digital economy & measurement
Free Digital Products and Aggregate Economic Measurement
with Diane Coyle, Economie et Statistique, 2023
The widespread use of free digital services such as online search and social media raises the question of how to measure the economic activity and welfare provided by zero price digital products. Among the possible approaches, the so‑called stated preference method directly questions consumers about the value they place on these products. Through three large representative UK surveys before and during COVID‑19 lockdowns, we ascertain consumers’ stated willingness to accept the loss of a range of ‘free’ online and offline products, and some paid substitutes. The average stated value for free products is generally high, with clear rankings among products, while the natural experiment of the lockdown brought about changes in stated values that were often significant and of plausible sign and scale. The stated preference method therefore provides useful insights. However, there are limitations in using it to estimate aggregate economic welfare, including the absence of a budget constraint.
Also published as ESCoE Discussion Paper
with Diane Coyle, Economie et Statistique, 2023
The widespread use of free digital services such as online search and social media raises the question of how to measure the economic activity and welfare provided by zero price digital products. Among the possible approaches, the so‑called stated preference method directly questions consumers about the value they place on these products. Through three large representative UK surveys before and during COVID‑19 lockdowns, we ascertain consumers’ stated willingness to accept the loss of a range of ‘free’ online and offline products, and some paid substitutes. The average stated value for free products is generally high, with clear rankings among products, while the natural experiment of the lockdown brought about changes in stated values that were often significant and of plausible sign and scale. The stated preference method therefore provides useful insights. However, there are limitations in using it to estimate aggregate economic welfare, including the absence of a budget constraint.
Also published as ESCoE Discussion Paper
Digital Transformation and Firm Productivity: Evidence from the UK
with Diane Coyle, Kieran Lind, and Manuel Tong, ESCoE Discussion Paper, 2022
One possible explanation for slower productivity growth in advanced economies despite widespread digital adoption is that some firms take time to use new technologies effectively. If this is the case, the firms that do adopt the technologies earlier can be expected to see a productivity gain compared to later-adopters. Using a unique UK firm-level data set, we construct digital capital stocks and explore the links between a large set of digital inputs, investments and firm-level productivity. While we find that larger firms are more digital-intensive and that digital adopters indeed have higher productivity than non-adopters, the nature of the digital technologies used is crucial. Those reflecting in-house capabilities are positively related to firm-level total factor productivity (TFP) while those indicating bought-in ones are negatively related. This finding that firms’ in-house capabilities matter for the impact of digital adoption on productivity takes advantage of the wide range of digital variables we can use, and underlines the role of organisational capabilities in considering the productivity slowdown.
with Diane Coyle, Kieran Lind, and Manuel Tong, ESCoE Discussion Paper, 2022
One possible explanation for slower productivity growth in advanced economies despite widespread digital adoption is that some firms take time to use new technologies effectively. If this is the case, the firms that do adopt the technologies earlier can be expected to see a productivity gain compared to later-adopters. Using a unique UK firm-level data set, we construct digital capital stocks and explore the links between a large set of digital inputs, investments and firm-level productivity. While we find that larger firms are more digital-intensive and that digital adopters indeed have higher productivity than non-adopters, the nature of the digital technologies used is crucial. Those reflecting in-house capabilities are positively related to firm-level total factor productivity (TFP) while those indicating bought-in ones are negatively related. This finding that firms’ in-house capabilities matter for the impact of digital adoption on productivity takes advantage of the wide range of digital variables we can use, and underlines the role of organisational capabilities in considering the productivity slowdown.
Measuring the Economic Value of Data and Cross-Border Data Flows
with Marta Paczos, OECD Digital Economy Papers, 2020
The amount and variety of data that companies collect, aggregate and analyse has increased dramatically in recent years. This paper investigates how the economic value of data can be conceptualised and measured from a business perspective. It discusses data monetisation as a strategy for developing new business models or enhancing traditional ones, and proposes a new taxonomy for data that focuses on measuring its business value. The paper also discusses how different data characteristics and types affect economic value, before examining the role of cross-border data flows as a key enabler of our global economy. As part of this discussion, the concept of a "global data value chain" is presented, based on the idea that digitalisation enables the physical detachment of data collection, analysis, storage and monetisation. The paper concludes with a summary and discussion of the most promising avenues for measuring the economic value of data.
