This is second of two pieces about “managing expectations” (the first is here). Open data has come a long way in the last few years and so have expectations. There’s a danger if open data is seen as a panacea that will magically solve climate change or eliminate corruption because it will inevitably fail to do so and hope and enthusiasm will be replaced by disappointment and dis-engagement.

This would be a tragedy as open data is valuable to us socially, commercially and culturally. However, we do need to think hard about how to make effective use of open data. Open data is usually only one part of a solution and we need to identify and work on the other key factors, such as institutions and tools, needed to bring about real change.

Government 2.0, Open Data and IT

More than two years ago a UK Government civil servant came to visit me. A new government had taken power in the UK for the first time in a decade and she wanted to ask to me about “Government 2.0″, open data and transparency.

One thing was immediately apparent from our discussion): while she was already excited by these ideas it wasn’t entirely clear to her what they involved or exactly what problems they would help with — something that has remained a common feature of conversations I’ve had since.

In my view (a view expressed in that conversation two years ago), there are (at least) two distinct — albeit related — ideas for what “Government 2.0″ means:

• Improving (Government) services by utilizing current information technology and open data — open data being especially interesting (and novel) as it could turn Government from the direct supplier of services to the supplier of the data (and infrastructure) needed to run those services (‘Government as a Platform’)
• More interactive, participatory governance (and therefore more “democratic) via the use, again, of open information and technology (though the connection was somewhat vaguer).

Put like this it’s clear why “Government 2.0″ can appear so exciting — after all it appears to promise a radical improvement, even transformation, of government.

But it also should make us concerned. Unrealistic expectations can be dangerous — something that is generally beneficial can get confused with a miracle cure and then blamed when it fails to deliver.

Moreover, there’s the risk that we start fixating on this wondrous new possibility (open data and technology) and ignore other key (but less exciting) elements in solving our problems — with the consequence that we much reduce the actual benefit we got from these new innovations in policy and technology.

This second point seemed especially important as it could lead to the dangerous assumption developing that open information + IT would magically turn into better (and more participatory) governance without much examination of how this exactly would come about and any changes to the form and structure of governance that would be needed.

The danger here is of confusing necessary with sufficient conditions: open data may be necessary part of better and more participatory governance but they are likely not sufficient without, say, substantial other changes in the structure and machinery of government (e.g. who gets to vote, when and where).¹ These latter changes are normally costly and much more difficult than adopting new IT or opening up data. Thus, whilst new IT and open data are important, they are likely only one (possibly small) part of a solution.

When is Open Data (Part of) the Solution?

To help think about and clarify this question — of the role of open data and IT vis-a-vis other factors in a solution — I drew the first version of this diagram (a diagram I have drawn again and again over the last few years).

The purpose of the diagram is to provide a rough-and-ready way to think about the role of open data (and IT) in solving a specific problem compared to other factors such as institutions.

Some specific problems are listed for illustrative purposes. For example, Climate Change is situated up at the top-left implying that Open Data + IT likely play a relatively limited role compared to other factors such as institutions and governance change (roughly: the real problem here is reaching international agreement on a solution not more (open) information).

Conversely finding a better way to get to work is likely a problem where Open Data + IT can have a very large impact irrespective of any other factors. Meanwhile, for an issue like Corruption there would be debate as to where to situate it: on the one hand Transparency and Open Data can have a big impact with relatively little institutional or governance change, however, on the other hand one could argue that without reasonably significant governance and institutional change, open data and transparency would have little effect.

A Theory of Change

What this line of thought suggests is that we need to delve deeper into the exact “theory of change” for a given area. Around open data I think there is a general chain of logic, which runs, roughly, as follows:

1. Open (digital) data + IT dramatically lowers the cost of access to information
2. This includes information about what the government is doing (be that in terms of laws or filling in pot-holes)

3. Armed with this better information citizens (or other groups) will

   1. Be able to hold government accountable and/or drive change
   2. Have a better sense of how their polity operates (improving trust etc)

In essence it presumes some theory of change like this (a diagram I also drew that day for the civil servant):

The key question is around step 3: “Action (& Change)”. It highlights the often missing (but implicit) assumption in much of this discussion that once information is available action and change will follow. But action, even in highly developed democracies can be hard for several reasons:

1. Understanding and action requires attention: analyzing and acting on information requires time and attention and these seem to be (increasingly) scarce. Crudely put: do I go out to the cinema with my friends or do I read up on the latest draft law?

   The key cost of becoming politically active is not the direct cost of acquiring information (be that what is happening or the email address of the representative to contact) but the attention and time cost in analyzing, understanding and acting on that information. If so, open data and IT may only have a limited impact on reducing the cost of taking “political action”

2. Digital technology by reducing simple transmission costs has substantially increased the amount of “information” competing for attention (information should also be interpreted here in the broad sense and include entertainment and anything else that could be shipped as digital “bits”)

3. The problems of coordination and collective action: crudely, why should I bother to act if it requires a million of us to act for something to happen. Coordination problems are as old as humanity itself. While one can argue that modern communication technologies can assist us in coordination (cf the debate on the “social media revolutions”) they would seem at best to offer mild improvement on a fundamentally difficult problem (see the appendix below for more on this).

