Big Data or Big Lie

Abstract

Big Data has become a buzz word. It is the next big thing that every corporation should invest in. It is said to bring hundreds of billions dollars in benefits to consumers. In this concept paper I show that Big Data is a tool that will allow corporations to take away consumer surplus from consumers by allowing corporations to charge prices based on consumer personal digital trace. Paper argues that after some time consumers will figure it out and will demand that they are paid to provide such data. So eventually they will get their consumer surplus back. There are also negative externalities of Big Data, such as problems with proper inflation measurement. So from economist viewpoint Big Data is not a disruptive innovation offering great value to consumers. It is a big lie.

Keywords: Big Data, consumer surplus, price discrimination

JEL Classification: C55, D11, E31