A Consumer Price Index for the 21st Century

Curated on Posted on by Stefaan Verhulst

Press Release by the National Academies of Sciences, Engineering, and Medicine: “The Bureau of Labor Statistics (BLS) should undertake a new strategy to modernize the Consumer Price Index by accelerating its use of new data sources and developing price indexes based on different income levels, says a new report from the National Academies of Sciences, Engineering, and Medicine.

The Consumer Price Index is the most widely used measure of inflation in the U.S. It is used to determine cost-of-living allowances and, importantly, influences monetary policy, among many other private- and public-sector applications. The new report, Modernizing the Consumer Price Index for the 21st Century, says the index has traditionally relied on field-generated data, such as prices observed in person at grocery stores or major retailers. These data have become more challenging and expensive to collect, and the availability of vast digital sources of consumer price data presents an opportunity. BLS has begun tapping into these data and has said its objective is to switch a significant portion of its measurement to nontraditional and digital data sources by 2024.

“The enormous economic disruption of the COVID-19 pandemic presents a perfect case study for the need to rapidly employ new data sources for the Consumer Price Index,” said Daniel E. Sichel, professor of economics at Wellesley College, and chair of the committee that wrote the report. “Modernizing the Consumer Price Index can help our measurement of household costs and inflation be more accurate, timelier, and ultimately more useful for policymakers responding to rapidly changing economic conditions.”..
The report says BLS should embark on a strategy of accelerating and enhancing the use of scanner, web-scraped, and digital data directly from retailers in compiling the Consumer Price Index. Scanner data — recorded at the point of sale or by consumers in their homes — can expand the variety of products represented in the Consumer Price Index, and better detect shifts in buying patterns. Web-scraped data can more nimbly track the prices of online goods, and goods where one company dominates the market. Permanently automating web-scraping of price data should be a high priority for the Consumer Price Index program, especially for food, electronics, and apparel, the report says.

Embracing these alternative data sources now will ensure that the accuracy and timeliness of the Consumer Price Index will not be compromised in the future, the report adds. Moreover, accelerating this process will give BLS time to carefully assess new data sources and methodologies before taking the decision to incorporate them in the official index….(More)”

Governing AI to Advance Shared Prosperity

Curated on Posted on by Stefaan Verhulst

Chapter by Ekaterina Klinova: “This chapter describes a governance approach to promoting AI research and development that creates jobs and advances shared prosperity. Concerns over the labor-saving focus of AI advancement are shared by a growing number of economists, technologists, and policymakers around the world. They warn about the risk of AI entrenching poverty and inequality globally. Yet, translating those concerns into proactive governance interventions that would steer AI away from generating excessive levels of automation remains difficult and largely unattempted. Key causes of this difficulty arise from two types of sources: (1) insufficiently deep understanding of the full composition of factors giving AI R&D its present emphasis on labor-saving applications; and (2) lack of tools and processes that would enable AI practitioners and policymakers to anticipate and assess the impact of AI technologies on employment, wages and job quality. This chapter argues that addressing (2) will require creating worker-participatory means of differentiating between genuinely worker-benefiting AI and worker-displacing or worker-exploiting AI. To contribute to tackling (1), this chapter reviews AI practitioners’ motivations and constraints, such as relevant laws, market incentives, as well as less tangible but still highly influential constraining and motivating factors, including explicit and implicit norms in the AI field, visions of future societal order popular among the field’s members and ways that AI practitioners define goals worth pursuing and measure success. I highlight how each of these factors contributes meaningfully to giving AI advancement its excessive labor-saving emphasis and describe opportunities for governance interventions that could correct that over emphasis….(More)”.

Access Rules: Freeing Data from Big Tech for a Better Future

Curated on Posted on by Stefaan Verhulst

Book by Thomas Ramge: “Information is power, and the time is now for digital liberation. Access Rules mounts a strong and hopeful argument for how informational tools at present in the hands of a few could instead become empowering machines for everyone. By forcing data-hoarding companies to open access to their data, we can reinvigorate both our economy and our society. Authors Viktor Mayer-Schönberger and Thomas Ramge contend that if we disrupt monopoly power and create a level playing field, digital innovations can emerge to benefit us all.