Conclusion

I should emphasize that I am far from arguing that open data (and IT) are not important. However, we need to temper our enthusiasm with an appreciation that they are only one part of the solution. As next steps I think we need to:

• Think hard about what problems to tackle — if technology and open information are the tools to hand we want to focus on problems where they are especially effective. Using the first of the diagrams above can be a useful exercise in clarifying where a particular problem is located.
• Be clear that other changes or improvements in, say, institutions, will be needed. We should work out what these are and then endeavour to make them. We should be aware that often these changes will be both more important and much harder than those that we can achieve with technology and open information alone.
• Appreciate that open data and technology are attractive tools because they are (relatively) very cheap and straightforward to use. This is worth bearing in mind: even if open data and (information) technology are 10% of solving a problem they are an incredibly cheap 10% to do.
• Acknowledge that open information and technology will often be complements to institutional change not substitutes. If so we cannot just do more open information and less governance reform — that would be likely giving you a second hammer to compensate for having no nails.

Appendix: Principal Agent Theory and Government

Imagine I hire a real-estate agent to sell my house for me. In legal/economic parlance I am the principal (I own the house) and the real-state agent is the “agent” — the person acting for the principal.

The normal “problem” of such relationships is that the interests and goals of the two parties are not aligned.

Take the real-estate case: suppose the two parties negotiate a 6% commission plus an up-front fee — then for every additional $1 in the sale price the agent manages to get from a buyer for the house the agent will receive only 6 cents in commission. This implies a strong divergence, at least in pure monetary terms, between the incentives of the principal (the owner of the house) and the agent (the real-estate agent).

To make this even more concrete, consider a situation where by working a weekend, and doing extra showings of the house it will be sold for an extra $10,000. Suppose that the agent crudely values this weekend time at $1000 a day (imagine their daughter has a birthday party!). For them the “payoff” is: $600 (6% of of $10k) – $2000 (their time cost) = -$1400.² So they have a strong incentive not to bother. Meanwhile the principal would clearly make the effort: even assuming a higher cost of their time of $5k their “payoff” is $10k – $5k = $5k.

So how does this relate to government? Well, Lincoln may have said that Government is by, for and of the people but in truth only the middle of these is true: Government is a classic principal agent setup in which the principal (the people) appoint agents (their elected representatives) to govern the polity.

Thus, Government faces exactly the kind of principal agent problems above: the incentives of elected officials (or bureaucrats) may differ markedly from those of the citizens as a whole. For example, elected officials may primarily care about remaining in office (just as the real-estate agent care about commission) rather than ensuring the best outcome for citizens — this trade-off will be especially acute when narrow but powerful groups who are able to provide monetary or other support for, say, re-election, have interests that conflict with the general welfare of society.

The focus of most principal-agent analysis is on how to better align the interests of the agent with that of the principal. Normally this involves some form of monitoring (so the principal knows what the agent is doing) combined with some form of reward and sanctions based on what the agent’s actions.

In a perfect world, the principal would know exactly what the agent was doing and with the right set of rewards and sanctions could then ensure they did exactly what was wanted. However, in this situation the principal would essentially be the agent (how else does one know exactly what they are doing) and so the real question is how well can one with imperfect information and imperfect rewards and sanctions. We need not go into detail here but the key (and obvious) point is that the more imperfect the principal’s information and the more imperfect their rewards and sanctions and poorer the alignment will be.

Unfortunately on this basis there are several reasons to think the government / people (electorate) principal-agent problem is especially bad:

• Government is complex – this makes it hard for the principal (the “people”) to know what the agent(s) are doing (remember it’s more about knowing the agents actions than outcomes since outcomes, due to uncertainty, only partially reflect an agent’s effort. Very strong incentives based on uncertain outcomes can be counter-productive — if I could work very hard and it will all be for nothing because things go badly for random reasons then maybe I should not bother and just see what random chance brings)
• The incentives that can be offered to agents (the governors) are relatively crude — being voted out at the next election (or being overthrown in an uprising!)
• Governance in fact has multiple levels of principal-agent relationships: the “people” may elect representatives who in turn appoint or utilize a managerial bureaucracy to run government — in this case elected officials are principals and the bureaucracy is agent.
• The very large number of individual citizens makes the coordination problem of acting to sanction or reward an agent especially difficult — the simplest form of this sanctioning (rewarding) is in the form of elections yet the incentives for any given citizen to make the effort to participate is very low: why should I bother to vote when I am only one among millions? (we note that turnout in most countries has been consistently dropping).