## Data in the Digital Age

_IMF News, November 17, 2017_

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**Canonical URL:** [Data in the Digital Age](https://www.imf.org/en/news/articles/2017/11/17/sp111717-data-in-the-digital-age)

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## Bibliographic details
- Published: November 17, 2017

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### New statistical challenges from digitalization
- Rapid technical advancement: reference to "In the 90s" and Moore’s Law reaching physical limits, while digital possibilities expand (cloud computing, big data, the internet of things).
- Examples of scale and change:
  - Amazon amassing $135 billion in revenue last year.
  - Twitter character limits: 140, and now 280 character tweets.
  - Third-party mobile payments are growing toward $9 trillion dollars a year in China.
  - The existence of 5 million smartphone apps and uncertainty whether they are reflected in volume indexes for software.
- Key measurement issues identified:
  - Need to include online platforms and businesses they enable promptly in source data for economic statistics.
  - Need for effective data-sharing arrangements between statistical agencies and other government producers of administrative data, such as tax authorities and regulators.
  - Need for more data on the digital economy for national accounts and trade statistics.
  - Update international classification systems for industries and products to guide incorporation of digital-economy source data and development of new statistics.
  - Renewed push to update and maintain quality adjustment procedures of price statistics for ICT-related goods and services, including mobile telephony, broadband internet, streaming videos, international calling and messaging, and time spent online.
  - Criticism that GDP and productivity statistics omit consumption of free services from digital platforms and neglect household production that uses digital technologies; this suggests a need for data on the welfare effects of digitalization.
  - Statisticians must update compilation practices and develop new forms of data to capture non-market production in households (e.g., gig economy, sharing economy).

### Role for developing countries
- Developing countries must be included in research on welfare effects of digitalization.
- Observation that impacts may be larger where prior access to phones and financial services was limited (example: East Africa).
- Implications for inequality are important and require measurement.

### New statistical opportunities from Big Data
- Digitalization provides new opportunities beyond measurement improvements: use Big Data to explore economic relationships and policy effectiveness in ways previously impossible.
- Examples of large-scale research leveraging administrative data:
  - Professor Raj Chetty’s work with vast databases from the Census Bureau and Social Security Administration tracking income trends of millions of people over 20-30 years.
  - Findings include quantifying effects of moving neighborhoods on escaping poverty and influence of a third-grade teacher on lifetime earnings.
- Sources of information: troves held by governments, banks, internet companies, and others—some accessible, some not.
- Potential within the IMF:
  - The Fund’s economists and statisticians do “superb work” with available data, and the Statistics Department helps governments develop compilation and analytical capabilities.
  - The Fund needs to give serious thought to how Big Data will transform its work and may attract future students and specialists to help harness these data.

### Measurement and valuation issues for GDP and transactions
- Quality versus price changes in ICT: example where a more powerful device costs the same as previous generation—question whether quality upgrade is adequately reflected in GDP numbers.
- Metadata and online retail: every purchase yields both a monetary transaction and an information-for-service exchange; each click and purchase produces vast information magnified across billions of transactions.
- Challenge: How to value transactions that include free internet services or information-provided-for-free—whether to treat them as the cost of a book or shoes or something of broader economic significance.
- Measuring free internet services and information-provided-for-free may represent significant value-added that is not currently captured in standard revenue or GDP measures.

### Resource, collaboration, and communication needs
- Measuring the digital economy and capturing Big Data opportunities will require resources and collaboration:
  - Need for budget and human capital resources well beyond current "old economy" capacities.
  - Need for better communication between compilers and users of statistics.
  - Need for data-reporting requirements for e-money transactions, including cross-border payments, to illuminate the unobserved economy.

### Summary recommendations and priorities (as summarized by IMF First Deputy Managing Director David Lipton)
- Promptly include online platforms and platform-enabled businesses in source data.
- Establish effective data-sharing arrangements with administrative data producers (tax authorities, regulators).
- Provide more data for national accounts and trade statistics on the digital economy.
- Update international classification systems for industries and products for digital incorporation.
- Update and maintain quality adjustment procedures for ICT-related price statistics.
- Improve measurement of free digital services and household digital production; gather data on welfare effects of digitalization.
- Include developing countries in research on digitalization’s welfare and inequality impacts.
- Leverage Big Data to enhance understanding of economic relationships and policy effectiveness.
- Allocate increased budgetary and human capital resources and promote collaboration to realize these measurement and analytical advances.

*IMF First Deputy Managing Director David Lipton — Speech, November 17, 2017*

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## References

- [David Lipton](http://www.imf.org/external/np/omd/bios/dl.htm)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2017/11/17/sp111717-data-in-the-digital-age_