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How Open Data is closing Poverty

“Unfortunately, many Americans live on the outskirts of hope—some because of their poverty, and some because of their color, and all too many because of both. Our task is to help replace their despair with opportunity. This administration today, here and now, declares unconditional war on poverty in America.” – President Lyndon B. Johnson, January 8, 1964

Since the declaration of war on poverty, there have been several intervention programs aimed at closing the gap on poverty and inequality. Notable among these anti-poverty programs is Medicaid, Medicare, Earned Income Tax Credit (EITC); Temporary Assistance for Needy Families, TANF; and Supplemental Nutritional Assistance Program (SNAP) – these programs have seen increased subscription rates over the years. But how have these initiatives affected the number of people living in poverty? Data presented by the Census Bureau from the Current Population Survey (CPS), 2015 Annual Social and Economic Supplement (ASEC), estimated that 46.7 million people in the United States were living in poverty by the end of 2014. According to the Census Bureau, poverty had fallen by only about four percentage points from 19 percent in 1964 to 15 percent in 2014. This modest progress calls for national, state, and local governments to rethink of new and innovative approaches to dealing with the situation.

Inarguably, the most effective way to significantly reduce poverty is through the creation of well-paying jobs. But what strategies can local governments pursue to empower their people to create the jobs that could better the lives of their residents? In recent years, there has been a tremendous advancement in information and technology innovation, making it possible for citizens to use data to answer economic questions, and develop tools and applications to improving living standards. Governments can build on this foundation by pursuing policies that accelerate providing residents unfettered access to open data. Many cities are bringing their residents into decision-making processes. However, these engagements can be made more intentional to alleviate poverty.

Government Open Data Practices

Many city governments are increasingly embracing and pursuing Open Data policies and practices. Across all levels of governance – national, state, county, and cities –  open data is now widely accepted as an important governance innovation. Open Data is publicly available data in a machine-readable format, free of charge for use or reuse by anyone for any purpose without restrictions from copyright or any form of private or government control. Governments collect a variety of data from individuals, organizations, research institutions, and companies. Making data available and accessible to the public promotes citizen participation, fosters government transparency, and accountability and improves the efficiency of service delivery and encourages innovation. Opening data holds promise for improving the quality of lives of residents but quantifying their effects present some critical issues. Ultimately, open data initiative must address questions about how it contributes to poverty reduction, promotes job creation, and raises economic value.

Connecting Open Data with Poverty Reduction Strategies

Improving the quality of lives, fighting poverty, and bringing prosperity to residents are important issues that lie at the core of almost every city government agenda. Through the use of data and evidence, cities can develop poverty reduction strategies that expand residents’ access to information, social infrastructure, and services, and improve livelihoods. City governments collect a significant amount of data that is valuable to a vast cross-section of the public. By making these data accessible, usable, and freely available without restrictions, cities can enable the private sector to leverage public data to increase economic value. City governments can connect open data initiatives and the use of data to:

  • Correct information asymmetry: Transactions where one party has more or better information than the other often create an environment of friction, slowing down economic activities. By publishing data openly, people may be able to make better use the information helping them to make informed decisions. This can lead to the breaking down of information gaps across industries, allowing enterprises to share benchmarks, standards, and best practices that raise productivity.
  • Enhance economic value: Publish data and make it meaningful for use by the public in a way that increases value. Open data from the National Weather Service supports a private weather industry worth over $1.5 billion per year. The use of NASA Landsat data publicly available is estimated to benefit the US economy by $1.8 billion dollars.
  • Invest in skill development: Several tools and applications are available to create value from data. People empowered with the skills to use these tools not only find jobs but also contribute to city revenue through income taxes. Some development companies like Cloudmade leverages OpenStreet Map data to create comprehensive location data and generates revenue by supplying the information to developers and publishers of geo-enabled products.
  • Promote innovation competition: Create opportunities for people to engage and innovate using publicly available data and support ideas that have the potential to propel entrepreneurship and service improvement. For example, New York BigApp Competition, an annual program that challenges participants to create solutions using data from New York’s open data portal have resulted in the creation of applications and tools for public use.  
  • Empower livelihoods: Data can reduce the costs of both public and private transactions, helping to generate an economic surplus from better products and services. Empower residents with data resources and information to decide what type of services and products they choose. By creating price and product transparency, and feedback mechanisms, people can better manage their time and resources and save cost. For example, a study by Truven Health Analytics showed how price transparency for Americans with employer-sponsored insurance could save the nation over $36 billion per year.

Open Data – Opening Jobs

As discussed earlier, one of the most potent weapons to winning the war against poverty is well-paying jobs. Therefore, cities’ open data practices must drive job creation, and expand and promote business growth. Already, public information is stimulating innovations, creating new markets, and promoting economic growth. It is helping businesses to optimize operations, improve resource allocations, expand activities, and promote an environment for investments. Many Open Data Startups, small and medium companies, new products and services have resulted from the availability of public data. Businesses such as BrightScope, a California financial information startup, uses government data to help consumers understand fees associated with their retirement savings accounts. Services including GPS information, financial services, and software applications have generated new business opportunities and have created jobs.

US Open Data 500 companies are a few corporations using publicly available data to enhance value, create jobs, and develop solutions that maximize revenue. For instance, The Weather Channel and Garmin develop consumer, aviation, and marine technologies using open government data. Furthermore, the availability of free real-world datasets is serving as an efficient resource to facilitate training and skills development for data analysts, data scientists, statisticians, financial analysts, GIS analysts, and others to adequately take advantage of the information systems, technological, and analytical job opportunities.