Oct 06, 2014 - 5:00pm

Big Data Means Big Opportunities for Consumers, Businesses


Senior Editor, Digital Content

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Big data could generate $3 trillion in additional value each year.
Big data could generate $3 trillion in additional value each year.

On October 7, 2014, the U.S. Chamber of Commerce Foundation will gather some of the nation's most influential leaders to focus on the revolutions that is changing the way every business operates in today's world—data. Watch the webcast here and follow the conversation on Twitter #data4good. 

The value of making information open and available has long been recognized.

Thomas Jefferson understood that the development of the economy and the health of the democracy depended on the free flow of information.

As president, Jefferson funded the expedition of Lewis and Clark in 1803 to gather all the information they could on the vast wilderness that had been acquired from France in the Louisiana Purchase—providing data on topology, human settlements, rivers, minerals, soil, flora, fauna, and weather that enabled the settlement of the frontier and the rapid growth of the economy.

The economic impact of big data will take a number of forms. A recent McKinsey report estimates that improved use of data could generate $3 trillion in additional value each year in seven industries. Of this, $1.3 trillion would benefit the United States.

Unlocking all that value requires the stakeholders – governments, NGOs, entrepreneurs or existing industries – to adopt new rules and procedures, the right attitude and, importantly, the right Open Data Platforms.

Here are a few key areas where big data could benefit consumers and companies:

Education: Using open data in education could enable approximately $890 billion to $1.2 trillion in value annually. The largest potential benefit comes from using open data to improve instruction by identifying the most effective strategies and tools for teaching specific skills and knowledge; students who acquire higher skills can expect higher lifetime earnings. Open performance data can also be used by students and parents to make more informed decisions about choices of schools and academic or vocational concentrations.

Transportation: Up to $920 billion a year could be generated per year, largely by individuals using Open Data to save time and energy in transit. The greatest potential source of value is increased productivity and time saving for individuals from using open data to reduce travel times. Additional value can be gained by using open data to improve the efficiency of public transportation and freight operations, through adjusting train and bus schedules to better match demand and optimizing operations based on industry-wide benchmarks. Open data can also inform infrastructure investments. To capture much of the consumer value of open data in transportation, consumers will need access to easy-to-use applications that provide real-time location and estimated travel times of different transportation options.

Health care: Up to $450 billion could be unlocked in the United States alone by using Open Data to help people take a more active role in disease prevention and treatment. Potential sources of value include enabling people to take an active role in disease prevention and treatment; helping providers determine what is the most timely, appropriate treatment for each patient; matching patients with the most appropriate providers; ensuring the cost-effectiveness of care; and identifying new therapies and approaches to delivering care.

Energy: Data could improve both sides of the energy equation. On the demand side, by analyzing energy use patterns, algorithms can improve energy efficiency. For example, Tesco, a grocery store chain in Ireland and the United Kingdom, expects to save €20 million by optimizing the performance of its refrigerators. Such uses of open data could produce $180 billion to $310 billion annually in value, according to McKinsey. On the energy supply side, energy analyst Mark Mills writes, “At the core of the hydrocarbon revolution we find 3D seismic maps that let you know where to drill, and down-hole sensors that tell you where to steer the drill underground.” As sensors collect more data and computing power follows Moore’s Law, more American energy will be economically feasible to produce.

Consumer finance: In banking, insurance and real estate, an estimated $210 billion or more can be captured by using Open Data to improve product design and underwriting. In particular, McKinsey said, Open Data can be used to assess risks for consumers who don’t have credit histories. It also could be used to help in fraud prevention and detection. 

International Trade: Data flows are the fastest growing component of international trade. Another McKinsey report found that global flows of trade, finance, people, and data increased world GDP between $250 billion and $450 billion each year. This report also found that economies with more international connections received up to 40% more benefit than less connected economies.

 

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About the Authors

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.

About the Author

Sheryll Poe is a former senior writer at the U.S. Chamber, who covered public policies affecting businesses including the three "T's" - transportation, trade and taxes.