1932
0
  1. Home
  2. A-Z Publications
  3. Annual Review of Economics
  4. Volume 15, 2023
  5. Article

Annual Review of Economics

Volume 15, 2023

Data and Markets

Abstract

Big data is changing every corner of economics and finance. The largest firms in the US economy are valued chiefly for their data. Yet, these data are largely excluded from macroeconomic and finance research. We review work and relevant tools for measuring economic activity, market power, data markets, and the role of data in financial markets. We also highlight areas where future work is needed.

Keyword(s): big data, data economy, data feedback loop, data markets, data valuation, financial data, JEL D40, JEL D46, JEL D80, JEL D83, JEL E01, JEL E22
Loading

Article metrics loading...

/content/journals/10.1146/annurev-economics-082322-023244
2023-09-13
2025-04-13
The full text of this item is not currently available.

Literature Cited

  1. Abis S, Veldkamp L. 2020.. The changing economics of knowledge production. Unpublished manuscript , Columbia Univ., New York:
     [Google Scholar]
  2. Acemoglu D. 2002.. Technical change, inequality, and the labor market. . J. Econ. Lit. 40:(1):7–72
     [Google Scholar]
  3. Acemoglu D, Makhdoumi A, Malekian A, Ozdaglar A. 2022.. Too much data: prices and inefficiencies in data markets. . Am. Econ. J. Microecon. 14:(4):218–56
     [Google Scholar]
  4. Admati AR. 1985.. A noisy rational expectations equilibrium for multi-asset securities markets. . Econometrica 53:(3):629–58
     [Google Scholar]
  5. Aghion P, Caroli E, Garcia-Penalosa C. 1999.. Inequality and economic growth: the perspective of the new growth theories. . J. Econ. Lit. 37:(4):1615–60
     [Google Scholar]
  6. Agrawal A, Gans J, Goldfarb A. 2018.. Prediction Machines: The Simple Economics of Artificial Intelligence. Boston, MA:: Harvard Bus. Rev. Press
     [Google Scholar]
  7. Agrawal A, Gans J, Goldfarb A. 2019.. Economic policy for artificial intelligence. . Innovat. Policy Econ. 19:(1):139–59
     [Google Scholar]
  8. Ali SN, Lewis G, Vasserman S. 2023.. Voluntary disclosure and personalized pricing. . Rev. Econ. Stud. 90:(2):538–71
     [Google Scholar]
  9. Allcott H, Braghieri L, Eichmeyer S, Gentzkow M. 2020.. The welfare effects of social media. . Am. Econ. Rev. 110:(3):629–76
     [Google Scholar]
  10. Begenau J, Farboodi M, Veldkamp L. 2018.. Big data in finance and the growth of large firms. . J. Monet. Econ. 97::71–87
     [Google Scholar]
  11. Benzell SG, Brynjolfsson E. 2019.. Digital abundance and scarce genius: Implications for wages, interest rates, and growth. NBER Work. Pap. 25585
    [Google Scholar]
  12. Berg T, Burg V, Gombović A, Puri M. 2020.. On the rise of FinTechs: credit scoring using digital footprints. . Rev. Financ. Stud. 33:(7):2845–97
     [Google Scholar]
  13. Bergemann D, Bonatti A. 2022.. Data, competition, and digital platforms. Unpublished manuscript , Yale Univ., New Haven, CT:
     [Google Scholar]
  14. Bergemann D, Bonatti A, Gan T. 2022.. The economics of social data. . RAND J. Econ. 53:(2):263–96
     [Google Scholar]
  15. Bonatti A, Cisternas G. 2020.. Consumer scores and price discrimination. . Rev. Econ. Stud. 87:(2):750–91
     [Google Scholar]
  16. Brynjolfsson E, Collis A, Diewert WE, Eggers F, Fox KJ. 2019a.. GDP-B: accounting for the value of new and free goods in the digital economy. NBER Work. Pap. 25695
    [Google Scholar]
  17. Brynjolfsson E, Collis A, Eggers F. 2019b.. Using massive online choice experiments to measure changes in well-being. . PNAS 116:(15):7250–55
     [Google Scholar]
  18. Brynjolfsson E, Hitt LM, Yang S. 2002.. Intangible assets: computers and organizational capital. . Brook. Pap. Econ. Act. 2002:(1):137–81
     [Google Scholar]
  19. Brynjolfsson E, McElheran K. 2016.. Data in action: data-driven decision making in US manufacturing. US Census Bur. Cent. Econ. Stud. Pap. CES-WP-16-06, Rotman Sch. Manag. Work. Pap. 2722502 , Washington, DC & Toronto, Can.:
     [Google Scholar]
  20. Byrne D, Corrado C. 2019.. Accounting for innovation in consumer digital services: It still matters. NBER Work. Pap. 26010
    [Google Scholar]
