Investigating CC’s welfare impact, the second step

Tal Niv, October 21st, 2010

CC has recently started thinking more rigorously about its contribution to the world. See the first and introductory posts in this series.

After I found what I believe to be a satisfactory formulation for what CC actually does, which divides the CC enterprise into three planes, transactional, institutional, and normative, as I described to you in the former post — another concern began to harass me in the shower, (and I mean this very literally).

This time the quandary had to do with the abundance of fields and activities which CC supports: CC operates to contribute to a wide variety of human endeavors. Part of its contribution can be classified under widely acknowledged topical fields, another part under budding fields, and yet another, which is slightly different than the other two, as a contribution to specific modes of creation.

In the first group I include art on all its types, basic science and open education. Among the second group I count user-generated-content enterprises, such as online commenting, blogging and contribution to knowledge bases like Wikipedia. The third group hovers the other two, since it pertains to the direct contribution to the method. In a nutshell, it refers to the welfare contribution of the improvement and suffusion of the new type of collaboration which is marked by the following attributes: (1) it involves many different individuals, usually a flexible group of people that changes dynamically with contributors leaving it and joining it (2) their product is thus highly flexible, transforming through time (3) the individual contributions are performed at different moments in time, and (4) the contribution can vary in size, from infinitesimally tiny to extremely extensive. Through the facilitation of this new type of collaboration, different interacting communities are being created, which in itself can be counted as a sphere of contribution.

So what’s the problem?

Clearly what one has to do in order to evaluate the contribution of each of these, is to scrutinize each in order to derive the proper metrics for quantification. But on closer inspection of the issue you necessarily come to realize that all of these fields of contribution have some unquantifiable quality which makes metrics-identification slightly complicated. Yes… unlucky me, CC has handpicked a set of fields that are quite resistant to measurement, each for its own reason:

Art. Nobody really wants to quantify art. Art in utilitarian terms… not very palatable, you have to admit. Thinking in pecuniary terms might imply that the contribution of art is merely its price, and would undermine the value of the very engagement in art, as well as the value of works which have not had the good fortune of being auctioned or sold.

Basic science is likewise a “tough cookie” for measurement. Not least because thinking just in terms of end products fails to account for the advantages of the learning process and some of the outputs of basic science are extremely hard to predict.

Open education… oh well, difficult to quantify in its own stead. How can one begin to account for the contribution that extended access has? That active over passive consumption of material has in terms of effectiveness of the learning and teaching process? And how does one discount the cost of degraded outputs which are invariably part of the contribution of educational material which has not undergone the same rigorous screening process that commerciality putatively mandates that it undergo?

Harder still, what’s the value of a collaborative encyclopedia? Is it that aggregation of the separate contributions, in many cases almost negligible? What is the contribution of a post that is published in the open? Of comments to these posts? Again, these are the same problems, overburdened by extrinsic costs that must be accounted for too.

All of these enterprises have a basic attribute which I considered as a separate issue and that is the contribution which ensues directly from increased collaboration. And how the (#*&(@&!# does one begin to analyze the beneficial impact that increased collaboration, cooperation and flexible creative communities has?

So, because hyperventilating in the shower is dangerous, I reminded myself that it cannot be that I am the first person who is attempting to tread this road. Except collaboration. I am pretty sure that I haven’t seen any separate consideration of the direct value of collaboration. So as an aside, let me just explain why I am resigned that it is quite necessary to think of collaboration as a separate matter: First, because there are new topical fields created by virtue of these new modes of interaction and these we will fail to consider, analyzing from a strictly topical angle. Second, collaboration itself has positive impact that goes much further than the benefits to the actual activity, creating immense positive externalities to an abundance of distinct enterprises that follow it.

To get back to what I was saying before, I did find out that I wasn’t the first one to try to find a similar path. So I’ll just describe the very first ideas I drew from other researchers.

The first one I choose to denominate as the devil’s advocate approach, which is basically: Don’t even try. Don’t try to measure; It’s all good; Its art; it’s science; it’s learning; its collaboration; these are fantastic things. And measuring will just downgrade the general awe with which everybody considers these human activities. I was tempted, but thought I’d better think of something else.

