Modi's visit to the facebook headquarters generated much debate in India regarding net neutrality in general and facebook's intentions behind the tricoloured display pictures in particular. This subsequently spilled over into an access vs. neutrality debate, and a few branches of the debate reached the technology vs. basic services debate. It is the last one that I seek to talk about in this post.
The trouble with evaluating the impact of most technology - based products is that the major impact happens through externalities. Therefore, if we try to measure the outcomes by the impact on individual households, we will always underestimate the impact of such products. There are also other issues. For example, increased attendance in couchsurfing gatherings has been observed to be positively related to a sense of belonging to the community; and hosting a guest shown to have a positive relationship with trust. However, in case the causal relationship runs in the opposite direction, could products like couchsurfing be making society worse off by segregating between two sections? Ignoring questions about negative consequences, let us focus on the more positive aspects. For example, independent media has often been shown to lead to many positive societal outcomes. However, the impact on the life of the marginal consumer would be quite low due to the externality problem. To add to that, because the consumer may not fully internalise the long - term benefits of these products, making fair comparisons inherently a difficult task.
If we narrow down to products which have immediate returns to consumers, we run into many that impact the middle segments of the population - ones who are significantly more prosperous than the BOP populations, but not wealthy enough to be excluded from other things. Take credit, for instance. Due to asymmetric information (and general risk aversion on the part of lenders), markets left to themselves lead to under-provisioning of credit. Technology, therefore, turns out to be an excellent tool to remove informational barriers. One might argue that access to facebook doesn't have any benefits (thought many will disagree). However, when social media activity becomes a gateway to credit access, facebook can turn into a tool for social empowerment. Companies such as Lenddo are creating a new industry where big data can be unsed to create the next wave of financial inclusion. Removal of informational barriers can also lead to benefits in more traditional goods markets. This is especially true for small producers and traders, for whom access to information (and storage) can often be prohibility expensive. For example, the introduction of mobile phones in the early 2000s was seen to lead to an increase of 8% in the profits of fishermen in Kerala[1]. There were also more wide - ranging benefits, including a 4% reduction in the average price of fish in these areas.
However, we are still talking in the realm of the middle class. What has technology got for the people at the bottom of the pyramid? Can technology reasonably impact the lives of those struggling for food, energy and shelter? Once again, technology as a medium for spreading information can help address some of the very basic issues of survival for large swathes of the population. The Chhattisgarh PDS turnaround was aided by technology, albeit alongside other systemic changes. Something as simple as sending SMS notification to villagers when the PDS truck leaves for the fair price shop can reduce pilferage and increase foodgrain availability to the poor. Having reduced wastage and pilferage from 40-50% to less than 10% in a short span of time, Chhattisgarh has shown that technology can help address the needs of the poor.
In conclusion, if one views technology as an end in itself, the impact may be too diffused and long - term to care about, especially for a country like India with more pressing concerns. However, if one looks at technology as an enabler, and as a disruptor of non - tech sectors, then one can start seeing some of the benefits of technology vis-a-vis other more traditional interventions. At the end of the day, few interventions - including technology - would be effective in a vacuum. It needs to be supported by government will and space for innovation.
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1 - The Digital Provide: Information (Technology), Market Performance and Welfare in South Indian Fisheries Sector - Robert Jensen (The Quarterly Journal of Economics, Vol. 122, No. 3 - Aug 2007)
The trouble with evaluating the impact of most technology - based products is that the major impact happens through externalities. Therefore, if we try to measure the outcomes by the impact on individual households, we will always underestimate the impact of such products. There are also other issues. For example, increased attendance in couchsurfing gatherings has been observed to be positively related to a sense of belonging to the community; and hosting a guest shown to have a positive relationship with trust. However, in case the causal relationship runs in the opposite direction, could products like couchsurfing be making society worse off by segregating between two sections? Ignoring questions about negative consequences, let us focus on the more positive aspects. For example, independent media has often been shown to lead to many positive societal outcomes. However, the impact on the life of the marginal consumer would be quite low due to the externality problem. To add to that, because the consumer may not fully internalise the long - term benefits of these products, making fair comparisons inherently a difficult task.
If we narrow down to products which have immediate returns to consumers, we run into many that impact the middle segments of the population - ones who are significantly more prosperous than the BOP populations, but not wealthy enough to be excluded from other things. Take credit, for instance. Due to asymmetric information (and general risk aversion on the part of lenders), markets left to themselves lead to under-provisioning of credit. Technology, therefore, turns out to be an excellent tool to remove informational barriers. One might argue that access to facebook doesn't have any benefits (thought many will disagree). However, when social media activity becomes a gateway to credit access, facebook can turn into a tool for social empowerment. Companies such as Lenddo are creating a new industry where big data can be unsed to create the next wave of financial inclusion. Removal of informational barriers can also lead to benefits in more traditional goods markets. This is especially true for small producers and traders, for whom access to information (and storage) can often be prohibility expensive. For example, the introduction of mobile phones in the early 2000s was seen to lead to an increase of 8% in the profits of fishermen in Kerala[1]. There were also more wide - ranging benefits, including a 4% reduction in the average price of fish in these areas.
However, we are still talking in the realm of the middle class. What has technology got for the people at the bottom of the pyramid? Can technology reasonably impact the lives of those struggling for food, energy and shelter? Once again, technology as a medium for spreading information can help address some of the very basic issues of survival for large swathes of the population. The Chhattisgarh PDS turnaround was aided by technology, albeit alongside other systemic changes. Something as simple as sending SMS notification to villagers when the PDS truck leaves for the fair price shop can reduce pilferage and increase foodgrain availability to the poor. Having reduced wastage and pilferage from 40-50% to less than 10% in a short span of time, Chhattisgarh has shown that technology can help address the needs of the poor.
In conclusion, if one views technology as an end in itself, the impact may be too diffused and long - term to care about, especially for a country like India with more pressing concerns. However, if one looks at technology as an enabler, and as a disruptor of non - tech sectors, then one can start seeing some of the benefits of technology vis-a-vis other more traditional interventions. At the end of the day, few interventions - including technology - would be effective in a vacuum. It needs to be supported by government will and space for innovation.
---------------------------------
1 - The Digital Provide: Information (Technology), Market Performance and Welfare in South Indian Fisheries Sector - Robert Jensen (The Quarterly Journal of Economics, Vol. 122, No. 3 - Aug 2007)
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