The rising popularity of video games has paralleled a surge in video game stocks over recent years. Stock in major video game developers Take-Two Interactive Software (Nasdaq: TTWO), Electronic Arts ( EA), and Activision Blizzard ( ATVI) are up 840 percent, 798 percent and 453 percent respectively in the last five years.
Even Rovio Entertainment, the company behind the “Angry Birds” hit mobile game and franchise, plans to go public soon, with reports indicating the IPO could value the company at $2 billion.
Meanwhile, economic growth has languished. Annual real GDP growth hasn’t topped 3 percent, a figure once considered standard, since 2005.
It’s always important to remember that correlation doesn’t mean causation, but in this case there is evidence that video games — along with the much more serious and deadly opioid epidemic — are a driving factor in inhibiting America’s economic growth.
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Video game addiction. A 2017 study from the National Bureau of Economic Research found that prime-age young men are working less than they used to. A lot less. Between 2000 and 2015, market hours worked for men between ages 21 and 30 plunged 12 percent. In 2016, 15 percent of these young men didn’t work at all in the past year, compared to only 8 percent in 2000.
Where did all that time go?
Between 2004 and 2015, young men grew the amount of time spent on recreational computer use and video games by almost 50 percent. Even after accounting for the sluggish economic recovery and other factors, the study found that between 20 and 40 percent of the 12 percent falloff in hours worked was attributable directly to this increased tech and game usage.
The effects are being felt in communities across the country.
“We often see people who’ve failed out of college, or they’re failing out of high school,” says Hilarie Cash, chief clinical officer and founding member of reSTART, a Washington-based treatment program for internet and video game addiction. “When they come to us, that’s what they’re doing: they’re sitting at home playing video games. Just think about that loss of productivity.”
Which way is screen addiction trending?
“It’s getting worse and it’s going to get worse,” Cash says, noting that the ubiquity of smartphones has exacerbated the problem since reSTART’s founding in 2009.
Better games, worse addictions. One thing NBER researchers noticed was that the growing percentage of our leisure time spent on computers and video games wasn’t just because our society is vaguely becoming “more technological.” Instead, it’s because video games are actually getting better. More realistic. More “social.” More informed by data with the ultimate goal of keeping gamers glued to their screens for as long as possible.
In economists’ terms, the “marginal value of leisure” has increased. Meanwhile, work is still work, and the primary engine for that becoming more enjoyable (increased compensation) has been almost completely stalled since the financial crisis. Wage growth hasn’t topped 2.6 percent in a quarter since 2008 — and that’s before inflation. Between 2001 and 2007, the norm was 3 to 4 percent.
This widening discrepancy in gratification is something that greatly concerns Hilarie, too.
“Video games are very carefully designed to bring quick rewards in the beginning and keep everything rewarding enough to hold the gamers there,” Cash says. “Life, in the working world, doesn’t go that way. You have to be able to delay your gratification and just put in the work.”
The opioid crisis. In a remarkable testimony to the Senate Banking Committee in July, Federal Reserve Chair Janet Yellen acknowledged there was a connection between the decline in the prime-age labor force participation rate and the opioid epidemic.
The human cost, too, is devastating. The Center for Disease Control estimates 142 Americans die every day from drug overdoses, with about two-thirds of those due to opioids.
And the worst may be yet to come.
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Some estimates put the number of overdose deaths over the next 10 years at 500,000, an astonishing figure that Harry Nelson, founder and board chairman of the American Addiction Treatment Association, believes could end up being twice as high.
But opiates don’t even have to kill people to hurt the economy.
“The issue of absenteeism and presentee-ism — people underperforming because they’re working in a state of poor health dealing with pain and dependent on opioids — is enormous as well,” Nelson says.
Former Florida State Sen. Ellyn Bogdanoff, a shareholder at the law firm Becker & Poliakoff, argues that the crisis also puts a huge fiscal strain put on state and local governments, which are forced to divert money from other causes to address the crisis.
“The economic impact that it’s having on families and the cost to governments is huge because these folks are utilizing our criminal justice system, our hospitals, our child welfare system — all of it. Very often it’s the same people,” Bogdanoff says.
Looking at the demographics, opioid overdoses are disproportionately common in 25- to 34-year-olds; men are almost twice as likely as women to overdose and whites and Native Americans are also overrepresented.
The broken window fallacy. On the other side of the coin, there’s an argument that both addictions have also helped foster thriving industries that nominally contribute to economic growth.
Ironically, gaming, the same industry that created the need for treatment programs like reSTART — which focuses on kids and young adults — is also the source of some of the most rewarding jobs available to young professionals.
“I’m currently filling over 125 job orders and we’re hiring millennials that have a passion for game design, programming, art and social media,” says Paxton Galvanek, senior recruiter in Games/Technology and business development director for The Chatham Group, an executive search and recruitment affiliate of MRINetwork.
“The jobs are out there, the studios are growing and I’m seeing more millennials getting hired at jobs they’re passionate about as opposed to sitting around being unemployed,” Galvanek says.
(The only problem with that perspective is that video game addicts don’t develop any employable skills.)
The opioid epidemic, too, came with plenty of profiteering. Insys Therapeutics ( INSY), which makes Subsys fentanyl, an incredibly strong sublingual opioid spray, saw its stock shoot up from 11 cents a share in July 2011 to more than $40 a share by July 2015. Purdue Pharma, the privately owned drugmaker behind OxyContin, has sold more than $30 billion worth of the drug during its lifetime.
Treatment centers and recovery solutions for addiction have, out of necessity, also emerged and grown.
While each problem has spawned industries of their own and created jobs, the losses on the flip side are immense and impossible to measure precisely. There is simply no way to spin the jobs created by addiction into an economic positive. A boy who breaks a window and whose father must pay for a new one does not, in fact, stimulate the economy.
Awareness, discussion and treatment. The slowdown in U.S. GDP growth undeniably has multiple factors. Larger economies see growth normalize, the economic recovery has been painfully slow, we’re having fewer kids, and our population is getting older.
But none of those explain the bizarre and disproportionate decline in labor force participation among young (typically male), prime-age workers. Both opioid addiction and the addiction to computers and gaming happen to make those statistics much less mysterious.
Unfortunately, neither problem has easy fixes. In technology, virtual reality is on the horizon. It will offer the most immersive form of digital experiences yet, and the “marginal value of leisure” will continue soaring. The opioid epidemic also has no end in sight.
“I believe we are looking at a problem that has not come close to peaking based on death rates and demands for treatment, and that this will continue to be a drag on the economy for decades,” says Nelson.
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The true potential of so many young Americans is in peril. Dire economic implications aside, these are human tragedies — and no matter how uncomfortable they may be, they deserve society’s full attention.
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Is GTA Hijacking GDP? How Gaming and Opioid Addictions Rob Our Economy originally appeared on usnews.com
