Modelling the (Secure) Data Economy

Forthcoming to the Review of Economic Studies, the paper “A Model of the Data Economy”: a micro-founded model for optimal data policy using a recursive representation to value data. According to its calibration to the US economy, the GDP mis-measurement due to missing value of data has been as high as 6% in 2018.

In the model, the same data can be sold multiple times, much like our paper “The Valuation of Secrecy and Privacy Multiplier”. And even though the model doesn’t consider the effects of secure computation or any other privacy-preserving technique, it conveniently defines a variable ι, the fraction of sold data that is lost when the firm sells to each other: using secure computation, this fraction can be kept to a minimum thus increasing the valuation and returns in a (secure) data economy.