The Department for Culture, Media and Sport commissioned Belmana with the University of the West of England to identify the likely positive and negative externalities of data use (that is, the wider social impacts of data use) and provide an assessment of the viability of methods that could be used to value them. The study developed a framework for understanding the types of direct costs incurred by data use — these costs include tangible costs such as legal and infrastructure costs, as well as intangible costs like competitive advantage.

The externalities associated with data use are often analysed in terms of opening data. There has been a drive to release data held by public bodies, a means to capture indirect external benefits of use further down the data value chain that the public body owning the data. It has relatively low indirect and direct costs. Privacy externalities for open data are low as they are usually anonymised. Data costs are minimal as data is the by-product of other activities.

However, there is a need to consider how wider data use can be enabled where data cannot be opened.  The study uses cases studies – Open Banking, personal data stores etc – and a literature review. Data is made more accessible to an ecosystem where structures minimise legal and security risks. There is wider value captured in an ecosystem of innovative businesses, researchers, data aggregators, regulators beyond the value chain of the core data use. The report looks at valuing externalities. To estimate the indirect effects of data use on transport planning, values for externalities are available. However, the methods available for valuing externalities that are specific to data use, such as privacy, need maturing.

Data use externatilies: Report to department for Digital, Culture, Media and Sport