Data economy

{{Expand section|date=May 2019}}

Big data is defined as the algorithm-based analysis of large-scale, distinct digital data for purposes of prediction, measurement, and governance.{{Cite book |last1=Flyverbom |first1=Mikkel |last2=Madsen |first2=Anders Koed |title=Sorting data out – unpacking big data value chains and algorithmic knowledge production |journal=Die Gesellschaft der Daten. Über die Digitale Transformation der Sozialen Ordnung |date=January 2015 |doi=10.4135/9781412985871 |isbn=9780803972377 }}{{cite web |url=https://www.forbes.com/sites/gregsatell/2014/01/26/5-things-managers-should-know-about-the-big-data-economy/#1664fb8c4def |last1=Satell |first1=Greg|title=5 Things Managers Should Know about Big Data Economy |website=Forbes |accessdate=7 September 2018}}

This involves processing vast amounts of information from various sources, like social media, sensors, or online transactions, using advanced computer programs (algorithms). These algorithms help uncover patterns, trends, and insights that would be impossible to identify manually, enabling applications such as predicting consumer behavior or optimizing city traffic systems.

Data barter occurs when goods or services are exchanged for customer data, typically at a zero monetary price. This phenomenon is common in digital services such as free apps, where the value of the data collected can be substantial. Data barter may not be captured by traditional GDP measures, leading to potential underestimation of economic activity.{{Cite book |last=Baley |first=Isaac |title=The data economy: tools and applications |last2=Veldkamp |first2=Laura |date=2025 |publisher=Princeton University Press |isbn=978-0-691-25672-6 |location=Princeton}}

In the process of economic transactions, firms acquire data about customers: the goods they purchased, the time at which they shopped or perhaps a means of payment, zip code or operating system. This data is valuable to firms. Firms that value such data should have an extra incentive do more transactions to gather more data. To do more transactions, a firm needs to lower its price or offer a higher-quality product at the same price, to induce more customers to come. Profit maximization dictates that firms that value data should offer customers lower prices (per unit of quality or quantity). This decline in the price, which is compensated for by the transfer of valuable data, is referred to as partial data barter.{{Cite web |last=Baley |first=Isaac |last2=Veldkamp |first2=Laura |date=April 17, 2024 |title=The partial data barter trades of the digital economy |url=https://www.brookings.edu/articles/the-partial-data-barter-trades-of-the-digital-economy/ |access-date= |website=Brookings |language=en-US}}

The human-driven data economy is a fair and functioning data economy in which data is controlled and used fairly and ethically in a human-oriented manner.{{cite web |url=https://www.sitra.fi/en/topics/human-driven-data-economy/#what-is-it-about |title=Human-Driven Data Economy |publisher=Sitra |accessdate=7 September 2018}}{{cite web |url=https://www.himssinsights.eu/prepare-new-human-driven-data-economy |title=Prepare for a new human-driven data economy HealthTech Wire |date=May 23, 2018 |publisher=HealthTech Wire HIMMS Europe |accessdate=7 September 2018}} The human-driven data economy is linked to the MyData Movement and is a human-centered approach to personal data management.{{cite web |last1=Dehaye |first1=Paul-Olivier |title=PersonalData.IO helps you get access to your personal data |url=https://blog.okfn.org/2016/12/21/personaldata-io-helps-you-get-access-to-your-personal-data/ |date=December 21, 2017 |website=Open Knowledge International Blog |accessdate=7 September 2018}}

This means that individuals have the ability to decide how their personal information is used and shared, ensuring transparency and accountability. It also aims to create systems where data contributes to societal benefits without compromising individual rights.

The personal data economy is created by individuals using personal data, which people supply either directly or indirectly. Consumers become suppliers and controllers.{{cite web |last1=Syrjänen |first1=Tuomas |title=The Rise of the Personal Data Economy |url=https://greenbookblog.org/2018/01/24/the-rise-of-the-personal-data-economy/ |date= January 24, 2018 |website=GreenBook Blog |accessdate=7 September 2018}}{{cite book |title=Personal Data: The Emergence of a New Asset Class |publisher=World Economic Forum |pages=40 |date=January 2011 |url=http://www3.weforum.org/docs/WEF_ITTC_PersonalDataNewAsset_Report_2011.pdf |accessdate=7 September 2018}}

In an algorithm economy, companies and individuals can buy, sell, trade, or donate individual algorithms or apps pieces, by leveraging dedicated marketplaces.{{cite web |title=What is the Algorithm Economy |url=https://www.techopedia.com/definition/32904/algorithm-economy |website=Techopedia |date=4 October 2017 |accessdate=7 September 2018}}{{cite arXiv |last1=Kumar |first1=Abhishek |last2=Finley |first2=Benjamin |last3=Braud |first3=Tristan |last4=Tarkoma |first4=Sasu |last5=Hui |first5=Pan |title=Marketplace for AI Models |date=2020 |class=cs.CY |eprint=2003.01593}}{{cite book |last1=Ezrachi |first1=Ariel |last2=Stucke |first2=Maurice E. |title=Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy |date=2019 |publisher=Harvard University Press |location=Cambridge |isbn=9780674241589}}

The size of the EU data economy was estimated to be more than €285 billion in 2015, representing over 1.94% of the EU GDP. Key sectors in the data economy either are or are on the way to becoming data-driven. For example, the manufacturing, agriculture, automotive, smart living environments, telecommunications, healthcare, and pharma industries are at the core of the data economy.

Management of personal information makes everyday life easier and adds to well-being. A unified procedure opens up opportunities for user-oriented innovations and business activities.

Individuals have control over the data concerning themselves. Individuals can actively define the services and the conditions under which their personal information is used. The service providers worthy of people's trust can also get access to significantly more extensive and varied data e-services.

