Standardized Data Collection: Legal Requirements, Guidelines, or Competition?

Abstract

The standardization of data collection effort is consistent with the problem of choosing between the benefits of competition versus economies of scale. Technical standards for data collection present the added complexity that lawmakers may be unable to distinguish between efficient and inefficient leapfrogging of collection methods. In other words, do the presumed economies enabled by the standards of today outweigh the drag on the potentially beneficial standards of tomorrow? And will encouraging standards today eliminate the possibility that future and superior data collection standards will arise?

The answers to these questions are perhaps, at this point, still irregular enough to be empirical. On the other hand, surely today’s benefits of standardization must be discounted to some extent by an uncertain future. Standards may generate economies of scale, but they simultaneously inhibit competition and its benefits. This is the danger of centralized standards, either imposed or announced. Good arguments for economies of scale can easily be made but difficult to believe upon further scrutiny. In other settings, auctions can serve as scrutinizers, though perhaps here, instead of firms bidding for a right to be sole data collector or something similar, piecemeal subsidies for collecting general variables can generate yet more data that works well over time and space, and something short of qualified standards can continue to be left in the hands of innovators.