What is the Value of Data?
Data is said to be the new oil of the digital economy. But what is the value of data for governments?
Data as a critical government asset
What is the value of open data? How to measure the real value of data governments have and how to improve its social impact? Reformers around the world are learning to leverage data insights to foster transparency and improve efficiency in government. They have come to appreciate how data can effectively be used to improve public policies and make them more evidence-based. They are learning that it can also be leveraged to streamline bloated bureaucracies and curb corruption. We know all-too-well that, in bureaucracies, data is power.
New technologies generate an enormous amount of new data that can be mined to generate new insights into the functioning of government. Our increasingly-connected societies and the new digital economy are producing a wealth of data. More than 2.5 quintillion bytes of data are produced every day. The new economy is an intangible economy and data is its main asset. Governments, too, are producing and releasing an increasing volume of data in open format, so that it can be reused to generate public value. The profusion of data, combined with increased analytical capabilities and computing power, provide new tools to improve the delivery of services. Some governments are also considering opening data of tech giants deemed to be in the public interest. Global initiatives such as the Global Partnership for Sustainable Development Data advocate for the use of private-sector data for social purposes.
However, data that is not used is meaningless. Jeni Tennison recently noted in the Financial Times, “We are struggling to get the best out of data. Too much gets collected, not enough gets used.” Too often, we see missed opportunities across the globe because data is not put in motion and used for a purpose, but left out in the open. To ensure its maximum impact, data should be put at work under three key conditions: Data must good quality, be released in a timely manner, and be accessible in a format that can be reused. The experience of Latin America shows that making data work for the public good requires addressing underlying issues about the governance of data.
Making data work
First, progressive governments must open their data by default. They must ensure that government data adheres to established standards and be released in a timely manner so it can feed back into the policy cycle. By opening up their data, reformers can circumvent the political economy challenges of the governance of data within government agencies, often operating in silos and not sharing their data. This new data allows civic activists and oversight institutions to bring governments to account in more effective ways than in the past, resorting to artificial intelligence and predictive analytics. In recent years, part of the open government agenda, Mexico to Chile to Colombia have been opening-up their data through online portals that integrate an increasing number of databases in a reusable format. Cities have often led the way, such as Mexico City, Rio de Janeiro, and Buenos Aires.
However, there is still a long road for governments to be data-driven and open by default and by design, despite the advances achieved by the open government data movement. The World Wide Web Foundation’s Open Data Barometer shows that no government is yet making open data its standard operating mode. In Latin America, progress has nevertheless been unequal. According to the Open Data Index – that measures the disclosure of data - Brazil, Mexico, Colombia, Argentina and Uruguay have advanced most. Reformers have to ensure the consistent application of standards for the production and release of public data by government agencies, and the enforcement of open data policies and rules on the sharing of data between them guaranteed the reliability and security of personal data. By opening data, reformers can create incentives within agencies to improving it, especially in subnational governments where the quality of the underlying data tends to be poorer. For example, in 2016 the Colombian government suspended transfers to 125 municipalities that had not provided it with quality and timely spending data, as required by law. Most discrepancies were resolved rapidly thereafter.
Second, governments must disclose their data in an accessible and understandable way. In Latin America, advanced visualization techniques are proving particularly effective for this purpose. In Mexico, the ministry of finance has expanded the breadth and depth of open budget data through its state-of-the-art fiscal transparency portal, that includes data on government contracts, public works and subnational transfers. Geo-referencing technology is helping Mexico, Colombia and Paraguay monitor corruption-prone infrastructure investments. Audit agencies in Chile and Peru are using this technology to improve the control of public works. Cities, such as Buenos Aires with its open public works portal, have often taken the lead. Mexico City has become the first city to disclose its contracts in open format. Savvy civic-techs such as datasketch in Colombia use this information to raise red-flags. Behind these platforms are radical changes in the business processes governing bureaucratic routines and the governance of data.
Third, data must be used effectively if it is to generate impact and shape policies. In Latin America, as in other regions, the challenge is gradually shifting from disclosing data to using it effectively. After the first generation of reforms focusing on increasing access to information-driven transparency concerns, second-generation reforms are emphasizing the actual use of data to enforce accountability and improve services. According to the Open Data Barometer that assesses the use of data, Mexico has advanced most in promoting the use of data, while progress in Uruguay, Colombia, Brazil and Argentina is more mixed.
Several countries are experimenting with innovation labs embedded in government agencies, often at the center of government, as in Chile. These structures allow to mesh data scientists with policy practitioners that understand the challenges bureaucracies are confronted to. “Hands-on data”, an initiative of the Development Bank of Latin America, is precisely seeking to facilitate such synergies. In other regions, especially in Europe, governments have embedded digital specialists in government agencies for longer periods of time, as in France, and set-up catalyst funds to address clearly-defined challenges from across government, as in Britain and Denmark.