Approaches to data breaches are problematic. Challenging issues include compensation to victims, incentives for enterprises to invest in data security, and uncertainties for corporations about regulatory burdens and litigation risks.{{cite journal |last1=Daly |first1=Angela |title=The introduction of data breach notification legislation in Australia: A comparative view |journal=Computer Law & Security Review |date=2018 |volume=34 |issue=3 |pages=477–495 |doi=10.1016/J.CLSR.2018.01.005 |s2cid=67358435 |url=https://strathprints.strath.ac.uk/69775/1/Daly_CLSR_2018_The_introduction_of_data_breach_notification_legislation_in_australia.pdf }} Furthermore, data portability might decrease interest in innovations.

The regulation of the data economy is closely linked to privacy. The present approach is flexibility, finding a balance between protecting privacy and allowing citizens to decide for themselves. The European Union GDPR regulation is one cornerstone of this new regulatory framework.{{cite news |last1=Davies |first1=Jamie |title=It turns out regulating the data economy is really hard. |url=http://telecoms.com/491604/it-turns-out-regulating-the-data-economy-is-really-hard/ |accessdate=27 August 2018 |agency=Telecoms news |date=August 2018}}{{cite web |last1=Abate |first1=Serafino |title=Is the data economy self-healing, or should economic regulation be considered? |url=https://www.gsma.com/publicpolicy/is-the-data-economy-self-healing-or-should-economic-regulation-be-considered |website=GSMA |accessdate=27 August 2018|date=13 August 2018}} A new paradigm for data governance is needed, with data ethics as a central component in all regulatory reforms.{{cite journal |last1=Maya |first1=Uppaluru |title=The U.S. Needs a New Paradigm for Data Governance |journal=Harvard Business Review |url=https://hbr.org/2018/04/the-u-s-needs-a-new-paradigm-for-data-governance |publisher=Harward Business Review |accessdate=7 September 2018 |date=April 16, 2018}}

The data economy raises concerns about regulatory uncertainties and incoherence, privacy, ethics, the loss of control of data, and the ownership of data and related rights.{{cite web |last1=Wendehorst |first1=Christiane |last2=Cohen |first2=Neil |last3=Weise |first3=Steve |title=Feasibility Study ALI-ELI Principles for a Data Economy |url=https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Projects/Data_Economy/Feasibility_of_ALI-ELI_Principles_for_a_Data_Economy_2017-08-25__002_.pdf |website=European Law Institute |accessdate=20 August 2018 |date=August 25, 2017 }}{{Dead link|date=October 2022 |bot=InternetArchiveBot |fix-attempted=yes }}{{cite journal |last1=Crabtree |first1=Andy |last2=Lodge |first2=Tom |last3=Colley |first3=James |last4=Greenhalgh |first4=Chris |last5=Mortier |first5=Richard |last6=Haddadi |first6=Hamed |title=Enabling the new economic actor: data protection, the digital economy, and the Databox |journal=Personal and Ubiquitous Computing |date=November 2016 |volume=20 |issue=6 |pages=947–957 |doi=10.1007/s00779-016-0939-3 |doi-access=free |hdl=10044/1/52734 |hdl-access=free }}{{cite journal |last1=Tene |first1=Omer |last2=Polonetsky |first2=Jules |title=Big Data for All: Privacy and User Control in the Age of Analytics |journal=Northwestern Journal of Technology and Intellectual Property |date=April 2013 |volume=11 |issue=5 |url=https://scholarlycommons.law.northwestern.edu/njtip/vol11/iss5/1/ |accessdate=20 August 2018}} Mathematical models and algorithms based on them are too often opaque, unregulated, and incontestable.{{cite book |last1=O'Neil |first1=Cathy |title=Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy |date=September 6, 2016 |publisher=Crown Publishing Group}}

Some concerns have been raised about internet companies controlling the flow of data and using it to gain power.{{Cite news|url=https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data|title=The world's most valuable resource is no longer oil, but data|newspaper=The Economist|access-date=2018-11-20|language=en}}

The critiques expressed in the 2012 General Data Protection Regulation (GDPR) draft of the European Commission have now led to concrete regulations:

:“This is why it is time to build a stronger and more coherent data protection framework in the EU, backed by strong enforcement that will allow the digital economy to develop across the internal market, put individuals in control of their own data and reinforce legal and practical certainty for economic operators and public authorities.”{{cite web |title=Proposal for a regulation of the European Parliament and the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation GDPR). COM(2012) 11 final |publisher=European Parliament |url=http://www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2012/0011/COM_COM(2012)0011_EN.pdf|accessdate=20 August 2018}}

• Algorithms
• Artificial intelligence
• Blockchain
• Cloud computing
• Cloud computing security
• Data
• Data analysis
• Digital economy
• Digitization economics
• Electronic business
• Electronic commerce
• E-commerce
• GDPR
• Information economy
• Information society
• Internet of Things
• Knowledge economy
• Knowledge market
• Machine learning
• Network economy
• New economy
• Open data
• Platform economy
• Virtual economy

{{Reflist}}

• [https://ec.europa.eu/digital-single-market/en/policies/building-european-data-economy Building a European Data Economy]
• [https://www.europeandataportal.eu/en/highlights/size-and-trends-eu-data-economy data.europa.eu: The size and trends of the EU data economy]
• [https://principlesforadataeconomy.org Principles for a Data Economy (American Law Institute and European Law Institute)]

• [https://www.sitra.fi/en/topics/human-driven-data-economy/ Human-driven data economy (Finnish Innovation Fund, Sitra)]
• [https://mydata.org/ MyData Global Network]
• [https://okfn.org/ Open Knowledge International]

Data