By Christopher Pissarides, Fadi Farra, and Amira Bensebaa
LONDON – The digital age has taught businesses to see people as individuals rather than just as members of certain demographic cohorts. On social media, we receive personalized ads based on our responses to previous ads, our current location, and our shopping habits. Our massive digital footprint enables companies to know precisely how effective their advertising campaigns are at the individual level and to derive immense value from this knowledge.
Alas, it seems that this technological wave has yet to reach policymakers. Despite the advantages of big data, governments still tend to use a one-size-fits-all approach when planning investments or designing policies. To help improve public services through better use of data, we have developed a new framework we call Quantum Governance.
Every successful business is built on three foundations: a shared goal, which serves as its raison d’être; the tools and methods to achieve it; and consumers, who are motivated by their own interests, ambitions, and beliefs. While it has become a staple of public debate that governments should operate like businesses, that is impossible, because these two types of social organization were created for different purposes. What they do have in common, however, is the human factor. And that should be the focus of public-private partnerships in the digital age.
To perform well, both governments and businesses need to measure, assess, and understand information about people. While preventing abuse requires sound data governance, the status quo offers little hope: large and powerful corporations hoard valuable datasets, lose public trust, and lobby legislators to avoid oversight, while governments resort to top‐down regulations that alienate voters. Moreover, because large companies have far greater resources to spend on compliance and lawyers than their smaller rivals do, these regulations often benefit the very businesses they were meant to constrain.
Yet data are simply too important to be entrusted to either governments or large corporations that treat them as their private property. Instead, governments should collaborate with companies on joint-governance frameworks that recognize both the opportunities and the risks of big data.
Businesses – which are best positioned to understand big data’s true value – must move beyond short‐sighted efforts to prevent regulation. Instead, they need to initiate a dialogue with policymakers on how to design viable solutions that can leverage the currency of our era to benefit the public good. Doing so would help them regain public trust.
Governments, for their part, must avoid top‐down regulatory strategies. To win the support they need from businesses, they need to create incentives for data sharing and privacy protection and help develop new analytical tools through advanced modeling. Governments should also rethink and renew deeply-rooted frameworks inherited from the industrial era, such as those for taxation and social welfare.
In the digital age, governments should recognize the centrality of data to policymaking and develop tools to reward businesses that contribute to the public good by sharing it. True, governments require taxes to raise revenues, but they must recognize that a better understanding of individuals enables more efficient policies. By recognizing companies’ ability to save public money and create social value, governments could encourage companies to share data as a matter of social responsibility.
But collaboration is just as critical as data sharing. Neither governments nor businesses properly account for the human factor in their decision-making processes. Adapting to the age of big data would mean shifting away from outdated metrics like GDP toward metrics that focus on people.
To this end, our Quantum Governance approach introduces an accounting framework we call the Balance of Public Policy, which treats the intangible and tangible aspects of policymaking as equal. When designing policies, policymakers often grapple with intangibles such as individual policy adoption, public legitimacy, popular narratives, and community beliefs. Similarly, the accounting standards that businesses use provide little guidance on how to value certain assets – for example, they often consider workers a disposable cost. But workers’ talents are a major factor in any company’s success or failure. Accounting frameworks should be revised to quantify and record such assets in business performance statements.
While it is widely acknowledged that intangible assets drive our economies and societies, we still lack adequate tools to measure and value them. Governments and businesses must work together to revise the prevailing metrics by which we value such assets. Both would benefit from developing the tools needed to better leverage big data, and doing so would serve the public good.
Copyright: Project Syndicate, 2022.