By Shahid Mehmood
Originally published in Business Recorder, 9th January, 2017
Public good, in economics, refers to something useful for the public that has two major properties: it is ‘non-excludable’ and its ‘non-rivalrous’. The former pertains to the aspect that nobody can be excluded from enjoying its benefits, while the latter signifies that the use or consumption of this kind of a good by one will not reduce its availability or quantity for the other persons. The classic, and perhaps the best, example of a public good is national defence. It does not matter whether a person pays a tax or not, it is not possible to exclude non-payers from defence as a whole country (or region) has to be defended rather than a few chunks or few people. Similarly, people within a country are entitled to consuming this good without worrying that his consumption will diminish consumption for the others. This, at least, is the theory of a public good.
It is increasingly realised nowadays that the collection, presentation and the provision of quality data is perhaps the best public good of all. The main reason for this assertion comes in the wake of the critical need for informed decision-making, both at the public and private level, so that resources can be used efficiently, judiciously and to its maximum effect. If this were to happen, then the outcome would unequivocally be in the public’s favour. And this urge to obtain and apply data is becoming more critical in a world where decision-making based on bad or spurious data costs billions of dollars per year, which is a tremendous waste by any measure.
The importance of gathering statistics for different purposes has been recognised since long. The Romans used to carry out surveys of population in their territories for the purpose of gauging the numbers of different ethnic populations. In 1086, William the Conqueror ordered a complete survey of lands and other goods in England in order to determine total worth of these for the purpose of taxation. Till this day, it retains its historical significance since it gives us an invaluable picture of England of that time (a survey of that scale was not carried out in England again, until 1873). During the middle ages, it was the churches and parishes that started keeping records. The importance of collecting data by public authorities again rose in the aftermath of the industrial revolution and the birth of nation-state concept. It was the 20th century, which really gave birth to the science of data collection and methodologies. As decision-making became more complex and scientific, advancements opened up new vistas of research, the need for having valid data to complement decision-making became even more urgent. Into the 21st century, advances in statistical methodologies, computing and the advent of wireless technologies (primarily cell phones) have created the welcome possibility of revolutionising the field of data gathering and its application.
There are already indications that such an occurrence is taking place. MIT, one of the world’s leading universities, runs ‘The Billion Price Project’ that collects and reports more than a billion prices every day. This helps policymakers and consumers gain a real picture of price movements on daily basis. ‘Planet Labs’ regularly reports data regarding environmental conditions, which is an invaluable source for those who are serious about environmental issues. Drones and satellites are now being regularly used to map lands and extents of natural disasters. Imagine how much help this would provide in properly demarcating lands and solving land disputes, and helping governments gauge the total damage incurred due to natural disasters like floods. Another excellent example comes in the form of real time data collected through a ride sharing service, Uber. Economist Steven Levitt (of the ‘Freakonomics’ fame) used this real time data to see the working of the basic demand-supply framework in action, and found it to be conforming meticulously to the theory. This is a first since the well-known and extensively taught model did not have an example that could confirm its working in real time.
In Pakistan, policymakers can reap tremendous rewards with the availability of quality, authentic data. Unfortunately, however, we have been pretty poor at this aspect. Our decision-making is informed by political compulsions and biases rather than based upon credible data. Whatever data is published at the government-level usually gives us an aggregate, macro-level picture whose authenticity is often disputed by neutral quarters. Micro-level, desegregated data is not the norm, which is quiet unfortunate because credible data is a must for decision-making at both the macro- and the micro-level initiatives. It is just important, for example, to have data about use of water and its quality as it is to have data about wealth distribution. The former could be used to make drinking water safe and prevent its waste (something extremely critical for a water stressed country like Pakistan), while the latter could be used to gauge the inequality of wealth within a country and initiate public policies that can ameliorate this socio-economic problem.
The governments all over the world have been collecting data for a long time now. In Pakistan, statistics can be found date back to at least the 1960s, but these have proven to be merely for the purpose of recordkeeping. We know, for example, that the dropout rates of students at different levels of schooling are alarmingly high. Yet we have comparatively little authentic data about the reasons for this state of affairs. At best, we have piecemeal data or guesstimates. Imagine the help that the availability of reliable, up-to-date data in this regard would give to policymakers and researchers who could then propose solutions. Moreover, there is a lot to be said regarding the quality of the data, which is prone to tampering so that the performance of the governments could be cast in good light.
But it is time the world moves away from collecting data only for record-keeping and publishing yearly manuals. Rather, the focus now needs to shift on its applications for better policy outcomes both, at public and private levels. This would not only ensure better policy outcomes with less waste, but also highlight data as one of the best public goods.