Over the past twenty years, Big Tech has managed to centralize the most relevant data on their servers, as data has become the most important raw material for innovation. However, dominant oligopolists like Facebook, Amazon, and Google, in contrast with their reputation as digital pioneers, are actually slowing down innovation and progress by withholding data for the benefit of their shareholders––at the expense of customers, the economy, and society. As Access Rules compellingly argues, ultimately it is up to us to force information giants, wherever they are located, to open their treasure troves of data to others. In order for us to limit global warming, contain a virus like COVID-19, or successfully fight poverty, everyone—including citizens and scientists, start-ups and established companies, as well as the public sector and NGOs—must have access to data. When everyone has access to the informational riches of the data age, the nature of digital power will change. Information technology will find its way back to its original purpose: empowering all of us to use information so we can thrive as individuals and as societies….(More)”.

Beyond Benchmarking: Why Countries should Ignore International Rankings

Curated on Posted on by Stefaan Verhulst

Essay by Robyn Klingler-Vidra and Yu-Ching Kuo: “In Ranking the World, Alexander Cooley and Jack Snyder explore the rise of benchmarking and rankings of countries. They indicate more than 95 such rankings by the time their book was published in 2016. Today, with the success of country rankings such as the Economic Intelligence Unit’s Democracy Index and the World Economic Forum’s Global Competitiveness Rankings, that number has grown two-fold, as more than 200 rankings systems compare countries for their democratic quality, investor friendliness, economic competitiveness, and more.

But, international benchmarking methods are problematic; they reflect politics, suffer from incomplete coverage, sample size and bias challenges, and institutional bias. Why, then, do countries increasingly rely on them to inform their policymaking? We employ Taiwan, and entrepreneurship rankings, as a lens to explore the accuracy of benchmarking methodologies, and the offer a new way forward. One that is informed by local evidence rather than global rankings, and as such, is better positioned to solve the ecosystem’s pressing challenges…(More)”.

Trade in Knowledge: Intellectual Property, Trade and Development in a Transformed Global Economy

Curated on Posted on by Stefaan Verhulst

Book edited by Antony Taubman and Jayashree Watal: “Technological change has transformed the ways knowledge is developed and shared internationally. Accordingly, in the quarter-century since the WTO was established, and since its Agreement on Trade-Related Aspects of Intellectual Property Rights came into force, both the knowledge dimension of trade and the functioning of the IP system have been radically transformed. The need to understand and respond to this change has placed knowledge at the centre of policy debates about economic and social development. Recognizing the need for modern analytical tools to support policymakers and analysts, this publication draws together contributions from a diverse range of scholars and analysts. Together, they offer a fresh understanding of what it means to trade in knowledge in today’s technological and commercial environment. The publication offers insights into the prospects for knowledge-based development and ideas for updated systems of governance that promote the creation and sharing of the benefits of knowledge….(More)”.

The GDPR effect: How data privacy regulation shaped firm performance globally

Curated on Posted on by Stefaan Verhulst

Paper by Carl Benedikt Frey and Giorgio Presidente:  “…To measure companies’ exposure to GDPR, we exploit international input-output tables and compute the shares of output sold to EU markets for each country and 2-digit industry. We then construct a shift-share instrument interacting this share with a dummy variable taking the value one from 2018 onwards.

Based on this approach, we find both channels discussed above to be quantitatively important, though the cost channel consistently dominates. On average, across our full sample, companies targeting EU markets saw an 8% reduction in profits and a relatively modest 2% decrease in sales (Figure 1). This suggests that earlier studies, which have focused on online outcomes or proxies of sales, provide an incomplete picture since companies have primarily been adversely affected through surging compliance costs. 

While systematic data on firms’ IT purchases are hard to come by, we can explore how companies developing digital technologies have responded to GDPR. Indeed, taking a closer look at some recent patent documents, we note that these include applications for technologies like a “system and method for providing general data protection regulation (GDPR) compliant hashing in blockchain ledgers”, which guarantees a user’s right to be forgotten. Another example is a ‘Data Consent Manager’, a computer-implemented method for managing consent for sharing data….

