‘Open Data’ Brings Potential And Perils for Government

May 8, 2013, 4:27 p.m. ET

‘Open Data’ Brings Potential And Perils for Government


Open Data: the very name is a virtuous pairing of transparency and science. No one is going to argue against openness, and data has the appeal of nonjudgmental objectivity.

Governments and public officials are rushing to embrace the concept, throwing open the vast panoply of publicly collected information for the digitally savvy to mine and exploit. The poster child of the movement is Mike Flowers, chief analytics officer for the City of New York. By mashing together all of the city’s numerous data sources, his team has more than doubled the hit rate for discovering stores selling bootlegged cigarettes and had a fivefold increase in the success rate of building inspectors looking for illegal conversions.

With that sort of track record, it is clear why Open Data is very appealing for politicians. At the last count almost 30 countries—mainly in Europe and other developed nations but also including Costa Rica, Kenya and India—plus a number of municipal areas have launched sites.

However, the use of government data throws up many issues surrounding privacy, policy-making and the uses to which the data has been put. These need to be tackled before simply opening up these digital to all comers.Take privacy. The U.K.’s cradle-to-grave national health service is a gold mine of medical data, encompassing everything from prescriptions to cancer outcomes. The government is attempting to realize some of that value, providing the data—in most cases stripped of personal identifiers—to researchers. The body responsible for making the material available says there are very stringent controls on access, use and destruction of the data, which is highly regulated.

But is it right that personal data are made available? And if so, under what conditions? Gavin Starks, chief executive of the U.K. government’s Open Data Institute, says the border between what data can be freely used and what can’t is clear. “We have stated publicly that personal data is not open data,” he said.

However, the boundary between what is personal and what is open is fuzzy. If you strip data of any personal identification, like names and addresses, or even more general details like age and sex, they become anonymized. Is that still personal, in which case they can’t be used, or is it now open, in which case they can?

The problem with even anonymized data is how easy it is to reverse the anonymity. Work by Massachusetts Institute of Technology researchers Yves-Alexandre de Montjoye and César A. Hidalgo showed that it was possible to take completely anonymous cellphone data and, by analyzing traffic at just four locations and times, uniquely identify 95% of the individuals.

“Anything unique is discoverable,” said William Heath, chairman and co-founder of Mydex, a startup that allows individuals to hold their own personal data. “Anonymized personal data has to be treated as personal data and not open data.”

But even if the issues of anonymity can be addressed, there is the much bigger issue of what open data actually tells you, and its promise to unlock hitherto unseen links between disparate events. In their book on big data, Kenneth Cukier and Viktor Mayer-Schönberger cite the previously unreported correlation between severe weather and the sale of Pop-Tarts. U.S. supermarket giant Wal-Mart WMT -0.14% noticed “before a hurricane, not only did sales of flashlights increase, but so too did sales of Pop-Tarts,” they wrote. “As storms approached, Wal-Mart stocked boxes of Pop-Tarts at the front of stores next to the hurricane supplies…and boosted sales.”

Big data may be great at teasing out correlations but it has little to say about causation. It tells you what, but not why.

“The main problem with correlation is that if you look at enough data you can find correlations in almost anything,” said Nick Halstead, the co-founder of DataSift, a U.K. startup that specializes in big data.

Mr. Flowers, quoted by Mr. Cukier and Mr. Mayer-Schönberger, was dismissive of causation. “I am not interested in causation except as it speaks to action,” he is quoted as saying. “Causation is for other people, and frankly it is very dicey when you start talking about causation…You know, we have real problems to solve.”

But according to Mr. Starks, there are other, bigger, risks in ignoring causation. If public policy simply becomes a Utilitarian exercise in maximizing favorable correlations and minimizing unfavorable ones, then does society do that which it values, or just that which it can measure? Does politics move from doing the right thing, to doing the pragmatic thing?

“Do we want some kind of technocratic utopia? Are we trying for some kind of technocratic vision of the future? My answer to that is no,” said Mr. Starks.

“What we have is a new set of instrumentation, a set of new resources, that enables us to make better decisions, but the available information is not all the information. You still have to have a sense of judgment.”

British parliamentarian Douglas Carswell, a member of the ruling Conservative Party and staunch free marketeer, says this sense of judgment is key, and enables us to hold those who make decisions to account.

“Digital technology is not about to turn us into some sort of data-driven technocracy. Ultimately, those who make public policy should do so in the knowledge not that the data says something is expedient, but that the voter has the power to say that they lose their job.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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