DATA IS NONRIVAL
Considerations on data sharing and data markets
CHARLES I. JONES and CHRISTOPHER TONETTI contribute to the “new but rapidly-growing field” known as the economics of data:
“We are particularly interested in how different property rights for data determine its use in the economy, and thus affect output, privacy, and consumer welfare. The starting point for our analysis is the observation that data is nonrival. That is, at a technological level, data is not depleted through use. Most goods in economics are rival: if a person consumes a kilogram of rice or an hour of an accountant’s time, some resource with a positive opportunity cost is used up. In contrast, existing data can be used by any number of firms or people simultaneously, without being diminished. Consider a collection of a million labeled images, the human genome, the U.S. Census, or the data generated by 10,000 cars driving 10,000 miles. Any number of firms, people, or machine learning algorithms can use this data simultaneously without reducing the amount of data available to anyone else. The key finding in our paper is that policies related to data have important economic consequences.”
After modeling a few different data-ownership possibilities, the authors conclude, “Our analysis suggests that giving the data property rights to consumers can lead to allocations that are close to optimal.” Link to the paper.
- Jones and Tonetti cite an influential 2015 paper by Alessandro Acquisti, Curtis R. Taylor, and Liad Wagman on “The Economics of Privacy”: “In digital economies, consumers' ability to make informed decisions about their privacy is severely hindered, because consumers are often in a position of imperfect or asymmetric information regarding when their data is collected, for what purposes, and with what consequences.” Link.
- For more on data populi, Ben Tarnoff has a general-interest overview in Logic Magazine, including mention of the data dividend and a comparison to the Alaska Permanent Fund. Tarnoff uses the oil industry as an analogy throughout: “In the oil industry, companies often sign ‘production sharing agreements’ (PSAs) with governments. The government hires the company as a contractor to explore, develop, and produce the oil, but retains ownership of the oil itself. The company bears the cost and risk of the venture, and in exchange receives a portion of the revenue. The rest goes to the government. Production sharing agreements are particularly useful for governments that don’t have the machinery or expertise to exploit a resource themselves.” Link.