Also published as VoxEU column; Referenced in OECD report for G20 Digital Economy Taskforce; UNECE Group of Experts on National Accounts; UN Statistics Division Advisory Expert Group on National Accounts
with Marta Paczos, OECD Digital Economy Papers, 2020
The amount and variety of data that companies collect, aggregate and analyse has increased dramatically in recent years. This paper investigates how the economic value of data can be conceptualised and measured from a business perspective. It discusses data monetisation as a strategy for developing new business models or enhancing traditional ones, and proposes a new taxonomy for data that focuses on measuring its business value. The paper also discusses how different data characteristics and types affect economic value, before examining the role of cross-border data flows as a key enabler of our global economy. As part of this discussion, the concept of a "global data value chain" is presented, based on the idea that digitalisation enables the physical detachment of data collection, analysis, storage and monetisation. The paper concludes with a summary and discussion of the most promising avenues for measuring the economic value of data.
Also published as VoxEU column; Referenced in OECD report for G20 Digital Economy Taskforce; UNECE Group of Experts on National Accounts; UN Statistics Division Advisory Expert Group on National Accounts
Valuing Goods Online and Offline: The Impact of Covid-19
with Diane Coyle, CEPR Covid Economics, 2020
This paper uses a survey representative of the UK online population to assess the willingness to accept loss of certain goods. We had conducted an initial survey in February, focusing on ‘free’ online goods and some potential substitutes and comparators. Consistent with other contingent valuation studies, consumers on average assigned valuations to many of these goods, particularly when benchmarked against revenue figures for the services. Our pilot studies, discussed in a forthcoming paper, also suggested that the actual valuations are not well anchored, but the methodology can give consistent rankings among goods. It is also a useful way to assess changes in valuations. Repeating the survey in May, during the UK, lockdown, we observed significant changes in the valuations of different goods and services, with some large differences by age and gender. In this sense the lockdown has acted as a natural experiment testing for the extent to which digital goods and physical goods are substitutes. These valuation changes may indicate which services are most valuable in a post-pandemic world where more activity takes place online. They also provide important, policy-relevant insights into distributional questions.
Also published as VoxEU column and ESCoE Discussion Paper; Covered by Quartz
with Diane Coyle, CEPR Covid Economics, 2020
This paper uses a survey representative of the UK online population to assess the willingness to accept loss of certain goods. We had conducted an initial survey in February, focusing on ‘free’ online goods and some potential substitutes and comparators. Consistent with other contingent valuation studies, consumers on average assigned valuations to many of these goods, particularly when benchmarked against revenue figures for the services. Our pilot studies, discussed in a forthcoming paper, also suggested that the actual valuations are not well anchored, but the methodology can give consistent rankings among goods. It is also a useful way to assess changes in valuations. Repeating the survey in May, during the UK, lockdown, we observed significant changes in the valuations of different goods and services, with some large differences by age and gender. In this sense the lockdown has acted as a natural experiment testing for the extent to which digital goods and physical goods are substitutes. These valuation changes may indicate which services are most valuable in a post-pandemic world where more activity takes place online. They also provide important, policy-relevant insights into distributional questions.
Also published as VoxEU column and ESCoE Discussion Paper; Covered by Quartz
No Plant, No Problem? Factoryless Manufacturing, Economic Measurement and National Manufacturing Policies
with Diane Coyle, Review of International Political Economy, 2020
‘Factoryless manufacturing’ describes the strategic decision by businesses to contract out part or all of their production, sometimes overseas. Although it has become widespread in some sectors of manufacturing, the phenomenon is not captured by existing economic statistics. This implies that the decline of manufacturing, often a focus of policy, may be overstated, while trade statistics fail to reflect globalized production. We present web-scraped evidence on the extent of factoryless manufacturing in the UK, finding that firms in sectors such as chemicals and pharmaceuticals are much more likely to use contract manufacturing, whereas in the US it is more prevalent within electronics. We also present case studies highlighting that firms can both use and provide contract manufacturing services. The limitations of the statistics imply that governments may believe their manufacturing sectors to be smaller than is the case and at the same time be unaware of the globalized character of much of that manufacturing production, adversely affecting their economic policies.
