Reading past the executive summary: how public executives can more actively engage big data.

• Author: Decker, John P.
• Position: Cover story

For centuries, governments have used data to "see" the world and measure the effect of policies. James C. Scott, the professor who popularized this metaphor, cites the example of 19th-century Germany, where the government used narrow surveys to manage forests held by the Prussian ruling families. Land assets were managed to maximize short-term revenue (i.e., timber yield). According to Scott, policymakers applied a particular "fiscal lens" (1) that colored their understanding. In the end, because that lens was myopic, there was damage to the forests, along with other negative long-term effects that policymakers didn't anticipate.

The lesson? Small data sets can represent a narrow or blinkered view. So-called "big data" has changed the way that governments "see" the world, particularly with regard to fiscal policies. Big data casts a wide net, which helps improve the ways in which data are collected and analyzed. In other words, it helps governments see the big picture.

Big data has the power to shape many public-finance decisions, including describing past budgets, evaluating programs, managing resources, and preparing for investments. It informs policy discussions and affects planning at all levels of government. It determines allocations of billions of dollars each day. As big data becomes increasingly accessible, it's important to understand what it is and how best to use it.

WHAT IS BIG DATA?

"Big data" is an elastic term that has been used to describe many types of digital information. It has been applied to an array of data or information streams that go beyond the large data sets modern public finance relies on. (2) Three aspects of big data help distinguish it from other types of data: volume, velocity, and variety.

Volume. More information is digitized each year, making it available for manipulation, display, and analysis. Though not all data sets are available or useful to the public executive, some are.

Velocity. Digital capture, storage, and manipulation create information at an accelerating rate. The speed and accessibility of these data will challenge fiscal executives to keep pace with the most current and relevant information streams available.

Variety. Digital data can generate information from an ever-expanding set of sources. New information can be gleaned by linking two data sets by a common feature, such as a name or social security number. For years, states linked their tax databases with the Internal Revenue Service to find taxpayers. Can other data sets be linked in similar ways to yield new insights? If so, what can these linked databases tell the executive that unlinked sets do not?

Private-sector analysts have used global positioning signals from cell phones and images from social media to generate information on traffic and retail demand. Can these same data streams be used in the public sector to yield information to mitigate road congestion or to anticipate demand for park visits?

BENEFITS OF BIG DATA

The greater volume, speed, and variety of information now available present tantalizing opportunities for expanding insight. Public executives can use their access to big data to help meet their fiscal responsibilities in a variety of practical ways.

Improved Cash Management.

Public finance executives depend on a steady flow of data to manage their large and often complex operations. They may use this information to...