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.
Linking climate fluctuations to the pace of cultural change
Economics researchers PAOLA GIULIANO and NATHAN NUNN look into 1,500 years of variations in temperatures and drought conditions and a variety of cultural practices, and find that “populations with ancestors who lived in more variable environments place less importance on tradition today.” This supports assumptions already in use:
“Our findings also provide empirical validation of a class of models from evolutionary anthropology that provide a foundation for the assumptions made in the models used in cultural economics […]. Within this class of evolutionary models, under general circumstances, some proportion of the population finds it optimal to rely on social learning – that is, culture – when making decisions. This result provides a justification for the assumption in models of cultural evolution that parents choose to and are able to influence the preferences of their children. The only previous empirical tests of these models, as far as we are aware, is done in a laboratory setting using either rats […] or students.”
Full working paper available here.
- Murat Iyigun and Jared Rubin build on the above work: "Our model suggests the complement to [Giuliano and Nunn's] argument, indicating that there is a positive correlation between traditional values and uncertainty related to positive economic shocks." Their paper offers some examples from history: "Historical analytic narratives support the theory, including Ottoman reform initiatives, the Japanese Tokugawa reforms and Meiji Restoration, and the Tongzhi Restoration in Qing China." Link.
- To facilitate research linking history and economics, Giuliano and Nunn have constructed “a publicly accessible database that measures the economic, cultural, political, and environmental characteristics of the ancestors of current population groups. Specifically, we construct measures of the average pre-industrial characteristics of the ancestors of the populations in each country of the world.” This paper describes the database project.
- J.W. Mason on the economics of decarbonization: “The economics of climate change look quite different from a Keynesian perspective, in which demand constraints are pervasive and the fundamental economic problem is not scarcity but coordination. In this view, the real resources for decarbonization will not have to be withdrawn from other uses. They can come from an expansion of society’s productive capabilities, thanks to the demand created by clean-energy investment itself.” Link, and Mason's follow-up response to commenters.
- Air pollution’s impact on health in China. Link. On Twitter, Alexander Berger points out, “Methods on this one are crazy—they got the universe of credit and debit card transactions in China to measure healthcare spending.”
- Annie Lowrey makes the case for basic income in a New York Times op-ed. Link. Lowrey links to a study on the negative income tax from Wiederspan, Rhodes, and Schaefer. Link (paywalled).
- Also on UBI, Ray Dalio has posted a primer on the idea (which, however, covers only one possibility for paying for it). Link.
- Market failure in kidney exchange: “This paper shows that, despite significant success, the kidney exchange market suffers from market failures that result in hundreds of lost transplants per year. Our descriptive evidence shows that the market is fragmented and operates inefficiently.” Link.
- Cross-state variation in social safety nets. Link.
- Dietrich Vollrath blogs on the industrial revolution and labor hours, then and now: "You could argue that recent innovations have made time-intense consumption items (e.g. Netflix or video games) cheaper. And in a mirror image response to the 1600’s, people are substituting more time-intense consumption for goods-intense consumption. This means that they willingly withdraw labor from the market in order to enjoy those time-intense activities." Link.
- Adam Tooze provides an overview of key works and thinkers in conceptualizing the national economy: "One of the things that makes me impatient with much 'radical' political economy is that it falls so far behind the curve of what mainstream social scientists and economists are doing right now. To answer the present by monotonously reproducing the classics is to follow the inspiration of those great texts in the worst possible way." Link.
- The importance of doctor diversity: “Our findings suggest black doctors could help reduce cardiovascular mortality by 16 deaths per 100,000 per year — leading to a 19% reduction in the black-white male gap in cardiovascular mortality.” Link.
- Cathy O'Neil takes stock of "Intensive Partnerships for Effective Teaching" from the Gates Foundation: "Keeping assessment formulas secret is an awful idea, because it prevents experts from seeing their flaws before they do damage." Link.
- Alex Tabarrok posts a striking chart on car manufacturing to show “trade war costs in a supply-chain world.” Link.
- Another good chart, this one tweeted by Arvind Narayanan: what numerical probabilities do people assign to words like “often” and “possibly”? Link.
- An alternative economics summer reading list, with works “by scholars approaching economics with alternative theoretical frameworks and by scholars from groups that tend to be excluded from the field.” Link. h/t Ankit
- Just for fun, cropmarks: “As the drought has persisted across Wales, scores of long-buried archaeological sites have been revealed once again as ‘cropmarks’, or patterns of growth in ripening crops and parched grasslands.” Link.