Also published as ESCoE Discussion Paper
with Diane Coyle, Review of International Political Economy, 2020
‘Factoryless manufacturing’ describes the strategic decision by businesses to contract out part or all of their production, sometimes overseas. Although it has become widespread in some sectors of manufacturing, the phenomenon is not captured by existing economic statistics. This implies that the decline of manufacturing, often a focus of policy, may be overstated, while trade statistics fail to reflect globalized production. We present web-scraped evidence on the extent of factoryless manufacturing in the UK, finding that firms in sectors such as chemicals and pharmaceuticals are much more likely to use contract manufacturing, whereas in the US it is more prevalent within electronics. We also present case studies highlighting that firms can both use and provide contract manufacturing services. The limitations of the statistics imply that governments may believe their manufacturing sectors to be smaller than is the case and at the same time be unaware of the globalized character of much of that manufacturing production, adversely affecting their economic policies.
Also published as ESCoE Discussion Paper
Cloud Computing, Cross-Border Data Flows and New Challenges to Measurement in Economics
with Diane Coyle, National Institute Economic Review, 2019
When economists talk about ‘measurement’ they tend to refer to metrics that can capture changes in quantity, quality and distribution of goods and services. In this paper we argue that the digital transformation of the economy, particularly the rise of cloud computing as a general-purpose technology, can pose serious challenges to traditional concepts and practices of economic measurement. In the first part we show how quality-adjusted prices of cloud services have been falling rapidly over the past decade, which is currently not captured by the deflators used in official statistics. We then discuss how this enabled the spread of data-driven business models, while also lowering entry barriers to advanced production techniques such as artificial intelligence or robotic-process-automation. It is likely that these process innovations are not fully measured at present. A final challenge to measurement arises from the fragmentation of value chains across borders and increasing use of intangible intermediate inputs such as intellectual property and data. While digital technologies make it very easy for these types of inputs to be transferred within or between companies, existing economic statistics often fail to capture them at all.
Also published as ESCoE Discussion Paper; Covered by The Scotsman; Royal Economic Society; Referenced by ECB, IMF, UNECE
with Diane Coyle, National Institute Economic Review, 2019
When economists talk about ‘measurement’ they tend to refer to metrics that can capture changes in quantity, quality and distribution of goods and services. In this paper we argue that the digital transformation of the economy, particularly the rise of cloud computing as a general-purpose technology, can pose serious challenges to traditional concepts and practices of economic measurement. In the first part we show how quality-adjusted prices of cloud services have been falling rapidly over the past decade, which is currently not captured by the deflators used in official statistics. We then discuss how this enabled the spread of data-driven business models, while also lowering entry barriers to advanced production techniques such as artificial intelligence or robotic-process-automation. It is likely that these process innovations are not fully measured at present. A final challenge to measurement arises from the fragmentation of value chains across borders and increasing use of intangible intermediate inputs such as intellectual property and data. While digital technologies make it very easy for these types of inputs to be transferred within or between companies, existing economic statistics often fail to capture them at all.
Also published as ESCoE Discussion Paper; Covered by The Scotsman; Royal Economic Society; Referenced by ECB, IMF, UNECE
measurement of public trust
Building Trust to Reinforce Democracy: Main Findings from the 2021 OECD Survey on Drivers of Trust in Public Institutions
OECD Publishing Paris, 2022 (with Valerie Frey, Sarah Hermanutz)
What drives trust in government? This report presents the main findings of the first OECD cross-national survey on trust in government and public institutions, representing over 50 000 responses across 22 OECD countries. The survey measures government performance across five drivers of trust – reliability, responsiveness, integrity, openness, and fairness – and provides insights for future policy reforms. This investigation marks an important initiative by OECD countries to measure and better understand what drives people’s trust in public institutions – a crucial part of reinforcing democracy.