  21. Cabrales A, Gossner O, Serrano R. 2013.. Entropy and the value of information for investors. . Am. Econ. Rev. 103:(1):360–77
     [Google Scholar]
  22. Caplin A, Leahy J. 1994.. Business as usual, market crashes, and wisdom after the fact. . Am. Econ. Rev. 84:(3):548–65
     [Google Scholar]
  23. Chen L, Huang Y, Ouyang S, Xiong W. 2021.. The data privacy paradox and digital demand. NBER Work. Pap. 28854
    [Google Scholar]
  24. Crémer J, Crawford GS, Dinielli D, Fletcher A, Heidhues P, et al. 2021.. Fairness and contestability in the Digital Markets Act. Unpublished manuscript , Univ. Toulouse, Toulouse, Fr:
     [Google Scholar]
  25. De Loecker J, Eeckhout J, Unger G. 2020.. The rise of market power and the macroeconomic implications. . Q. J. Econ. 135:(2):561–644
     [Google Scholar]
  26. Demsetz H. 1982.. Barriers to entry. . Am. Econ. Rev. 72:(1):47–57
     [Google Scholar]
  27. Eckbo BE, ed. 2008.. Handbook of Empirical Corporate Finance. Amsterdam:: Elsevier
     [Google Scholar]
  28. Eeckhout J, Veldkamp L. 2022.. Data and market power. NBER Work. Pap. 30022
    [Google Scholar]
  29. Epstein LG, Farhi E, Strzalecki T. 2014.. How much would you pay to resolve long-run risk?. Am. Econ. Rev. 104:(9):2680–97
     [Google Scholar]
  30. Fajgelbaum PD, Schaal E, Taschereau-Dumouchel M. 2017.. Uncertainty traps. . Q. J. Econ. 132:(4):1641–92
     [Google Scholar]
  31. Farboodi M. 2022.. Data markets and digital platforms. Unpublished manuscript , MIT, Cambridge, MA:
     [Google Scholar]
  32. Farboodi M, Matray A, Veldkamp L, Venkateswaran V. 2022a.. Where has all the data gone?. Rev. Financ. Stud. 35:(7):3101–38
     [Google Scholar]
  33. Farboodi M, Singal D, Veldkamp L, Venkateswaran V. 2022b.. Valuing financial data. NBER Work. Pap. 29894
    [Google Scholar]
  34. Farboodi M, Veldkamp L. 2020.. Long-run growth of financial data technology. . Am. Econ. Rev. 110:(8):2485–523
     [Google Scholar]
  35. Farboodi M, Veldkamp L. 2022.. A model of the data economy. NBER Work. Pap. 28427
    [Google Scholar]
  36. Frankel A, Kamenica E. 2019.. Quantifying information and uncertainty. . Am. Econ. Rev. 109:(10):3650–80
     [Google Scholar]
  37. Frost J, Gambacorta L, Huang Y, Shin HS, Zbinden P. 2019.. Bigtech and the changing structure of financial intermediation. . Econ. Policy 34:(100):761–99
     [Google Scholar]
  38. Gan J, Riddiough TJ. 2008.. Monopoly and information advantage in the residential mortgage market. . Rev. Financ. Stud. 21:(6):2677–703
     [Google Scholar]
  39. Goldfarb A, Tucker C. 2011.. Online display advertising: targeting and obtrusiveness. . Mark. Sci. 30:(3):389–404
     [Google Scholar]
  40. Goldfarb A, Tucker C. 2019.. Digital economics. . J. Econ. Lit. 57:(1):3–43
     [Google Scholar]
  41. Goldstein I, Jang W, Karolyi GA 2019.. Special issue: to Fin Tech and beyond. . Rev. Financ. Stud. 32:(5
     [Google Scholar]
  42. Gottieb J, Weinberg A. 2019.. Catch them if you can: how leaders in data and analytics have pulled ahead. . QuantumBlack AI by McKinsey, Sept. 19
    [Google Scholar]
  43. Grossman SJ, Stiglitz JE. 1980.. On the impossibility of informationally efficient markets. . Am. Econ. Rev. 70:(3):393–408
     [Google Scholar]
  44. Gul F, Pesendorfer W. 2001.. Temptation and self-control. . Econometrica 69:(6):1403–35
     [Google Scholar]
  45. Gutierrez G, Philippon T. 2017.. Investmentless growth: an empirical investigation. . Brook. Pap. Econ. Act. 48:(2):89–190
     [Google Scholar]
  46. Hau H, Huang Y, Shan H, Sheng Z. 2019.. How FinTech enters China's credit market. . AEA Pap. Proc. 109::60–64
     [Google Scholar]
  47. He Z, Huang J, Zhou J. 2020.. Open banking: credit market competition when borrowers own the data. NBER Work. Pap. 28118
    [Google Scholar]
  48. Hulten C, Nakamura L. 2017.. Accounting for growth in the age of the Internet: the importance of output-saving technical change. NBER Work. Pap. 23315
    [Google Scholar]
  49. Ilut C, Schneider M. 2014.. Ambiguous business cycles. . Am. Econ. Rev. 104:(8):2368–99
     [Google Scholar]
  50. Jones CI, Tonetti C. 2020.. Nonrivalry and the economics of data. . Am. Econ. Rev. 110:(9):2819–58
     [Google Scholar]