While the results reported above show that GDPR has reduced firm performance on average, they do not reveal how different types of firms have been affected. As is well-known, large companies have more technical and financial resources to comply with regulations (Brill 2011), invest more in lobbying (Bombardini 2008), and might be better placed to obtain consent for personal data processing from individual consumers (Goldfarb and Tucker 2011). For example, Facebook has reportedly hired some 1,000 engineers, managers, and lawyers globally in response to the new regulation. It also doubled its EU lobbying budget in 2017 on the previous year, when GDPR was announced. Indeed, according to LobbyFacts.eu, Google, Facebook and Apple now rank among the five biggest corporate spenders on lobbying in the EU, with annual budgets in excess of €3.5 million.

While these are significant costs that might reduce profits, the impact of the GDPR on the fortunes of big tech is ambiguous. As The New York Times writes, “Whether Europe’s tough approach is actually crimping the global tech giants is unclear… Amazon, Apple, Google and Facebook have continued to grow and add customers”. Indeed, by being better able to cope with the burdens of the regulation, these companies may have increased their market share at the expense of smaller companies (Johnson et al. 2020, Peukert et al. 2020). …(More)”.

Bringing Open Source to the Global Lab Bench

Curated on Posted on by Stefaan Verhulst

Article by Julieta Arancio and Shannon Dosemagen: “In 2015, Richard Bowman, an optics scientist, began experimenting with 3D printing a microscope as a single piece in order to reduce the time and effort of reproducing the design. Soon after, he started the OpenFlexure project, an open-license 3D-printed microscope. The project quickly took over his research agenda and grew into a global community of hundreds of users and developers, including professional scientists, hobbyists, community scientists, clinical researchers, and teachers. Anyone with access to a 3D printer can download open-source files from the internet to create microscopes that can be used for doing soil science research, detecting diseases such as malaria, or teaching microbiology, among other things. Today, the project is supported by a core team at the Universities of Bath and Cambridge in the United Kingdom, as well as in Tanzania by the Ifakara Health Institute and Bongo Tech & Research Labs, an engineering company. 

OpenFlexure is one of many open science hardware projects that are championed by the Gathering for Open Science Hardware (GOSH), a transnational network of open science hardware advocates. Although there are differences in practice, open hardware projects operate on similar principles to open-source software, and they span disciplines ranging from nanotechnology to environmental monitoring. GOSH defines the field as “any piece of hardware used for scientific investigations that can be obtained, assembled, used, studied, modified, shared, and sold by anyone. It includes standard lab equipment as well as auxiliary materials, such as sensors, biological reagents, analog and digital electronic components.” Compared to an off-the-shelf microscope, which may cost thousands of dollars, an OpenFlexure microscope may cost a few hundred. By being significantly cheaper and easier to maintain, open hardware enables more people in more places to do science….(More)”.

An EU Strategy on Standardisation

Curated on Posted on by Stefaan Verhulst

Press Release: “Today, the Commission is presenting a new Standardisation Strategy outlining our approach to standards within the Single Market as well as globally. The Strategy is accompanied by a proposal for an amendment to the Regulation on standardisation, a report on its implementation, and the 2022 annual Union work programme for European standardisation. This new Strategy aims to strengthen the EU’s global competitiveness, to enable a resilient, green and digital economy and to enshrine democratic values in technology applications.

Standards are the silent foundation of the EU Single Market and global competitiveness. They help manufacturers ensure the interoperability of products and services, reduce costs, improve safety and foster innovation. Standards are an invisible but fundamental part of our daily life: from Wi-Fi frequencies, to connected toys or ski bindings, just to mention a few. Standards give confidence that a product or a service is fit for purpose, is safe and will not harm people or the environment. Compliance with harmonised standards guarantees that products are in line with EU law.

The fast pace of innovation, our green and digital ambitions and the implications of technological standards for our EU democratic values require an increasingly strategic approach to standardisation. The EU’s ambitions towards a climate neutral, resilient and circular economy cannot be delivered without European standards. Having a strong global footprint in standardisation activities and leading the work in key international fora and institutions will be essential for the EU to remain a global standard-setter. By setting global standards, the EU exports its values while providing EU companies with an important first-mover advantage.