Covered by: The Independent, The Irish Times, Rheinische Post, Expresso, Publico, Jornal de Notícias, Kronen Zeitung
OECD Publishing Paris, 2022 (with Valerie Frey, Sarah Hermanutz)
What drives trust in government? This report presents the main findings of the first OECD cross-national survey on trust in government and public institutions, representing over 50 000 responses across 22 OECD countries. The survey measures government performance across five drivers of trust – reliability, responsiveness, integrity, openness, and fairness – and provides insights for future policy reforms. This investigation marks an important initiative by OECD countries to measure and better understand what drives people’s trust in public institutions – a crucial part of reinforcing democracy.
Covered by: The Independent, The Irish Times, Rheinische Post, Expresso, Publico, Jornal de Notícias, Kronen Zeitung
Survey design and technical documentation supporting the 2021 OECD Survey on Drivers of Trust in Government Institutions
OECD Working Papers on Public Governance, 2022 (with Valerie Frey, Santiago González, Monica Brezzi)
The inaugural OECD Survey on Drivers of Trust in Public Institutions carried out in 2021 (“Trust Survey”) is a novel measurement tool supporting OECD governments in reinforcing democratic processes, improving governance outcomes, and, correspondingly, strengthening people’s trust in their democratic government. This paper provides the technical details of the surveying process for the inaugural OECD Trust Survey, including its coverage and sample design. The paper also reviews the methodological aspects of the survey to provide an account of the progress made in measuring trust in public institutions cross-country, with respect to previous projects and recommendations included in the OECD Guidelines for Measuring Trust. Finally, it proposes the continuation of the survey in the future, highlights potential areas for improvement in cross-country comparability and for continued cooperation with National Statistical Offices.
OECD Working Papers on Public Governance, 2022 (with Valerie Frey, Santiago González, Monica Brezzi)
The inaugural OECD Survey on Drivers of Trust in Public Institutions carried out in 2021 (“Trust Survey”) is a novel measurement tool supporting OECD governments in reinforcing democratic processes, improving governance outcomes, and, correspondingly, strengthening people’s trust in their democratic government. This paper provides the technical details of the surveying process for the inaugural OECD Trust Survey, including its coverage and sample design. The paper also reviews the methodological aspects of the survey to provide an account of the progress made in measuring trust in public institutions cross-country, with respect to previous projects and recommendations included in the OECD Guidelines for Measuring Trust. Finally, it proposes the continuation of the survey in the future, highlights potential areas for improvement in cross-country comparability and for continued cooperation with National Statistical Offices.
Drivers of Trust in Public Institutions in Norway
OECD Publishing, 2022 (with Santiago Gonzaléz, Silke Goubin, Mariana Prats)
Trust in public institutions is a cornerstone of the Norwegian administrative and political model. It has also been a crucial element in Norway’s response to the COVID-19 pandemic. Preserving and strengthening this “trust capital” will be essential for Norway in addressing future trade-offs and challenges, such as ensuring the sustainability of the welfare model, coping with climate change and maintaining social cohesion. Based on the results of the OECD Survey on Drivers of Trust in Public Institutions and using a combination of quantitative and qualitative methods, this study examines the main determinants of trust in Norway’s national government, local government and public administration.
OECD Publishing, 2022 (with Santiago Gonzaléz, Silke Goubin, Mariana Prats)
Trust in public institutions is a cornerstone of the Norwegian administrative and political model. It has also been a crucial element in Norway’s response to the COVID-19 pandemic. Preserving and strengthening this “trust capital” will be essential for Norway in addressing future trade-offs and challenges, such as ensuring the sustainability of the welfare model, coping with climate change and maintaining social cohesion. Based on the results of the OECD Survey on Drivers of Trust in Public Institutions and using a combination of quantitative and qualitative methods, this study examines the main determinants of trust in Norway’s national government, local government and public administration.
