Consumer Software Products to Enhance (Not Take Advantage of) the Human Individual

With case studies of Robinhood and Facebook.

9 min readMar 23, 2021

Abstract

This paper will be exploring the ethics of engineering and design of B2C software products, with specific focus on the ethical concerns around major tech companies Robinhood and Facebook. The software revolution has brought upon limitless benefits as well as dangers to our world. I will first be analyzing the implications of the hyper democratization of skills and knowledge that were once held exclusively to people with certain experiences, education, and other specific qualifications. Then, I will discuss the contrast between stakeholder agenda and human-centered engineering and design. Lastly, I will offer potential solutions in addressing development of unethical software products, supported by psychology and human behavior research.

Influence of Consumer Software Products

In just the past decade alone, software has completely revolutionized how our world operates. From being able to connect with anybody in the world through social media to hailing personal drivers with ridesharing with a few taps on a smartphone, we continue to make exponential progress in software innovation, which is now projected to even surpass the projections of Moore’s Law [1]. The decisions of the select few working in major tech companies, whether it be pushing a brand-new feature or just tweaking a simple UI update, impact millions (sometimes billions at massive scale) of individuals. Therefore, we must obsess over even the most minuscule of details while designing and developing our software products, especially as we are in an inflection point in human history of incredible and highly scalable technological innovation.

Dangers of Democratization

One of the most incredible aspects of software is that it has democratized so many trades, skills, and knowledge to anyone with access to the internet. Although this is an incredibly exciting time in human history, it is also one of great risks. Take for instance the democratization of trading and investing in stocks through Robinhood, as they have become one of the greatest disruptive forces in the financial services industry in decades. Traditionally, being knowledgeable and even placing positions on stocks have largely been a mystery to the mainstream, as most people used to depend on investment advisors or passively bet on the market at most to partake in buying and selling stocks. Robinhood has propelled themselves as the largest online stockbroker within a decade of being founded due to an extremely intuitive UI and zero-commissions trading, which has now become the industry standard for electronic brokers.

This democratization of greater participation in the public markets has led to great opportunities for new retail investors and traders, but also opened the door to tremendous risk to these novices, who are actually Robinhood’s target customers. In [2], “The potentially irrational behavior by uninformed retail investors can adversely impact these investors’ wealth due to overconfidence, herding, and other unproductive tendencies…retail investors over-invest in ‘lottery stocks’ and are subject to a ‘house money effect,’ which encourages aggressive trading after a sudden run-up in stock prices.” This is especially dangerous in the world of buying and selling highly liquid securities instantaneously, as it has opened the floodgates for millions of new retail investors/traders to try to make quick profits from high-risk, short-term trading such as day-trading and trading options. Both of these activities should not be readily accessible by the novice investor, as only a small percentage of retail traders and experienced professionals in financial institutions actually profit from these strategies in the long-term. The question should then be asked, “How can we give people the benefits of software that hold immense potential to be leveraged for good, but also at the same time mitigate the risks of human tendencies (greed in the case of Robinhood) misusing the technology?

Contrast between Stakeholder Agenda and Human-Centered Principles

We can begin exploring the answers to the previous question with a human-centered approach to building software. Mike Cooley first coined “human-centered systems” in Architect or Bee? while working with computer-aided design. At the most fundamental level, human-centered systems are created to assist and enhance human skills and goals. The figure below in [3] shows the base practices that constitute the foundation of human-centered systems as it relates to creating software products.

Figure 1: The Human Centered Design Processes and their base practices (HCDP) (Earthy, 1999); Source: [3]

In essence, human-centered software products are created with a bottom-up focus of addressing a human user’s needs and appropriately complementing that value proposition to generate business value; however, there exists a whole universe of conflicting incentives and other variables that has pushed software engineering and design to actually be of a diversion in pursuit of human-centered systems. What may look like cutting-edge innovation, may actually provide a net negative to society by releasing products that take advantage of human nature in pursuit of profits.

We can see this ethical issue at play through multiple cases. Going back to the discussion of Robinhood, there also exists a misalignment between the user’s mental/financial well-being and Robinhood’s revenue model. Robinhood provides zero-commissions trading and greatly simplifies the process of buying and selling stocks through a very user-friendly UI/UX and gamification; however, supporting this system that popularized the public markets to the masses requires a controversial profit model called order flow, in which Robinhood directs users’ orders to different parties such as hedge funds and market makers in return for revenue [4]. Therefore, Robinhood’s profits are directly correlated with the quantity and frequency of positions being executed on their platform, which increases risk for the retail investor/trader. Additionally, the platform highly gamifies the user’s portfolio performance through a real time, interactive line graph which displays portfolio capital performance that manipulates human psychology and reward centers in the brain to stay hooked onto the product. Gamification is used to invoke certain desired behaviors from the user, which encourages users to be more active as researched in [5], and therefore Robinhood encourages users to take more frequent positions than is recommended for a novice retail investor/trader.

