Digitization, Perception, Cognition, and Categorization : Consequences for Accounting

Hundreds of thousands of years ago, our perceptions developed beyond their analog origins to include digital modes. It was a key transformation that may well have distinguished genus homo from its predecessors. Since digitization necessarily discards at least some of the information contained in continuous analog magnitudes, it is not obvious that digitization would prove to be a useful improvement and promote survival and flourishing of the species. Yet, it has been a spectacular success, playing a key role in development of human mind, cognition, and civilization. We examine how digitization altered the perceptions and cognition of our environment and enabled us to go on to create a different world.As a prerequisite, digitization predated accounting in pre-history. An immediate consequence of digitization is the way we categorize (or classify) observations to create data, confidence we place in the categories we create, and how we use those categories. Categorization is a central feature of accounting practice and regulation. Learning to categorize constitutes a large part of accounting education and training. We reflect on the properties and limitations of categorization, as well as the consequences of insufficient attention to limitations of accounting categories we create and prescribe in the form of accounting and financial regulations and rules. In the excitement about the power of digitization, we should not neglect to attend to limitations and potential blind alleys associated with digitization, which are equally important