Creating and governing social value from data

Abstract

Data is increasingly recognised as an important economic resource for innovation and growth, but its innate characteristics mean market-based valuations inadequately account for the impact of its use on social welfare. This paper extends the literature on the value of data by providing a framework that takes into account its non-rival nature and integrates its inherent positive and negative externalities. Positive externalities consist of the scope for combining different data sets or enabling innovative uses of existing data, while negative externalities include potential privacy loss. We propose a framework integrating these and explore the policy trade-offs shaping net social welfare through a case study of geospatial data and the transport sector in the UK, where insufficient recognition of the trade-offs has contributed to suboptimal policy outcomes. We conclude by proposing methods for empirical approaches to social data valuation, essential evidence for decisions regarding the policy trade-offs . This article therefore lays important groundwork for novel approaches to the measurement of the net social welfare contribution of data, and hence illuminating opportunities for greater and more equitable creation of value from data in our societies.

Keywords: Data, valuation, social welfare, governance

JEL Classification: D02, D80, O30