Big-data and the Market Mechanism
Big-data and the Market Mechanism
Introduction
Big-data could be the game
changer in future. Data and big-data are conceptually similar but the later differs
technically due to the enormity in volume and the corresponding difficulty in
storage. Big-data would imply information that is collected in microseconds from
any or all activities that can be captured through recent and path breaking
technologies. And of course its use is wide ranging, spreading across a
spectrum from simple identification of technical snags (traffic jams, flight
delays or power failures) to possible prediction of life expectancies of an
individual from signal collected over a period from his eating, search
behaviour online and so on. Until this point it is fine; but the big question
is how do we comprehend big-data? What do we expect in future? I am not going
to go into the tricky affair of the morality of collecting such data from individuals. A better
way to put it is how many of us know and are exposed to the data collection
business that goes around us. This point in time of human history is only the beginning
of the graph where there is an overabundance of big-data. Agencies and
institutions that have the logistics have already started collecting and
storing it. Imagine data accumulation at the level of being able to
successfully predict what each and every individual, institution or nation
would be doing say ten minutes from now. That’s like being God. Is it? Need not
be. An analogy with natural resources would help us to predict that market
mechanism would erase monopoly ownership of big-data in the long-run.
Is big-data a natural resource?
Why a natural resource? Because
just like the natural resources it is natural that each of our act whether
intended or unintended produce data as an outcome. It is difficult to classify
it as renewable because what has been produced cannot be reproduced under the
same conditions. So data that I generated through an act yesterday may be
reproducible today but not under the same conditions as yesterday.
The fate of natural resources has
been this: For a long period of time these resources were subject to constant
exploitation, and mankind benefited much out of this. Demand for these
resources steadily increased. The good thing was that supply also increased and
at times outpaced demand due to technological progress as well as innovative methods
of exploitation. The long-term prices has been continuously declining as a
consequence. This is also due to the fact that technology helped to produce
alternatives for some of these resources.[1]
Now consider big-data, it is a
(non) renewable resource. Just like natural resources at its earliest stage in
development, whatever has been produced till now is up there for exploitation.
People who had the skill in identifying the benefits of natural resources, who
had the logistics to extract it benefitted at this early stage in natural
resource exploitation. Trade allowed them to prosper. This is just similar to
people who have the logistics is getting into the data accumulation process. Just
like those laws and regulations which were revised time and again to determine
who should own the natural resources, there are laws (at a nascent stage) being
formulated to control the generation and accumulation of big-data. Google’s
‘forget-me’ is the outcome of such attempts to legally negotiate possible
outcomes of such accumulation.
Big-data in the long-term
In the long-term the following might result. Demand for big-data would be increasing considering the various
potential businesses that could be done with it. For instance, predicting
victors in elections would become much easier and much more accurate
(questioning the democratic process itself), health would be a major area
benefitting, and many avenues for business which can be developed after
understanding the choices and preferences of people would increase. All this
might just reengineer the world that we live in now with new forms of
institutions and mechanism developing in response to these possibilities. Supply
of big-data would also increase. And just like the exploitation of natural
resource, newer technology and innovation would make it cheaper to extract more
data. The costly logistics could be avoided. Thus supply would outpace demand
and lead to a long-term decline in prices. The possibility of substitutes is
difficult to imagine at this point; but in case big-data finds its substitutes,
prices would decline further.
So demand and supply is likely to
bring down big-data to affordable levels considering the possibility that it is
like a natural resource. However, what is going to be crucial is the period ‘in
between’; that is between now and the time when such
data becomes affordable to everyone. For natural resources, such a period was
mostly misutilized in fighting for ownership rights. The state finally won this
fight and ended up assuming the role of protectors of natural resources.
But for big-data, the period should be better used to develop a policy
framework that could ensure privacy. We can also use this time frame to
understand the various possible misuse of information and tighten the legal
apparatus to ensure such things are minimal. Another possibility that could be
thought about is on the individual’s opportunity to trade his data. The
richness of it and the demand would ensure that each individual could sell the
data to whoever demands it. We might just end up on a positive note in future if these considerations are duly discussed.
Rahul V Kumar
[1]
You can refer this behaviour of falling prices of natural resources in any standard Microeconomics text books.
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