  51. Kacperczyk M, Nosal J, Stevens L. 2019.. Investor sophistication and capital income inequality. . J. Monet. Econ. 107:(C):18–31
     [Google Scholar]
  52. Kadan O, Manela A. 2019.. Estimating the value of information. . Rev. Financ. Stud. 32:(3):951–91
     [Google Scholar]
  53. Kadan O, Manela A. 2020.. Liquidity and the strategic value of information. Unpublished manuscript , Washington Univ. St. Louis, St. Louis, MO:
     [Google Scholar]
  54. Kirpalani R, Philippon T. 2020.. Data sharing and market power with two-sided platforms. NBER Work. Pap. 28023
    [Google Scholar]
  55. Kolanovic M, Krishnamachari RT. 2017.. Big data and AI strategies: machine learning and alternative data approach to investing. Rep. , Glob. Quant. Deriv. Strategy, J.P. Morgan, New York:
     [Google Scholar]
  56. Krusell P, Ohanian LE, Ríos-Rull JV, Violante GL. 2000.. Capital-skill complementarity and inequality: a macroeconomic analysis. . Econometrica 68:(5):1029–53
     [Google Scholar]
  57. Kyle AS. 1989.. Informed speculation with imperfect competition. . Rev. Econ. Stud. 56:(3):317–55
     [Google Scholar]
  58. Lambrecht A, Tucker CE. 2015.. Can big data protect a firm from competition? Unpublished manuscript , Lond. Bus. Sch., London:
     [Google Scholar]
  59. Liu Z, Sockin M, Xiong W. 2020.. Data privacy and temptation. NBER Work. Pap. 27653
    [Google Scholar]
  60. Lorenzoni G. 2009.. A theory of demand shocks. . Am. Econ. Rev. 99:(5):2050–84
     [Google Scholar]
  61. Martin KE. 2020.. Ethical issues in the big data industry. . In Strategic Information Management: Theory and Practice, ed. RD Galliers, DE Leidner, B Simeonova , pp. 450–71 London:: Routledge
     [Google Scholar]
  62. Mihet R. 2021.. Financial technology and the inequality gap. Res. Pap. Ser. 21-04 , Swiss Finance Inst., Zürich:
     [Google Scholar]
  63. Mitchell T, Brynjolfsson E. 2017.. Track how technology is transforming work. . Nature 544:(7650):290–92
     [Google Scholar]
  64. Morton FMS, Dinielli DC. 2020.. Roadmap for a digital advertising monopolization case against Google. . Omidyar Network, June 1
    [Google Scholar]
  65. NIST. 2019.. NIST big data interoperability framework. NIST Spec. Publ. 1500-1r2 , Natl. Inst. Stand. Technol., US Dep. Commer., Washington, DC:. https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.1500-1r2.pdf
    [Google Scholar]
  66. Ordonez G. 2013.. The asymmetric effects of financial frictions. . J. Political Econ. 121:(5):844–95
     [Google Scholar]
  67. Ouyang S. 2021.. Cashless payment and financial inclusion. Unpublished manuscript , Princeton Univ., Princeton, NJ:
     [Google Scholar]
  68. Peress J. 2004.. Wealth, information acquisition and portfolio choice. . Rev. Financ. Stud. 17:(3):879–914
     [Google Scholar]
  69. Peress J. 2010.. The tradeoff between risk sharing and information production in financial markets. . J. Econ. Theory 145:(1):124–55
     [Google Scholar]
  70. Prat A, Valletti TM. 2022.. Attention oligopoly. . Am. Econ. J. Microecon. 14:(3):530–57
     [Google Scholar]
  71. Rosen S. 1981.. The economics of superstars. . Am. Econ. Rev. 71:(5):845–58
     [Google Scholar]
  72. Saunders A, Brynjolfsson E. 2016.. Valuing information technology related intangible assets. . MIS Q. 40:(1):83–110
     [Google Scholar]
  73. Savov A. 2014.. The price of skill: performance evaluation by households. . J. Financ. Econ. 112:(2):213–31
     [Google Scholar]
  74. Shiller BR. 2013.. First degree price discrimination using big data. Unpublished manuscript , Brandeis Univ., Waltham, MA:
     [Google Scholar]
  75. Tambe P, Hitt L, Rock D, Brynjolfsson E. 2020.. Digital capital and superstar firms. NBER Work. Pap. 28285
    [Google Scholar]
  76. Veldkamp L. 2005.. Slow boom, sudden crash. . J. Econ. Theory 124:(2):230–57
     [Google Scholar]
  77. Wilson R. 1975.. Informational economies of scale. . Bell J. Econ. 6::184–95
     [Google Scholar]
  78. Zingales L. 2017.. Towards a political theory of the firm. . J. Econ. Perspect. 31:(3):113–30
     [Google Scholar]
/content/journals/10.1146/annurev-economics-082322-023244
Loading
  • Article Type: Review Article

Most Cited Most Cited RSS feed

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error