Executive Vice-President for a Europe Fit for the Digital Age, Margrethe Vestager, said: “Ensuring that data is protected in artificial intelligence or ensuring that mobile devices are secure from hacking, rely on standards and must be in line with EU democratic values. In the same way, we need standards for the roll-out of important investment projects, like hydrogen or batteries, and to valorise innovation investment by providing EU companies with an important first-mover advantage.”…(More)”.

Leveraging Non-Traditional Data For The Covid-19 Socioeconomic Recovery Strategy

Curated on Posted on by Stefaan Verhulst

Article by Deepali Khanna: “To this end, it is opportune to ask the following questions: Can we harness the power of data routinely collected by companies—including transportation providers, mobile network operators, social media networks and others—for the public good? Can we bridge the data gap to give governments access to data, insights and tools that can inform national and local response and recovery strategies?

There is increasing recognition that traditional and non-traditional data should be seen as complementary resources. Non-traditional data can bring significant benefits in bridging existing data gaps but must still be calibrated against benchmarks based on established traditional data sources. These traditional datasets are widely seen as reliable as they are subject to established stringent international and national standards. However, they are often limited in frequency and granularity, especially in low- and middle-income countries, given the cost and time required to collect such data. For example, official economic indicators such as GDP, household consumption and consumer confidence may be available only up to national or regional level with quarterly updates…

In the Philippines, UNDP, with support from The Rockefeller Foundation and the government of Japan, recently setup the Pintig Lab: a multidisciplinary network of data scientists, economists, epidemiologists, mathematicians and political scientists, tasked with supporting data-driven crisis response and development strategies. In early 2021, the Lab conducted a study which explored how household spending on consumer-packaged goods, or fast-moving consumer goods (FMCGs), can been used to assess the socioeconomic impact of Covid-19 and identify heterogeneities in the pace of recovery across households in the Philippines. The Philippine National Economic Development Agency is now in the process of incorporating this data for their GDP forecasting, as additional input to their predictive models for consumption. Further, this data can be combined with other non-traditional datasets such as credit card or mobile wallet transactions, and machine learning techniques for higher-frequency GDP nowcasting, to allow for more nimble and responsive economic policies that can both absorb and anticipate the shocks of crisis….(More)”.

How digital transformation is driving economic change

Curated on Posted on by Stefaan Verhulst

Blog (and book) by Zia Qureshi: “We are living in a time of exciting technological innovations. Digital technologies are driving transformative change. Economic paradigms are shifting. The new technologies are reshaping product and factor markets and profoundly altering business and work. The latest advances in artificial intelligence and related innovations are expanding the frontiers of the digital revolution. Digital transformation is accelerating in the wake of the COVID-19 pandemic. The future is arriving faster than expected.

A recently published book, “Shifting Paradigms: Growth, Finance, Jobs, and Inequality in the Digital Economy,” examines the implications of the unfolding digital metamorphosis for economies and public policy agendas….

Firms at the technological frontier have broken away from the rest, acquiring dominance in increasingly concentrated markets and capturing the lion’s share of the returns from the new technologies. While productivity growth in these firms has been strong, it has stagnated or slowed in other firms, depressing aggregate productivity growth. Increasing automation of low- to middle-skill tasks has shifted labor demand toward higher-level skills, hurting wages and jobs at the lower end of the skill spectrum. With the new technologies favoring capital, winner-take-all business outcomes, and higher-level skills, the distribution of both capital and labor income has tended to become more unequal, and income has been shifting from labor to capital.

One important reason for these outcomes is that policies and institutions have been slow to adjust to the unfolding transformations. To realize the promise of today’s smart machines, policies need to be smarter too. They must be more responsive to change to fully capture potential gains in productivity and economic growth and address rising inequality as technological disruptions create winners and losers.

As technology reshapes markets and alters growth and distributional dynamics, policies must ensure that markets remain inclusive and support wide access to the new opportunities for firms and workers. The digital economy must be broadened to disseminate new technologies and opportunities to smaller firms and wider segments of the labor force…(More)”.