So my first real attempt to stand on the shoulders of giants was to think in terms of strict macroeconomic gauges. After all, this is the natural direction for the measurement of the contribution of any enterprise to welfare. Also, so many before us have chosen this path: The US copyright industries, for example, have come up with their report (Look, for example, for Stephen E. Siwek’s Copyright Industries in the U.S. Economy: The 2006 Report, prepared for the International Intellectual Property Alliance (IIPA), Nov 2006) after WIPO produced its Guide on Surveying the Economic Contribution of the Copyright-Based Industries, and after many different countries produced such similar reports. This has likewise been the method employed for the preparation of the US fair-use industries report, analyzing the fair-use industries contribution to the revenue, value added, employment, productivity and exports.

So why don’t I believe that this is the solution for CC? Well, I have both general and practical reasons:

As for the general incongruence –

First, most of the macroeconomic measures are nation-centric, while CC is a global enterprise which sets to advance global welfare. Pure aggregation of the macroeconomic contributions of CC to each country is not a solution because it can’t show us whether CC manages its goal to obtain global optimization.

Second, macroeconomic measures do not account for non-market transactions. In other words, activities that are not directly paid for will not contribute to these measures. And yet the promotion of non-market interactions is at the core of CC’s contribution, which means that we can’t settle for measures that are not set to estimate these contributions directly.

In truth, I am not the first to note these shortcomings of macroeconomic measures. The World Bank, for example, despite being content with measuring the total wealth as the net present value of future consumption, came up with a measure for what it deems “intangible capital”. This measure is calculated as the difference between total wealth and the sum of produced and natural capital. According to the World Bank, this number “necessarily includes human capital—the sum of knowledge, skills, and know-how possessed by the population. It also includes the institutional infrastructure of the country as well as the social capital—the level of trust among people in a society and their ability to work together toward common goals.”

I realize this sounds promising. Still, I don’t think it is the answer for CC. First, because intangible capital contribution is a primary area of its contribution, which means that it requires a gauge that measures it directly and vicariously, as a complement. The second and related reason is that CC is contributing to both monetary and non-monetary interactions and the calculation of value must consider the mutual influences. My third qualm with this measure is more fundamental than practical: even when we are coming to evaluate CC’s contribution, it seems pertinent to remember that the very foundations on which CC has been established have to do with the presumption that the consumption stream cannot fully account for human and social capital or for an optimal institutional infrastructure. This means that even these measures would fail to represent the range of contribution of the CC enterprise, because they are complementing measures that do not account for all the relevant welfare dimensions.

As for the practical incongruence –

First, Macroeconomic measures are so broad and all-encompassing that it makes one wonder how she can possibly isolate the separate contribution CC has on the sum of Consumption, Investment, Government Spending and Net Exports, (and, by the way, the former reports on other enterprise do not seem to bridge this difficulty.)

Second, the norm category of contribution (3rd pillar of contribution from the previous post in this series) seems to be almost categorically at odds with macroeconomic estimation in the sense that they stand on distinct foundations: The macroeconomic set of measures is strictly utilitarian, whereas the norm pillar has both a utilitarian aspect as well as one which creates the proper environment against which utility will later be estimated.

To repeat, CC is operating in the norm space to recalibrate the creative space in a way that will induce more value from a utilitarian perspective, but it is also acting according to a set of beliefs with respect to how the fields of its operation ought to operate from a different moral perspective; in a way that is more collaborative and free. So although it is sensible to ask whether this recalibration of norms is beneficial to the aggregate welfare, it is a question, the answer to which will fail to expose the entire picture. If that makes sense.

What to do instead?

Well… good question. Any ideas?

I can only tell you where I decided to venture, and you can tell me what you think about it: I have come to notice that more often than not, CC’s contribution is fully captured by value measures which can then be translated to the more general macroeconomic sphere (if one is so inclined). In other words, I realized it is not my job, or not part of this project to look beyond CC’s direct impact, because that will do nothing to promote the efficacy, specificity, soundness or integrity of the evaluation. If anything, it might add an unnecessary level of complication and this is one circumstance in which you simply do not want to do that.

Particularly, what I suggest is to measure the incremental contribution of CC in terms of quality, quantity and variability of collaboration enterprises. All three should be measured across the different fields, under the different value categories, (transactional, institutional and normative), and as they pertain to both productive and consumptive use. What I mean by quality, quantity and variability will be described in more length in the coming posts, but what’s relevant here is that once we have these estimates for CC’s contribution, others should be able to use them to instruct their studies of wider economic measures. At least that’s the idea.

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