Another example of a B2C software that raises ethical concerns is Facebook and its child company Instagram. In [6], “When the like notification appeared, the brain’s reward system was active. This region is called the ventral striatum. It’s also active when we’re presented with food, drinks, sex and money — and during drug consumption. A messenger substance in the brain that is often associated with social media is dopamine. Experiments with money have shown that it’s released when we anticipate success. This is how researchers explain why you keep hanging on to the slot machine — or why you keep looking at your phone…Social networks can easily activate these small social rewards. At any time, can we connect to hundreds or thousands of people and we don’t even have to go outside.” Facebook, Instagram, and many other social media platforms profit off advertisement revenue and therefore from users’ time on these apps. Facebook is incentivized to make users spend as much time as possible through rewarding the human brain with likes, comments, and other notifications. In fact, A/B statistical testing is performed to understand what changes in features and UI/UX lead to retaining users as long as possible in order to maximize profits. Many adverse health effects stem from prolonged social media usage, as rates of loneliness, depression, and suicide have spiked since 2010 which is the time apps like Facebook took off in popularity especially for younger people [7].

Figure 2: Uptick in mental health problems since the start of social media boom (SAMHSA.gov); Source: [7]

It is disappointing to see how misaligned these tech companies’ incentives are in regard to the well-being of users. We must strive to make software products that enhances, not take advantage of, the human experience.

Approaching Ethical Software Engineering

This paper is not meant to demonize companies like Robinhood and Facebook, rather it is to shine light on the direction and precedent we are making for highly influential and powerful software we are putting into the hands of countless people. Human-centered principles should be first in mind when approaching to build B2C software products, as it does not make sense to prioritize anything other than the human user if they are to find true value in the product. This requires a deep understanding of human nature, since what seems like value to the user can often times be incredibly detrimental to their health and well-being in the common case where human needs differ drastically from human desires. For instance, pornography sites provide instant gratification to take advantage of one of the strongest human desires in sex; however, this comes with a whole range of problems to the user. The same applies to social media sites that have been designed to profit off of user attention by engineering platforms to reward dopamine releases through likes, notifications, and flashy UI.

The solution that a software product offers should be meticulously broken down to its fundamental components in order to understand how it is exactly benefitting the user and also consider all potential risks it poses to humans [3]. Human-centered engineering and design is the first step in approaching to think about the consequences of a software product to a human, however, it does not end there. The proposed solution should majorly consult the fields of psychology, biology, and other sciences to gain a wholistic understanding of the true consequences and risks of a B2C software product to its human user.

Duolingo is an example of a software product built with fantastic human-centered principles by greatly enhancing the human experience. The app uses gamification to encourage the beneficial act of learning a new language easily which actually aligns improvement in the user’s quality of life with Duolingo’s monetization. The user must complete a task in order to progress to the next level which motivates further learning. Another great example is Calm, an app for sleep and meditation. Their mission is to make the world happier and healthier by equipping users with the knowledge and resources to enhance the human experience and mental health. Calm uses high quality audio and soft UI/UX practices to deliver value that inspires personal growth and relaxation for our generation plagued by digital unrest and distractions.

There are massive implications at scale of software products, for better or for worse. As Marc Andreessen of Andreessen Horowitz famously stated, “Software is eating the world”, and we need to especially be carefully thinking about how to build consumer products for the wellbeing of the individual. Creating human-centered software products designed to assist human growth and potential should be the focal point of building consumer tech, but capitalism ultimately incentivizes profit-maximization even at the exploiting human nature. Our B2C software engineers, designers, product managers, and visionaries must recognize the massive influence they hold and create products to preserve and improve the human experience.

About the Author

Trustin Yoon is a 4th year studying Business Administration and Applied Analytics at the University of Southern California. He is a full-stack engineer and VC @ California Crescent Fund investing in SaaS.

References

[1] Mark Lundstrom, “Moore’s Law Forever?,” Science (American Association for the Advancement of Science), vol. 299, no. 5604, pp. 210–211, 2003.

[2] Pagano MS, Sedunov J, Velthuis R. How did retail investors respond to the COVID-19 pandemic? The effect of Robinhood brokerage customers on market quality. Finance research letters. Published online 2021:101946-. doi:10.1016/j.frl.2021.101946

[3] R. A. Majid, N. Laila M. Noor, and W. Adilah W Adnan, “Human Centered Design Approach as a Technology Capability: Integration of the Management Perspectives in the Human Centered Software Developemnt Process,” Journal of Engineering and Applied Sciences, vol. 14, no. 6, pp. 9272–9277, 2019, doi: 10.36478/jeasci.2019.9272.9277.

[4] Johnston, M., 2021. How Robinhood Makes Money. [online] Investopedia. Available at: <https://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp> [Accessed 24 February 2021].

[5] D. Basten, “Gamification,” IEEE software, vol. 34, no. 5, pp. 76–81, 2017, doi: 10.1109/MS.2017.3571581.

[6] “World: Instant gratification and the pursuit of perfection: Why our brains love Instagram,” Asia News Monitor, Thai News Service Group, Bangkok, 2019.

[7] “Table 27. Had at Least One Major Depressive Episode in the Past Year among Persons Aged 18 or Older, by State and Substate Regions: Percentages, Annual Averages Based on 2008, 2009, and 2010 NSDUHs: CBHSQ Data,” SAMHSA.gov. [Online]. Available: https://www.samhsa.gov/data/report/table-27-had-least-one-major-depressive-episode-past-year-among-persons-aged-18-or-older. [Accessed: 24-Feb-2021].