Placing Value on InformationJackson Library University of North Carolina Greensboro P.O. Box 26170 Greensboro, NC 27402-6170
Society regards information as a commodity and the possession of it as an asset. Economists would like to account for information in the same way as physical assets, but no discipline has given us an accepted model for such treatment. Disciplines regard information differently, and it is more difficult to develop systems to measure information than physical commodities. The price system has been used to assign value to information, but does it provide the best means? Can librarians plan for the future, justifying increasing expenditures to their funding agencies, in the absence of a meaningful information measurement scheme?
What is Information Worth?
Information has become an element of commerce. In earlier times, success was based on such criteria as control of finance, physical resources, writing, food, fire or shelter. Today, successful people and businesses are those who control information: its development, access, analysis and presentation. We refer to our era as the "Information Age." We buy and sell information, sometimes with money and sometimes by trading it for other information. Information, as an element of commerce, is a commodity, yet there are no cogent, universally accepted accounting or economic theories of information.
There are various frameworks in which we try to view and define information, various attempts to measure it, decide what kind of value it has, and determine how much it is worth. For example, disciplines such as economics, accounting, sociology and behavioral science regard information in very different ways. Economists define information as phenomena that reduce uncertainty, and measure it in terms of exchange rates based on supply and demand. Accountants think of costs and benefits (debits and credits), while sociologists concern themselves with the net public good of information. Behaviorists study cognitive and behavioral change brought about by information. Clearly, placing value on information is not a straightforward, single-step process.
Information passes through many stages before it has value to anyone. It exists first in a latent state, waiting for the right paradigm or perspective, long before anyone recognizes it to be information. Then we realize that raw, unorganized data may be of some use. We collect it, organize it, analyze it and draw conclusions from it. Both the information and our conclusions can be communicated. Only when information has been comprehended, can we value it and respond to it.
A determination of the actual value of information can be made only at this final stage. Information has no value in itself; its value is derived from its understanding and subsequent application. Before this last stage we can do no more than estimate the value we expect it to have. Society values only the product, or result, of information.
Information as Commodity
Business regards information as a commodity and the possession of it as an asset. Economists would like to treat and account for information in the same way as physical assets. However, no discipline has given us an accepted model for such treatment although analogies abound.
Information can, to some extent, be valued and costed in the same way as the other assets of organizations, and included in their financial reports. As inventory, information goes through the value-added stages of raw material (events or processes to be measured), work-in-progress (information in development), and finished goods (marketable information). Information gathering and presentation require capital investment and human labor. Besides being costly to acquire, information incurs management costs. Like physical assets, information faces quality control inspection before it can be distributed. Information is subject to just-in-time requirements, just like physical inventory. Left on its own, its value may depreciate over time.
At each stage or level of information, there are specialized vendors and customers. Seekers of information may overpay and providers of information may undercharge because they do not differentiate among levels and varieties of information transactions. This is due to problems in identification and measurement of information.
Information and the Price System
Joseph Stiglitz refers to the belief of early twentieth century economists that the decentralized price system led to the efficient allocation of resources. "It was hoped," says Stiglitz, that "the same kinds of tools that had provided insights into other branches of economics would work in the 'economics of information'." In fact, to Stiglitz the price system is not a satisfactory model for the economy since it does not acknowledge "problems of information," the ways in which information differs from physical commodities.1
John Perry Barlow, referring to "information commerce," sketched an outline of the non-monetary ways that society assigns value to information. Generally, Barlow says, information increases in value as it becomes more familiar, unlike physical goods that are more valuable if they are scarce. Sometimes scarcity does increase the value of information as when, for example, the possessor of a secret profits from knowing it. In these instances timing is as much the determinant of value as is the information itself. The person who is closest to the information at the time it is produced is the one who benefits from implementing it. The information becomes less valuable, less relevant, as the interval between its formation and its use increases. Barlow also points out that the value we place on information is affected by the reputation or point of view of the provider. We value the opinions of people recognized as experts, and those people sell us their way of perceiving the world at the same time as they provide us with information.2
It is very difficult to measure the value of information according to the price system. Its characteristics make it both like and unlike physical inventory:
The Librarian's View of Information
Librarians view themselves as information professionals. How do they view information? In the past, librarians have busied themselves most with the communication or transmittal stage of the information process. Others do the collecting and organizing of information writers, artists, and publishers, for example. Librarians present this gathered content and make it available. While a librarian must be aware of content, knowing what it is and where to find it, his or her chief concern is with the presentation of content, not with its production.
