The Information Society: Measurement issues and the impact on policy making

1. The Information Society:Measurement issues and the impact on policy making Discussant Luc Soete

2. Outline • Start with some general comments inspired, I admit, by Koenig’s apples and oranges • Specific comments on the three papers • Clayton’s new economy measurement • Hovi’s information society measurement • Koenig’s alternative information use proposals

3. The original new economy statistical challenge • The paradox on the national product in heaven and in hell. In heaven, there is no scarcity. All commodities are available in abundance. Consequently, all prices, and hence the national product, are equal to zero. In hell, on the contrary, there is a need for energy to keep the temperature sufficiently high. On top of that, everything is scarce. As a result, all prices and the national product are high. Clearly for a determination of the welfare difference in heaven and hell, traditional macro-economic methods of measurement do not apply… • Not that the information society is heaven, certainly when viewed today!

4. The “apple” of information • Evan Koenig’s “apple” of truth is really an apple of information, what Koenig’s calls pure “news” • Koenig’s analysis is, however, a neat illustration of some of the information costs of more and better statistical information. Remember: “If members of a group have different expectations or different objectives, there is a tendency to collect too much information. In the case of different expectations, the reason for this lies in the fact that the individual expectations about the pay-offs of actions that are far in the future only coincide when large amounts of identical information are shared by the members of the group. Inefficiently large amounts of information then only serve to justify an otherwise unavoidable decision for all. If there are different objectives, collecting more information helps to put off decisions and keeping alternatives open. In both cases abundant information may well have a negative influence on welfare.“

5. The “apple” of information • But also: “Another social danger that lures when too much information is available. The argument that individuals are better off with more information because they then have a better ability to determine the consequences of their choices, is based on the assumption that no options of choice disappear when more information comes available. This is certainly not always the case. Some markets exist only by the grace of incomplete information. A well-known example of this is the insurance market. If it is possible to determine with certainty that someone suffers from a certain illness or will be struck by disaster, there is no possibility of insuring against it.” • In other words: after revelation of the state of the world it is no longer possible to insure oneself. So let’s keep in mind Hirshleifer’s effect in collecting information society statistics…

6. Tony Clayton’s overview • Interesting historical overview of shifts in policy interests • International e-Commerce benchmarking exercise: G-7 + Australia + Sweden (see reference) • Shift from macro to micro-based firm level research (can only agree) • Role OECD, remember ICCP as frontrunner long before new economy or information society

7. Comments • Macro-economic effects within too traditional mould • Spillovers due to network effects by definition not picked up • (Open) standards essential for the realisation of productivity gains associated with ICT use • Strongly focused on IT part, little on CT: • transaction cost reductions (disintermediation) vs versioning.quality improvements (reintermediation) , holds also for e-government services • Quid with respect to the mobile information society, its impact on mobility, work patterns

8. Kaija Hovi’ Finnish report • Maybe Tony Clayton should have included Finland in benchmarking exercise… • Finland clearly best practice case with respect to collection of IS data and IS performance • Shift away from technology towards behavioural features (IS strategy reform in 1998), Finnish policy makers had foresight • Lots of interesting example of need for other statistics: “losses caused by viruses”, “trust in electronic services”, etc.

9. Comments • Holds also for Tony Clayton’s paper: strongly nationally focused, but what about the international dimensions of IS • For a small country crucial: • Transaction cost reductions and their implications for international competitiveness • New trading opportunities (increase in tradability of services and information goods) and implications for international competitiveness • Quid with respect to government services • Role of national statistical offices and OECD (Nordic countries association, G7+ approach

10. Evan Koenig’s paper • Interesting analysis challenging policymakers strong belief in the benefits of “revised” data • Difficult to disagree with, illustrations convincing • Policymakers seem group with conflicting objectives collecting too little information, and even ignore free information in order to avoid real conflicts, see Hirshleifer & Riley (1995) and Jones & Ostroy (1984).

11. Comments • Link to the mergence of ICT is not really addressed, yet here too many possibilities for faster, more reliable output measures, for more pure “news” in statistical data form • IT applied to economic behaviour has been compared to the microscope invention: detailed data on individual agents behaviour whether they are consumers or producers, even citizens… • PMI and other marketing, temporary work agencies possess nearest to the market data