Better ways to measure the new economy

Valerie Hellinghausen and Evan Absher at Kauffman Foundation: “The old measure of “jobs numbers” as an economic indicator is shifting to new metrics to measure a new economy.

With more communities embracing inclusive entrepreneurial ecosystems as the new model of economic development, entrepreneurs, ecosystem builders, and government agencies – at all levels – need to work together on data-driven initiatives. While established measures still have a place, new metrics have the potential to deliver the timely and granular information that is more useful at the local level….

Three better ways to measure the new economy:

  1. National and local datasets:Numbers used to discuss the economy are national level and usually not very timely. These numbers are useful to understand large trends, but fail to capture local realities. One way to better measure local economies is to use local administrative datasets. There are many obstacles with this approach, but the idea is gaining interest. Data infrastructure, policies, and projects are building connections between local and national agencies. Joining different levels of government data will provide national scale and local specificity.
  1. Private and public data:The words private and public typically reflect privacy issues, but there is another public and private dimension. Public institutions possess vast amounts of data, but so do private companies. For instance, sites like PayPal, Square, Amazon, and Etsy possess data that could provide real-time assessment of an individual company’s financial health. The concept of credit and risk could be expanded to benefit those currently underserved, if combined with local administrative information like tax, wage, and banking data. Fair and open use of private data could open credit to currently underfunded entrepreneurs.
  1. New metrics:Developing connections between different datasets will result in new metrics of entrepreneurial activity: metrics that measure human connection, social capital, community creativity, and quality of life. Metrics that capture economic activity at the community level and in real time. For example, the Kauffman Foundation has funded research that uses labor data from private job-listing sites to better understand the match between the workforce entrepreneurs need and the workforce available within the immediate community. But new metrics are not enough, they must connect to the final goal of economic independence. Using new metrics to help ecosystems understand how policies and programs impact entrepreneurship is the final step to measuring local economies….(More)”.