Big data is defined as the enormous mass of digital information produced by electronic interactions via cellphones, online transactions and social networking.
In the face of the ever expanding volume of unstructured data, the challenge lies in giving an efficient structure to the gathered information that can serve multiple uses. Geolocalisation, for example, can be used to gather detailed information on frequent users of the subway, a motorway or an establishment. And free mobile applications can be used to carry out surveys or gather economic data, or even integrate various sources of cloud data.
Yet despite these advantages, economic science has lagged considerably in spotting the relevance this information mine has for gauging the impact of public policies or discerning economic behaviour, partly because of the conventional practices of requiring that every bit of data be strictly reliable when elaborating behaviour and prediction models.
Alberto Cavallo and Rigoberto Ribobon of the Massachusetts Institute of Technology have proposed the idea of creating price indexes by obtaining data from online retail pages. Indeed, soon we may no longer need the official data of central banks to know the state of inflation in a country, a city or region, or for sectors or particular items. This offers enormous advantages for economists in countries like Venezuela, where governments deprive civil society of official economic data, pressuring it to construct the data it lacks by its own means.
But while big data offers advantages for economists in controlled environments, it can be a double-edged sword: It poses the risk that governments can take over the sources of the data, such as information platforms, and can perfect their ability to control it.
Through a series of seminars and information events, the UN’s Economic Commission for Latin America and the Caribbean, or CEPAL, is currently promoting use of big data as a regional development tool. Big data offers advantages, the UN body argues, in critical areas such as healthcare, jobs, productivity, security or disaster management. From CEPAL’s perspective, big data provides an important innovative possibility in business management, public services, development and the monitoring of public policies.
The World Bank, for its part, is discussing how mass data can help fight poverty, including the use of geographical monitoring and analysis of online search habits. Yet, to keep its credibility and relevance, data must be filtered with conventional statistical methods to reduce seasonality or perturbation correlations.
The expansion of the digital economy in Latin America and the Caribbean region can have advantages in promoting transparency, limiting corruption and measuring the impact of strategic projects. It’s worth noting that between 2003 and 2015, internet users increased in the region by almost 60 per cent, and there are now more than 700 million cellphone lines in the region.
Big data and real-time information analysis are new sources of value creation: They allow market segmentation that can guide products towards the right customers; encourage innovative business and production models; help create products to suit customer needs, and improve transparency and economic efficiency.
Big data availability and its analysis in real time are becoming essential elements in economics, as bases for decisions and efficient resource allocation, and even as production levers in strategic sectors. It can also help contribute to sustainable development goals, acting as the technological support to check on their progression, monitor government actions and provide the public with responses in real time.
Access to data in real time can dramatically reduce differences between developed and less developed states, between the rich and the poor and public and private institutions. These can in turn help curb rights violations by governments, as information is power distributed more equitably between persons worldwide, and strengthen democracy by ensuring access to information for the disadvantaged sectors of society.
The potential of economies to grow on the basis of efficient use of data will evidently depend on the speed and advances of their telecommunication systems, and especially on how fairly information technology resources and intelligent devices are distributed. And while some countries may insist, archaically, on restricting or censoring information, the future bends towards liberty.
Economists understand it already, but now they must align their own field with this advance. What’s at stake is no less than the growth and sustainability of the economy in our region, and the world.
–Worldcrunch/New York Times News Service