Information Economics Melanie J. Norton, “Introductory Concepts in Information Science” Chapter 6, “Information Economics” Chapter 7, “Interpretations of Value” pp 79-107, Information Today Inc., 2000 Lester & Koehler, “Fundamentals of Information Studies” Chapter 8, “The Economics of Information” pp 161-178 Discussion led by: Kevin Lynch, Ed Sobczak, Raja Sztorc, Lucinda Steinhauser, and Elizabeth Teegarden

What is Economics? Activities undertaken to provide for the satisfaction of desires based on production and consumption. Traditionally, economic analysis is focused on resource scarcity, demand, supply, and exchange.

Introductory Questions Why were we asked to read Chapter 6, with all the economics lessons? Why did we read this combination of chapters (that is, how are they related)? What could informatics/information science students gain from all of this information?

Information as an Economic Entity Technology Haves and have-nots Is information a resource? How does it differ from traditional resources? Is information a commodity? Means of supplying what is needed—resources are considered limited, which contributes to a value system for exchange of resources Information is expandable, compressible, formats can be modified, can be distilled abstracted, summarized Commodity? Any good or service offered as a product for sale in the marketplace Lack of information is the measure of uncertainty. It is necessary for modeling and analytic reasons to establish artificial parameters to deal with uncertainty, however establishing artificial parameters may contribute to uncertainty. Information economics attempts to take into account the variations created by the presence, absence, extent and distribution of information in economic structures

Internet Population Penetration % in 2006 http://www.internetworldstats.com/stats.htm

Do you agree? “However information is perceived and treated in the past, it is being treated more and more as a commodity that can be owned, controlled, and traded in the market.” Dr. Wang posed this question in Week 2, how do you feel about it now?

Applying Economic Models What is the difference? Macro Economics Micro Economics Macro - concerned with large scale trends in the economy, how policies impact industries, how countries' economies influence each other. Micro - impact of factors on a small scale, such as processes within one company research, sales, wages, marketing, etc.

Information as a Commodity Shannon-Weaver model and Economics of Information Traditional Value Propositions Cost/benefit analysis. Public Goods? Renovation and Mutation Organizational Impact Uncertainty and Models Role of the Government Value is ascribed after the information has been obtained and applied. Value can be as dependent on the recipient as the information itself Renovation—the intentional modification of information. Mutation—accidental modification (through carrier failure, misinterpretation) Value of information can be dependent on the structure of the organization—top-down, team based, channels Criteria for utilization—validity, quality, ease of use, and the degree of fit between information provided and the environment in which it is being sought (Repo) Compare to information architecture!

Traditional Value Propositions What are the differences between resources in the traditional economic sense and information as a resource? Why is this distinction important?

Value of Information Is the price we pay for information reflective of the quality of information? How do we price information in our daily lives? What is the value to us if we buy a book or a magazine or print a document?

Measurability of Information Buying a house vs. buying a software program Why is a contractor not entitled to improvements on a house, but a programmer is entitled to improvements based on his database? Dual nature of information as tangible and intangible systems. Intellectual property and copyright laws. Example from chapter 6, selling something tangible vs sharing an idea. (Ring example)

Renovation and Mutation of Information With Renovation it is easy to see how new valuable information can be produced. How viable is the mutation process as a source of new useful information? Author states that errors in chemical formulas and errors in interpretation can lead to better results? How often does this happen? Examples?

Organizational Impact What are the consequences of integrating communication technology into an increasing number of organizations, such as libraries, schools, government processes? Efficiency? Ease of use? Investment $$$? Reliance on communication channels? User training?

Uncertainty and Game Theory How does this relate to Information Economics? Reduced uncertainty leads to increased information value? Research is set up with a set of specific rules to yield valuable results?

Creating and Applying Models How do we define and use a model as described in the reading? A documented research process? An experiment that can be repeated and examined to allow for further investigation into the subject matter?

Role of Government in Information Economics Should the public know all information exchanged among individuals? Communications between officials? Role of the media?

Role of Government in Information Economics Should all information dissemination be a political process? information classified depending on what kind of ‘good’ it provides, also on who is creating the information

Role of Government in Information Economics What role do political agendas play in the advancement of research, availability of information, and application of information? Is government intervention in these matters a good thing? Alternating policies between administrations causing setbacks? Providing grants and means for information to spread? Specific examples?

Applications of Information Technology Manufacturing and industry use information technology to improve timeline estimates on projects and to enhance competitiveness by saving money for customers by meeting or beating deadlines. The use of better gathering and implementation of information from point of sale by large retailers improves product purchasing, helps maintain balance of inventory, identifies regional product preferences.

Applications of Information Technology How many people have noticed certain companies that have changed to or evolved to help the consumer’s needs and wants? The manner in which factories operate has been changed by automation, and the management of those facilities has been modified by information exchange and telecommunications. Decisions are based on information from agents in distant places and are no longer restricted by limited communication facilities. Information that provides insight into the corporate conduct influences the value of stocks, managerial portfolios, and public image.

Applications of Information Technology As technology improves and we become more of a faceless society, how will this impact our culture? Good or bad? If a product is considered obsolete, fewer products will be purchased; if this cycle goes too far, the business will fail. Everyone who works for the business is out of work, everyone who relied on those workers buying goods for them will suffer a loss of income.

Applications of Information Technology As technology grows and we become more and more dependent on it, how will this effect the business in the future?