What is the value of data? A review of empirical methods

Policy brief by Diane Coyle and Annabel Manley: “The economy has been transformed by data in recent years. Data-driven firms made up seven of the global top 10 firms by stock market capitalisation in 2021; and across the OECD (Organisation for Economic Co-operation and Development) economies there has been a growing gap in terms of productivity and profitability between firms that use data intensively and the rest (e.g. Brynjolfsson et al 2019; Bajgar et al 2022; Coyle et al 2022). The widespread availability of data and analytics has also begun to extend into the public sector and policymaking, for example with ‘following the science’ – implying intense use of data – becoming a tagline for the handling of the COVID-19 pandemic in the UK and elsewhere.

It is therefore obvious that data has value in an economically meaningful sense. The sources of its value and characteristics of data as an economic asset are discussed at length in our earlier Value of Data report (Coyle et al 2020a). We concluded that there is potential value to the economy as a whole from having the ability to use data, and not just to the organisations that control specific data sets. This appreciation is increasingly reflected in many policy statements of data strategy and the broader debate about the governance of data (e.g. European Parliament 2022). The value of data is also explicitly and implicitly acknowledged by firms that sell data services, and investors who take dataset assets into account in stock market valuations or mergers and acquisitions.

However, despite the broad recognition of its value, and the need to develop appropriate policy frameworks, there is still no consensus method for empirically determining the value of data. Without this, the full potential will not be realised (Verhulst 2018). There are not even many examples of markets for data that would indicate a private valuation (although not the wider social value). Yet estimates of the value of data are needed to determine an appropriate level of investment, as well as a better understanding of how data can contribute value to the economy and how to govern the collection and use of different types of data.

This brief presents an overview of a range of alternative methods for data valuation, including those proposed in the existing literature. This includes some relatively widely used methods and others that are more specialist or preliminary…(More)”.