Opening data with a purpose
However, reformers need to be clear what the purpose they are seeking to achieve by opening up specific databases, whether to improve government transparency and service delivery. It is important to open-up data by default, but also with a purpose. This explains that databases most critical to curb corruption, such as property registries, procurement data, and company registries, are more challenging to release, as noted by the Open Data Charter. Progressive governments can work with civic-tech start-ups to uncover once-hidden practices and patterns, but also gain insights on how to improve service delivery.
For example, the observatory of public spending of the Brazilian transparency ministry has detected irregular practices in social benefits programs, leading to important savings and policy changes, simply by cross-referencing databases that previously could not be connected. Tax authorities and customs agencies have been pioneers in the use of data intelligence, which allows them to predict patterns of tax avoidance, and stimulate the impact of legislative changes on taxpayer behavior. In Britain. They are now increasingly savvy at using artificial intelligence and predictive analytics to detect and deter tax evasion.
Leveraging the value of data
The so-called “data revolution” provides us with a critical opportunity that must be seized to improve the machinery of government and restore trust in institutions in the digital age. In her recent op-ed in The Financial Times, Jeni Tennison underscores the need to create new institutions for this digital age to better regulate the storing and sharing of data, and the delicate balance between privacy concerns over personal data and the social value of open data. To leverage the full value of data, policy-makers could consider the following recommendations.
First, we must invest more and better in data for social impact, both the supply of data as well as the demand for better data by engaged citizens. Producing data is not enough; promoting the demand for better data by data-users is critical. An important lesson emerging from Latin America is that, for data to have an impact, it must be used, effectively and responsively. This is why initiatives such as the Data Science for Social Impact of the Rockefeller Foundation, launched earlier this year with a US$50 million endowment, is so important to unlock the power of data for public good.
Second, as part of this agenda, we need to measure and evaluate the value of data. Despite the prevailing consensus on the role of data and evidence in policymaking, we have invested little on measuring the impact of better data on the quality of public policies and the efficiency of public spending. Rigorous evaluations of the impact of data initiatives are scant, especially regarding the impact of open data to improve efficiency and transparency in government. Global initiatives advocating for the greatest investment in data, such as Paris21, have a critical role to play in measuring the value of data and the value-for-money to governments in investing in better data.
Third, governments should deploy bolder approaches to the management of data and treat it as a critical asset. There is much debate on the international rules governing the taxation of data-based tech giants. But governments have yet to grapple on how to govern their data and generate revenue from the public data they are releasing. Open government data is considered as a public good and thus governments do not tax their re-use to recover part of the costs of producing it, even if it is re-used by tech giants generating huge profits and paying little taxes. Some countries, such as France, have established agencies to manage their intangible assets and could use these agencies to manage better the value of data. Data is becoming a critical intangible asset for governments and therefore a potential source of revenue that could be generated as a result of its re-use by the data-hungry private sector in the new economy.
Fourth, to manage expectations and concerns over the misuse of personal data, governments should better regulate the use of personal data, ensuring the security, reliability, and privacy of personal data it gathers, stores and re-uses. The governance of data is critical in the digital age. Data storing and sharing is a critical challenge within the government whose inter-operability platforms face numerous challenges in many countries. Portugal and Estonia have devised innovative solutions to address them, centered in the management of citizens’ digital identity. Resolving this critical challenge also resides in regulating the ownership of personal data managed by governments, that is who owns the data and authorizes its use. The Open Data Institute is advancing the concept of “data trusts” where “control over data-sharing is transferred to an independent third party, legally bound to ensure its use for a defined purpose.” New institutions, including oversight and regulatory ones, are urgently needed to steer the data-driven digital age.
Last but not least, as a cross-cutting idea that underlies these recommendations is that, well into the 21st century, governments and societies should change the way they think about data. This means pushing conceptual boundaries towards a new understanding of data; one that recognize data not only as a tool but also as a reflection of who we are and how we function as a whole. Only then will we be able to harness its full potential to create public value for all.
Carlos Santiso heads the Governance Practice of the Development Bank of Latin America on Digital Innovation in Government, based in Bogotá since September 2018. The views expressed in this article are those of the author and do not necessarily reflect the opinion of the bank, nor its shareholders. This article first appeared in Global Policy in May 2019, available here: https://www.globalpolicyjournal.com/blog/20/05/2019/what-value-data-improving-lives-through-open-data