cognitive Scarcity
If people see it, they just might want to buy it. For generations, profit-seeking firms have purchased advertising space in the mediums seen by consumers, ranging from roadside billboards to radio to television. Today, the most frequent medium seen by consumers is the Internet, especially social media. As a result, firms spend heavily on Internet advertising, hoping to translate views into clicks, which direct Internet browsers to the companies’ websites. From there, hopefully a meaningful percentage of browsers will make a purchase, turning those advertising costs into revenue.
Market for Consumer Attention
We all know that advertisers, which are comprised of most large firms in every market, want consumer attention. The more attention to ads, the more sales will almost certainly be generated. However, consumer attention is limited, making it valuable.
Limited Supply of Consumer Attention
While the demand for consumer attention is virtually infinite, the supply is limited by multiple factors. A physical limitation is time - no consumer can watch ads more than 24 hours per day. Quickly, realistic limitations narrow this window to only a portion of waking hours. Even among Internet and social media addicts, this leaves only a relative handful of daily hours for advertisers to compete within for consumer attention.
In addition to limited supply of consumer attention, not all attention is equal. In psychology, which is part of the field of behavioral economics, researchers study the serial position effect, also known as exposure order effects, to determine when consumers are most susceptible to advertising. Consumers are most likely to remember the ads they saw first (primacy effect) and those they saw last (recency effect), meaning firms will likely pay more money to have the first commercial at the beginning of a social media short (video clip) or movie or TV episode on a streaming platform’s ad-supported tier.
Many Substitutes Creates Intense Competition
We know consumers have limited time each day to consume media, so where are they found? Websites that are not supported by subscription revenue, like streaming entertainment sites, need to attract consumer attention so they can sell advertising space. There are many of these cost-free sites, including social media and news platforms, so they must compete for loyal users. In an attempt to get users for ad revenue, and perhaps to convince users to sign up for paid subscription upgrades from freemium packages, these websites and apps can use various design and marketing strategies to appeal to users.
Many websites and apps use gamification techniques to make users feel rewarded for time spent online, especially interacting actively by clicking links, sending messages, or buying products. They have also moved to infinite scroll architecture, allowing users to use continuously without ever reaching the “end” of the site. Between gamification and dark patterns that manipulate users into picking sub-optimal choices (such as purchasing more expensive products than needed), controversy abounds when it comes to popular websites trying to get users - particularly minors - spending more time online. In March 2026, a court found Meta (parent company of Facebook and Instagram) and Google (parent company of YouTube) guilty of intentionally trying to make their platforms addictive to young users.
Why So Addictive? Users See Low Opportunity Cost of “Mutitasking”
Due to the competitive market for consumer attention, websites and apps have gotten so good at drawing attention that many consider them addictive. One economic reason that many people may be constantly online is that they see negligible opportunity costs to being on social media or streaming entertainment. On a laptop, users can switch back and forth between productive tasks and entertainment with the click of a mouse, moving from one Internet browser tab to another. On a smartphone, a few swipes of a finger can accomplish the same thing. Due to the ease of switching between entertainment and work, Internet users may assume that they are effectively multitasking.
Unfortunately for self-proclaimed multitaskers, research suggests that the vast majority of people are not actually good at multitasking. When shifting one’s attention from one task to another, details are often forgotten. People don’t realize that they are forgetting important details, leading them to falsely assume that the opportunity cost of adding Netflix, Instagram, or TikTok to their “attention lineup” while at work or school has zero opportunity cost. Over the long term, people are significantly less productive when switching back and forth between productive tasks (work or school) and entertainment.
Restrictions: Limit Substitutes for Attention to Maintain Productivity
Do streaming entertainment and social media really have such a strong grip on students and workers? In recent years, this has led to conscious attempts to limit the ability of young people to access entertainment and social media websites and apps during school hours. In the United States, many states have recently passed laws banning smartphone use during school hours. Lawmakers argued that students were using social media and streaming entertainment constantly during the school day, leading to rapidly eroding academic skills.
Employers have also begun implementing similar policies, forbidding workers from being on social media while on the job and blocking access to such sites on company Internet connections. However, there are more legal protections for adults than students when it comes to electronic communication, complicating employers’ attempts to limit non-work Internet use. Labor law prevents employers from banning workers’ use of social media platforms if that ban can be reasonably proven as an attempt to prevent workers from communicating with each other about workplace issues. However, employees at most private sector companies can be terminated if they are repeatedly seen browsing social media or streaming entertainment instead of performing their work duties.
Economic Implications of Cognitive Scarcity
Today, the average student or worker is faced with a myriad of digital distractions that compete for his or her attention. This can lead to substantial underperformance if not guarded against, potentially reducing macro-level economic output in the long run. If millions of students are gaining less skills than their predecessors due to social media addiction, they will become less productive workers. Currently, many observers fear that the rapid rise of generative AI will lead to younger Gen Z employees struggling to develop critical thinking skills. Is this all neo-Luddite fearmongering, or a real economic threat? Researchers, educators, and employers are trying to find the answer as quickly as possible, hoping that our collective productivity isn’t in jeopardy.