An updated OECD framework on drivers of trust in public institutions to meet current and future challenges
OECD Working Papers on Public Governance, 2021 (with Monica Brezzi, Mariana Prats, Santiago Gonzaléz)
Trust between citizens and their governments is crucial for the legitimacy and functioning of democracies. This paper discusses the main determinants of people’s trust in public institutions and their measurement, in times of crisis as well as for a long-term, strong, inclusive and green recovery. It presents evidence on the great variation in the levels and drivers of trust across public institutions, across levels of government within countries, and among population groups. It also identifies three main trust challenges for public governance that were heightened by the COVID-19 crisis: i) people’s views on the credibility and effectiveness of government action on intergenerational and often global challenges; ii) the changes in political participation and political attitudes; and iii) an increasing distrust of and disengagement from democratic processes. Building on previous OECD work, and taking into account lessons from other crises and handling of the COVID-19 pandemic, the paper introduces a revised and expanded version of the OECD Framework on Drivers of Trust in Public Institutions. Furthermore, it discusses how this Framework is applied in the OECD Trust Survey. Both the Framework and the Survey aim to provide governments with actionable evidence to build and maintain people’s trust as the basis for successful planning and policy reforms, allowing democracies to be fitter, stronger and more resilient in the future.
OECD Working Papers on Public Governance, 2021 (with Monica Brezzi, Mariana Prats, Santiago Gonzaléz)
Trust between citizens and their governments is crucial for the legitimacy and functioning of democracies. This paper discusses the main determinants of people’s trust in public institutions and their measurement, in times of crisis as well as for a long-term, strong, inclusive and green recovery. It presents evidence on the great variation in the levels and drivers of trust across public institutions, across levels of government within countries, and among population groups. It also identifies three main trust challenges for public governance that were heightened by the COVID-19 crisis: i) people’s views on the credibility and effectiveness of government action on intergenerational and often global challenges; ii) the changes in political participation and political attitudes; and iii) an increasing distrust of and disengagement from democratic processes. Building on previous OECD work, and taking into account lessons from other crises and handling of the COVID-19 pandemic, the paper introduces a revised and expanded version of the OECD Framework on Drivers of Trust in Public Institutions. Furthermore, it discusses how this Framework is applied in the OECD Trust Survey. Both the Framework and the Survey aim to provide governments with actionable evidence to build and maintain people’s trust as the basis for successful planning and policy reforms, allowing democracies to be fitter, stronger and more resilient in the future.
other publications
From ideas to growth: Understanding the drivers of innovation and productivity across firms, regions and industries in the UK
BEIS Research Paper Number, 2021 (with Andrew Aitken, Francesca Foliano, Larissa Marioni, Ana Rincon-Aznar, and Enrico Vanino)
Funded by UK Department for Business, Energy & Industrial Strategy
BEIS Research Paper Number, 2021 (with Andrew Aitken, Francesca Foliano, Larissa Marioni, Ana Rincon-Aznar, and Enrico Vanino)
Funded by UK Department for Business, Energy & Industrial Strategy
The Prospects for Regional Disparities in the UK in the Times of Brexit and COVID-19
National Institute Economic Review, 2020 (with Arnab Bhattacharjee and Tony Venables)
National Institute Economic Review, 2020 (with Arnab Bhattacharjee and Tony Venables)
Places and Spaces: Mapping Britain's Regional Divides
NIESR General Election Briefing, 2019, (with Andrew Aitken, Janine Boshoff, Ana Rincon-Aznar and Andrea Stocchino)
