Each year the public relations company Edelman release a 'Trust Barometer', which highlights how people feel about various institutions, companies and even professions. It's one of a number of surveys that hold a mirror up to society and delve into the trust we have in others.
What is common throughout these various surveys is that trust in institutions, whether government, corporate or religious, is plummeting. Whilst our trust in institutions plummeting, our trust in other individuals seems to be soaring. We're more likely to trust recommendations from our peers for everything from news to holidays, whilst the so called sharing economy appears to be flourishing tremendously, due in no small part to the way such platforms facilitate trusting relationships between participants.
Central to trust in any market is the so called 'market for lemons'. The theory, coined by George Akerlof is an often cited one when it comes to government regulation. It highlights how information deficiencies can lead to market failures, and therefore require regulation.
Akerlof's work highlights how used car buyers know that bad cars exist (lemons), but are ill equipped to know where they are, which lowers their willingness to pay for cars. This uncertainty in the demand side then discourages those on the supply side from offering up high quality cars. In other words, everyone loses.
A recent paper highlighted how the sharing economy overcomes this. The paper argues that the sharing economy has provided just the kind of market based solution to the lemons problem that Friedrech Hayek promoted. Indeed, the rise of the sharing economy could be seen as the natural exploitation of such a weakness in the market. It was less a failure as an opportunity.
The reputation that is at the heart of the sharing economy acts as a powerful incentive to both constrain opportunistic behavior, and to also incentivize honest transactions between people.
Similarly 'distributed' forms of communicating trust exist in technologies such as blockchain, with high profile supporters, such as Don Tapscott, believing that blockchain will transform trust in society.
Who can we trust?
So is trust in crisis or on the verge of a technology driven leap forward? That's the question posed by Rachel Botsman's recent book Who Can You Trust? I met up with her recently to find out more.
Adi Gaskell: What is it about the current changes in trust that makes you think we've in the middle of something transformative?
Rachel Botsman: My fascination, and my work, really focuses on getting underneath the technology and examining human behavior, and then looking at the different strands of change and figuring out if they're connected. I started to realize that the connection is trust. If you think about it, trust has only had three chapters: local, institutional, and now distributed, and it explains so many patterns of change, and unrest.
Gaskell: Do you think this is a very systemic change, in the sense that we have the technology now to capitalize on the lack of trust people have, or is it more of a drip drip?
Botsman: I don't think it's necessarily like I distrust this so I'm going to trust that it's not like you know your trust moves from one thing to the other. It's more that this is inherently where technology, whether it's payment systems, artificial intelligence, it's naturally where technology pulls us to take power away from the center. And so I think we often find ourselves in systems of distributed trust without realizing it. On Facebook, for instance, what you read is being determined by algorithms.
Gaskell: From an organizational perspective, with so much apparent inherent trust given to organizations such as Facebook, even when that trust is abused. How important is trust from an organizational perspective?
Botsman: It's tempting to look at institutions and leaders and place all of the blame on them, but then there's the realization of how easily we give away our trust. You know, we probably don't think about it, but when you accept the terms and conditions, that is actually giving away our trust. When you take a recommendation you have in some way outsourced your trust to an algorithm. And so I think one of the challenges is the way products and services are designed to make everything seamless, but efficiency is almost the enemy of trust. You need a little bit friction. You have to make decisions.
Gaskell: It's interesting with the emergence of AI, and one of things people ask for is to provide us with a sense of how the algorithms work.
Botsman: Well, we can't, it's just silly, it's too silly.
Gaskell: So I wonder how trust will unfold in algorithms when we're either not interested or don't necessarily understand how they work?
Botsman: I think it comes down to ethics, and digital ethics is a rising field. I hate it when people say we need a digital ethicist, but we kind of do, because at the end that day it's human beings making those decisions, and you can choose to do the right thing or the wrong thing. So trusting the intentions of the people programming the algorithms is more important than understanding how they work.
Gaskell: You mention in your book the Social Credit System in China, which is a very state run system for determining reputation, but also the distributed ledgers underpinned by blockchain on the other. What does the middle ground look like?
Botsman: I actually re-wrote that chapter several times as I realized I'd written it through a very Western lens. It's really easy to point the finger at this idea of real-time ratings and penalties that don't match the crime, but I got to thinking about how far we are off in the West in the way data is used against us.
It's why I think GDPR is so interesting because it allows you to port your data and you have the right to question and challenge algorithms that make decisions about you. That's the black box of algorithms and it's tied to how data is used and the judgements made from it.
Gaskell: We're living in an age where 'data is the new oil', and the big tech platforms have huge amounts of our data, and it's enormously valuable to them. Is it too late to put the genie back in the bottle, or are industries such as healthcare, where our data will be digitized soon but ownership of it is still undetermined, likely to show us a new way?
Botsman: I'm more optimistic around this, because we've come out of a period of laissez faire where you (the company) take our data and you own it. I think the blockchain could be crucial as you're born with a digital identity and when my body is emitting data all the time, I will get a choice whether I sell that on to, say, an insurance company and my health insurance changes. Whatever it is, I will be in control of that decision, and I think that's why GDPR is so important, because your data belongs to you. I fundamentally believe that, and companies are increasingly agreeing with that, but they've traded on apathy and ignorance for a long time.
Gaskell: I know the Wellcome Trust have developed a platform to help educate people around not only what data is collected about them, but their data rights (Understanding Patient Data).
Botsman: I'm not poo poohing such work, but for me it has to be built into the design of the product or service, so that people are asked "are you sure?" when their data is being requested. I think it's in the company's interests in the long-term.
To be honest though, we need a new make-up of regulators. This is a problem in that often the regulators lose sight of the end objective. What is the end objective and then how do we design regulation around that?
Gaskell: What will prompt that kind of regulatory framework into being?
Botsman: They will probably go in heavy handed, and does it really work in terms of changing behavior? No, so what creates reform? That's where you'll see the nature of regulation changing, and I'm a big believer in designing this into the system.
Gaskell: Estonia are lauded as digital champions, are they a good example of a country that is doing this well?
Botsman: I think Estonia are a great example, and a lot of that starts with integration, and they can see the flaws and faults in the system because they're all on the same backend. Fragmentation of things gives a lot of power away. The fact that they all have a digital identity and have a degree of control over how the data is released is really powerful.
This interoperability is a key issue as citizens increasingly move around and need to take their digital identities with them. At the moment there's so much friction around, and hopefully someone will come up with a solution to make it easier to port.
Trust is fundamental to pretty much every aspect of human life, and it's unquestionable that new technologies have had a significant impact on how trust is understood and communicated. There is a strong sense that we are at the beginnings of this journey towards a more distributed means of communicating trust, and it will be a fascinating journey to go on.
About the Author
Adi Gaskell is a free range human who believes that the future already exists, if we know where to look. From the bustling Knowledge Quarter in London, it is my mission in life to hunt down those things and bring them to a wider audience. He is an innovation consultant and writer, and the author of The 8 Step Guide To Building a Social Workplace. He has worked across private and public sectors, helping organizations discover fascinating projects and work from around the world to help trigger the innovation process. With a post graduate degree in computing, his posts will hopefully bring you complex topics in an easy to understand form that will allow you to bring fresh insights to your work, and maybe even your life.
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