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Why we under-appreciate the division of labor

Economists have long known that a key source of society's wealth is the division of labor. Robinson Crusoe was marvelously self-sufficient, specializing in everything and depending on no one to supply his wants. Doubtless this was a liberating experience for him. Yet, he was desperately poor. When we divide the tasks of life into smaller components, we are able to capitalize on the natural differences in workers' skills, so that we can specialize in what we are intrinsically good at, as well as become more skillful at our chosen tasks. The division of labor also creates more opportunities for technological advance, as specialized machinery can further accelerate these more fine-grained tasks.

Most of these points are made by Adam Smith in Book I, Chapter 1 of The Wealth of Nations. He illustrates how the division of labor worked in his own time using his famous example of the pin factory:

To take an example, therefore, from a very trifling manufacture; but one in which the division of labour has been very often taken notice of, the trade of the pin-maker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty.

But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will perform two or three of them.

I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might e considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations. [WN I.1.3 *].

It is, frankly, hard to wrap one's head around this example. In brief, he is saying that it takes 18 steps to make a pin, and one person trying to manufacture pins by carrying all of these steps alone could make between 1 and 20 pins in a day (apparently depending on skill). In contrast, when the work is divided into many distinct operations (listed in the second paragraph above), each worker can effectively produce over 4,800 pins in a day!

Why is this so hard for us to understand? It just sounds impossible. Smith must have realized this, as he remarked in passing that "the advantage which is gained by saving the time commonly lost in passing from one task to another, is greater than we should at first be apt to imagine it" [WN I.1.7]. He notes that task-switching in a factory setting involves shifts in attention, as well as shifts in location and shifts in tools. I agree that it is easy for those of us not on the ground – that is, not working in 18th-century factories – to neglect these time costs. But I think there is probably some interesting cognitive science too.

I think a big part of the problem is that we just underestimate how complicated it is to make a pin. It's literally a stick of metal – how complicated could it be?! But it turns out that we greatly underestimate the complexity of understanding even much more complicated devices. In a famous study by Leon Rozenblit and Frank Keil (2002)**, participants were asked to rate how well they could explain how devices such as a cylinder lock and a flush toilet worked. (Dear reader, please try to make this rating yourself. How well could you explain how these things work?) Participants often were quite confident in their explanatory powers. However, after making these ratings, participants were asked to actually explain how these same devices worked. (Try this at home.) After writing out their often-terrible and deeply sketchy explanations (not too dissimilar from yours, more likely than not), participants re-rated their explanatory abilities much lower compared to their initial rating.

So there is some sense in which people do appreciate the complexity of these devices. People did not actually believe their crap explanations. But for some reason (that is still not well-understood), we are not well-calibrated in judging our ability to actually explain these complex causal systems. Let's try it for a pin. It sure sounds like it would be easy to explain how a pin is made. But if you ask me to actually explain this process (much less actually carry it out), I would be at a loss, despite having copied out Smith's step-by-step instruction manual above.

If we underestimate the challenges of manufacturing a simple object like a pin, we are also likely to underestimate the gap in difficulty between performing all of the manufacturing steps (of which we have learned there are 18!) versus performing a single atomic step. This is evidently a huge gulf, even for an object like a pin: We conceive of only a small efficiency gain from specialization for a pin, when according to Smith it is greater than 240-fold. Now imagine how big this gap must be for something vastly more complicated than a pin, like a chair or a car or a jumbo jet. (And look here for one man's amusing quest to perform all the steps required to manufacture his own toaster.)

Are there other cognitive limitations to appreciating the division of labor? Probably there are. Does it matter in the real world? I suspect it does. Perhaps I'll come back to this topic at some later point. Feel free to comment below if you have thoughts.

For those who are following along with me through The Wealth of Nations, I am through Book 1, Chapter 1, "Of the Division of Labour." I am a bit stuck here, though, because there are already several other points here I want to blog about (this post being the first). So we'll dwell on Chapter 1 for a bit before moving on to Chapter 2.


* Bibliographic note: I am using the Liberty Fund edition, which marks paragraphs. So, this quote is from Book I, Chapter 1, paragraph 3. This was originally one long paragraph, and I broke it up here for readability.

** Full disclosure: Frank was my Ph.D. supervisor.


Rozenblit, L., & Keil, F. (2002). The misunderstood limits of folk science: An illusion of explanatory depth. Cognitive Science, 26, 521–562. link


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