Covered by The Independent, Yahoo Finance; Funded by Nuffield Foundation
NIESR General Election Briefing, 2019, (with Andrew Aitken, Janine Boshoff, Ana Rincon-Aznar and Andrea Stocchino)
Covered by The Independent, Yahoo Finance; Funded by Nuffield Foundation
Book Review: Innovation, Economic Development and Policy: Selected Essays by Jan Fagerberg
Regional Science Policy and Practice, 2019
Regional Science Policy and Practice, 2019
Regional Disparities and Development in the UK
UK2070 Commission Think Piece, 2019
Also published as NIESR Policy Paper
UK2070 Commission Think Piece, 2019
Also published as NIESR Policy Paper
Growth, productivity and digitalisation in China
National Institute Economic Review, 2020
National Institute Economic Review, 2020
Productivity in Europe: Trends and Drivers in a Service-Based Economy
JRC Technical Report, European Commission, 2020 (with A Rincon-Aznar, and JRC colleagues)
JRC Technical Report, European Commission, 2020 (with A Rincon-Aznar, and JRC colleagues)
China and the United Kingdom: Economic Relationships
NIESR Landscape Series, 2020 (with B Allen, J Chadha, A Kara, X Mao, A Pabst, P Turner, and L Xu)
Covered by Sky News, The Guardian, LBC, The Times
NIESR Landscape Series, 2020 (with B Allen, J Chadha, A Kara, X Mao, A Pabst, P Turner, and L Xu)
Covered by Sky News, The Guardian, LBC, The Times
A Switch to Active Fiscal Policy: NIESR Response to Budget 2020
National Institute of Economic and Social Research, 2020 (with J Chadha, P Dolton, C Manzoni, X Mao, J Runge, K Whyte, and G Young)
National Institute of Economic and Social Research, 2020 (with J Chadha, P Dolton, C Manzoni, X Mao, J Runge, K Whyte, and G Young)
Investment in ‘Global Britain’ – gain, retain ... or risk economic pain?
National Institute Economic Review, 2019 (with Arno Hantzsche)
National Institute Economic Review, 2019 (with Arno Hantzsche)
Brexit and the Health and Social Care Workforce in the UK
NIESR Policy Report, 2018 (with P Dolton, M Castellanos and H Rolfe)
Covered by The Independent, Metro, The British Medical Journal
NIESR Policy Report, 2018 (with P Dolton, M Castellanos and H Rolfe)
Covered by The Independent, Metro, The British Medical Journal
Reflecting on the Broken Housing Market: An Introduction
National Institute Economic Review, 2018 (with J Chadha)
National Institute Economic Review, 2018 (with J Chadha)
Blog posts and columns
- "The Value of Free Digital Goods" (with D Coyle), ESCoE blog, 14 Dec 2020
- "Are small businesses ready to compete as consumers move online?" (with M Tong), Economics Observatory, 19 Oct 2020
- "Measuring the Economic Value of Data" (with M Paczos), VoxEU, 6 Oct 2020
- "How can we measure the economic value of data and data flows?", ESCoE blog, 8 Sep 2020
- "Failure to tackle digital skills divide will worsen regional inequality", NIESR blog, 22 Jul 2020
- "The impact of Covid-19 on the value of online goods", VoxEU, 10 Jul 2020
- "Do we make informed decisions when sharing our personal data?", Economics Observatory, May 2020
- "Renting factories: an industrial trend that complicates economic measurement", LSE Business Review, 21 Oct 2019
- "How the increasing trend to rent factories is challenging economic measurement", ESCoE blog, 13 Sep 2019
- "Large-scale use of cloud services poses challenges to measurement in economics", LSE Business Review, 5 Sep 2019
- "New general-purpose tech on the block: cloud computing services transform our economies while economic measurement struggles to keep up", ESCoE blog, 22 Aug 2019
- "A divided country? As Westminster squabbles, Britain’s economic disparities are left unresolved", NIESR blog, 14 Jan 2019
- "Fewer migrants from the EU also means fewer nurses and doctors", NIESR blog, 6 Nov 2018
Podcasts
- VoxTalks, "Valuing digital services" (with D Coyle), hosted by T Philips, Jul 2020
- NIESR Talks "General Election 2019, Episode 4: Regional Divides" (with A Rincon-Aznar), hosted by J Chadha, Dec 2019
- NIESR Talks "Could Brexit be bad for our health and social care sectors?" (with H Rolfe), hosted by P Buonadonna, Nov 2018
- ESCoE Research Seminar "Cloud Computing and National Accounting" (with D Coyle), Oct 2018