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Apple iPhones Give Me the Feelies

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  • (0:30) - Judgement Day: Big Investors Write a Letter To Apple
  • (5:30) - Smartphone Addiction: How Did We Get Here?
  • (8:20) - Neil Postman: A Wise Teacher Ahead Of His Time
  • (11:00) - The Medium Is The Message
  • (17:30) - Perfecting Captivation: Tantalizing Television
  • (22:40) - Technopoly: The Dystopia That’s Not Fiction
  • (36:15) - Can Everything “Bad” Be Good For You?
  • (30:00) - Technology Can Enhance or Ensnare our Education
  • Podcast@Zacks.com

Welcome back to Mind Over Money. I'm Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.

This is a very important episode because it's about the collision of technology, culture, and education. And it goes back to my first love in college, philosophy.

You probably heard the news over the weekend that Apple (AAPL - Free Report) received a letter on Saturday from two large shareholders, Jana Partners, a leading activist investor, and the California State Teachers' Retirement System (CalSTRS), a major pension fund.

Jana has over $8.5 billion in assets under management and CalSTRS controls $45 billion with over 8.8 million shares of Apple, its largest holding.

That letter, first reported by The Wall Street Journal on Sunday, urged Apple to develop new software tools to help parents control and limit phone use. They also asked the company to assist in studying the impact of overuse of smartphones on mental health.

“There is a developing consensus around the world including Silicon Valley that the potential long-term consequences of new technologies need to be factored in at the outset, and no company can outsource that responsibility,” said the investors, who collectively control $2 billion worth of Apple shares.

"The average American teenager who uses a smart phone receives her first phone at age 10 and spends over 4.5 hours a day on it (excluding texting and talking)," the investors wrote, adding that "78 percent of teens check their phones at least hourly and 50 percent report feeling 'addicted' to their phones."

The iGen: Super-Connected… and Suicidal?

I want to share from a January 8 article from NPR by Bill Chappell, because they have a prior connection to some of the research that these two large investors were referencing...

Detailing some of the consequences of heavy smartphone use, the investors cited an inability to focus in class, along with a greater risk of depression and anxiety. Their letter to Apple also said researchers have found that "U.S. teenagers who spend 3 hours a day or more on electronic devices are 35 percent more likely, and those who spend 5 hours or more are 71 percent more likely, to have a risk factor for suicide than those who spend less than 1 hour."

The letter cited work by Jean Twenge, a psychology professor at San Diego State University who has written a book called iGen, about what she has called troubling trends in teens feeling isolated, depressed and helpless, as she told member station KPBS last year.

"The happiest teens have phones but use them < 2 hrs/day," Twenge said in a tweet welcoming the Apple investors' letter. She added, "more parents would buy phones if they were easier to set up safely for kids. Win-win both ethically & financially."

My reaction, the good and the bad...

Good: Socially responsible by big money who have benefited and would continue to benefit financially from growing iPhone sales. But the investors and their social/intellectual circles obviously see the downside for society as a whole and this public act is admirable since they took the risk it would impact their investment negatively.

Bad: Parental controls are good, but they don't really get to the heart of the problem. Kids will still want the smartphone drug and find ways to get it if they don't have better ways to fulfill their interest, energy, and mental focus.

Teaching As a Socially Responsible Activity

That's where I'm going: what is it about education that we fail so badly at preparing kids to actively engage their own learning and create lives and careers they might actually enjoy and be successful at.

And when I say "education" I'm not just placing all the blame on schools. I'm talking about the home and family as one's first teacher and "forever school," where the values and virtues of learning are taught, or not; where curiosity about science, nature, history, math, language, and literature are either kindled, or snuffed.

This was a problem before the smartphone. It's only worse now because kids aren't using their phones to look up science and history. Their using them to occupy their minds and emotions.

And we're coming up to the big history I have with this problem...

In December, I saw a YouTube interview with former Facebook (FB - Free Report) executive, and co-owner of the Golden State Warriors, Chamath Palihapitiya. It was actually a condensed 45-minute segment when he appeared on CNBC's Squawk Box on December 12th with Andrew Ross Sorkin, Becky Quick, and Joe Kernen.

Chamath said he intentionally "opted out of social media" because it was "eroding the core foundations of how people behave."

Apparently ex-Facebook president Sean Parker has also been warning how the site was deliberately designed to “exploit human vulnerability.” He has been quoted as saying "God only knows what it's doing to our children's brains."

And I have since learned that Simon Sinek, a former ad-agency executive and author of leadership books like Start With Why and Find Your Why, has also been a critic of social media and its effects on kids.

But did you know that someone was warning us very explicitly about this over 30 years ago -- a decade before the World Wide Web became our favorite destination?

Mindless Entertainment to Tantalize and Captivate

In the podcast that accompanies this article, I share the story of that Cassandra and his books that influenced me to become engaged in a life-long debate about TV as the primary educator and captivator of children -- two decades before our collective iPhone problem.

And while I adore over a dozen Disney (DIS - Free Report) films that I've watched over and again with my kids (ages 5 to 25), I have always railed against the trash TV and films created and financed by entertainment giants like Time-Warner and Fox.

Long before smartphone companies "learned" how to captivate our brains, Hollywood and Madison Avenue knew how to do it with accelerating images and sounds to provoke our emotions and tantalize our senses.

Why work so hard to capture our attention? Because it's the grand game of Hollywood and Madison Avenue to sell us more things. And the only way they can do that is if they capture, control and captivate attention, over and over again.

Thus the bar has been continuously raised by advertising firms and film/TV producers to create more clever ways of captivating.

Or should I say "lowered the bar" in terms of content, PG-13 appeal, and sensory tricks.

And when I say PG-13 appeal, I mean pushing the boundaries of what you can put in a thus-rated film that also finds its way on TV and cable.

The heightened competition for eyeballs has only been accelerated of late with the brilliant success and heavy investment of Netflix (NFLX - Free Report) in their own original programming.

Be sure to listen to this highly educational episode and check out the complete Mind Over Money menu here. You’ll thank me later.

Disclosure: I own shares of AAPL and FB for the Zacks TAZR Trader portfolio.

Kevin Cook is a Senior Stock Strategist at Zacks Investment Research where he runs the TAZR Trader service.




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