At present librarians are keenly interested in the format in which information appears, and with its means of presentation. Many library conferences and journal articles focus on the characteristics of print versus electronic formats, or discuss commercial enterprises such as content mediators that librarians fear may encroach on territory they consider their own.
In the literature of library science there is much discussion of value-added information services. Both librarians and their clients have become concerned about the glut of information, asking how to eliminate needless and worthless data in the search for appropriate content. For library users, there are very real barriers to accessing, analyzing, and applying information, and librarians add value to information whenever they reduce the barriers to it. Value is added in easing the finding of the most appropriate, complete source of information, and in easing connections with information. Value is also added in easing the analysis and processing of information, and in facilitating its application. Consultants of all sorts know this well, and it is plain to see how much value our society places on providing hand-holding and turn-key solutions.
For all their concern with providing information access, giving good service to users, and adding value, librarians are hampered by the fact that information cannot yet be quantified and valued in any measurable way. Each element of information-handling requires its own accounting: acquiring information, presenting information, analyzing information, and so on. What is the relationship between the expense incurred in collecting information and the value of that information? This is a troublesome question for librarians. They must plan for the future, justifying increasing expenditures to their funding agencies, in the absence of a meaningful scheme to measure the value of information.
New Metaphors for Information
Stiglitz cites his 1976 and 1980 marketing studies done with Sanford J. Grossman. These studies showed that "if information is costly, there must be an equilibrium amount of disequilibrium--persistent discrepancies between prices and 'fundamental values' that provide incentives for individuals to obtain information." Stiglitz and Grossman concluded that "the only information that could be efficiently distributed was costless information."4
Does Stiglitz' reference to "costless information" imply that it is neither necessary nor possible to quantify information in terms of currency? Information is only one of many non-physical, non-material things we value. Do we need to measure it in dollar terms any more than we need to measure satisfaction that way, or self-expression, or self-fulfillment?
In the past, society's attempts to assign a dollar value to information and knowledge have had very uneven results. In academic life, a scholar's reputation depends on the perceived value of the knowledge she or he possesses. Society pays professionals such as doctors and lawyers highly for their expertise. Yet the stereotype of the impoverished artist or musician is based on a failure of the currency model when it comes to valuing ideas. At what stage or level do ideas and information become truly valuable to us? Is the satisfaction of merely possessing information sufficient in itself? Has the information economy become so fundamental to business and to our way of life that we must find a way to equate ideas with cash? Or, is an upheaval in our value system implied here, a need for a new foundation for commerce?
Librarians have long recognized the interrelated nature of knowledge, the many ways in which information produced in one discipline is integrated into another. Rather than finding analogies for valuing information in the fields of business, economics and accounting, information scientists could shape metaphors from other models. For example, information could be compared with the processes of metabolism:
Money is a means of exchange, a way of measuring needs and wants, status and social expectations, scarcity and satiety, quantity and quality, usefulness and satisfaction, and so forth. However, the price system is an aggregate system. We cannot easily determine value at the individual level. It is obvious that price is rarely equivalent to intrinsic value. Perhaps value is, at root, a metaphysical construct. Is money the best surrogate for value? Could information itself better represent value? Information is a larger and more inclusive concept than money. Could information become the currency of a new barter system, a true information economy?
1. Joseph E. Stiglitz, "The Contributions of the Economics of Information to Twentieth Century Economics,"Quarterly Journal of Economics 115 (Nov. 2000): 1441-1478.
2. John Perry Barlow, "The Economy of Ideas,"Wired 2 (March 1994): 84-90, 126-129. Available:www.wired.com/wired/archive/2.03/economy.ideas.html (13 Febrary 2002)
3. Joseph E. Stiglitz, "The Contributions of the Economics of Information to Twentieth Century Economics,"Quarterly Journal of Economics 115 (Nov. 2000): 1441-1478. p. 1449.
4. Joseph E. Stiglitz, "The Contributions of the Economics of Information to Twentieth Century Economics,"Quarterly Journal of Economics 115 (Nov. 2000): 1441-1478. p. 1460.