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Personal data ownership drives market transparency and empowers consumers

The White House added a community for the "smart disclosure" of consumer data to Data.gov.

On Monday morning, the Obama administration launched a new community focused on consumer data at Data.gov. While there was no new data to be found among the 507 datasets listed there, it was the first time that smart disclosure has an official home in federal government.

Data.gov consumer slide apps image

Image via Data.gov.

“Smart disclosure means transparent, plain language, comprehensive, synthesis and analysis of data that helps consumers make better-informed decisions,” said Christopher Meyer, the vice president for external affairs and information services at Consumers Union, the nonprofit that publishes “Consumer Reports,” in an interview. “The Obama administration deserves credit for championing agency disclosure of data sets and pulling it together into one web site. The best outcome will be widespread consumer use of the tools — and that remains to be seen.”

You can find the new community at Consumer.Data.gov or data.gov/consumer. Both URLs forward visitors to the same landing page, where they can explore the data, past challenges, external resources on the topic, in addition to a page about smart disclosure, blog posts, forums and feedback.

“Analyzing data and giving plain language understanding of that data to consumers is a critical part of what Consumer Reports does,” said Meyer. “Having hundreds of data sets available on one (hopefully) easy-to-use platform will enable us to provide even more useful information to consumers at a time when family budgets are tight and health care and financial ‘choices” have never been more plentiful.”

The newest community brings the total number of communities on Data.gov to 16. A survey of the existing communities didn’t turn up much recent activity in the forums or blogs, although the health care community at HealthData.gov has more signs of life than others and there are ongoing challenges at Challenge.gov associated with many different topics.

Another side of open?

Smart disclosure is one of the 17 initiatives that the U.S. committed to as part of the National Action Plan for the Open Government Partnership.

“We’ve developed new tools — called ‘smart disclosures’ — so that the data we make public can help people make health care choices, help small businesses innovate, and help scientists achieve new breakthroughs,” said President Obama, speaking at the launch of the Open Government Partnership in New York City in September 2011. “We’ve been promoting greater disclosure of government information, empowering citizens with new ways to participate in their democracy. We are releasing more data in usable forms on health and safety and the environment, because information is power, and helping people make informed decisions and entrepreneurs turn data into new products, they create new jobs.”

In the months since, the Obama administration has been promoting the use of smart disclosure across federal government through a task force (PDF), working to embed the practice as part of the ways that agencies deliver on consumer policy. The United Kingdom’s “Midata” initiative is an important smart disclosure case study outside of the United States.

In 2012, the U.S. Treasury Department launched a finance data community, joining open data initiatives in health care, energy, education, development and safety.

“I think you have to say that what has been accomplished so far is mostly [that] the release of government data has spawned a new generation of apps,” said Richard Thaler, professor of behavioral science and economics at the University of Chicago, in an interview. “This has been a win-win for business and consumers. New businesses are created to utilize the now available government data, and consumers now know when the next bus will arrive. The next step will be to get the private sector data into the picture — but that is only the bright future at this stage, rather than something that has already been accomplished. It is great that the government has led the way in releasing data, since it will give them more credibility when they ask private companies to do the same.”

Open data as catalyst?

While their business or organizational goals for data usage may diverge, consumer advocates, entrepreneurs and media are all looking for more insight into what’s actually happening in marketplaces for goods and services.

“Data releases are critical,” said Meyer. “First, even raw, less consumer-friendly data can help change government and industry behavior when it is published. Second, sunlight truly is the best disinfectant. We believe government and industry want to do right by consumers. Scrutiny of data makes the next iteration better, whether it’s produced by the government or a hospital.”

What will make these kinds of disclosures “smart?” When they involve timely, regular release of personal data in standardized, machine readable formats. When data is more liquid, it can easily be ingested by entrepreneurs and developers to be used in tools and services to help people to make more informed decisions as they navigate marketplaces for finance, health care, energy, education or other areas.

“We use government datasets a great deal in the health care space,” said Meyer. “We use CMS ‘Hospital Compare’ data to publish ratings on patient experience and re-admissions. To develop ratings of preventive services for heart disease, we rely on the U.S. Preventive Services Task Force.”

The stories of Brightscope and Panjiva are instructive: both startups had to invest significant time, money and engineering talent in acquiring and cleaning up government data before they could put it to work adding transparency to supply chains or financial advisers.

“It’s cliche, but true – knowledge is power,” said Yaron Samid, the CEO of BillGuard, in an interview. “In BillGuard’s case, when we inform consumers about a charge on their credit bill that was disputed by thousands of other consumers or a known grey charge merchant before they shop, it empowers them to make active choices in protecting their money – and spending it, penny for penny, how they choose and explicitly authorize. The release and cross-sector collaboration of billing dispute data will empower consumers and help put an end to deceptive sales and billing practices, the same way crowdsourced “mark as spam” data did for the anti-spam industry.”

What tools exist for smart disclosure today?

If you look through the tools and services at the new alpha.data.gov, quite a few of the examples are tools that use smart disclosure. When they solve knotty problems, such consumer-facing products or services have the potential to massively scale quickly:

As Meyer pointed out in our interview, however, which ones catch on is still an open question.

“We are still in the nascent stage of identifying many smart disclosure outcomes that have benefited consumers in a practical way,” he said. “Where we can see demonstrable progress is the government’s acknowledgement that freeing the data is the first and most necessary step to giving private sector innovators opportunity to move the marketplace in a pro-consumer direction.”

The difference between open data on a government website and data put to work where consumers are making decisions, however, is significant.

“‘Freeing the data’ is just the first step,” said Meyer. “It has to be organized in a consumer-friendly format. That means a much more intense effort by the government to understand what consumers want and how they can best absorb the data. Consumer Reports and its policy and action arm, Consumers Union, have spent an enormous amount of time trying to get federal and state governments and private health providers to release information about hospital-acquired infections in order to prevent medical harms that kill 100,000 people a year. We’re making progress with government agencies, although we have a long way to go.”

There has already been some movement in sectors where consumers are used to downloading data, like banking. For instance, BillShrink and Hello Wallet use government and private sector data to help people to make better consumer finance decisions. OPower combines energy efficiency data from appliances and government data on energy usage and weather to produce personalized advice on how to save money on energy bills. BillGuard analyzes millions of billing disputes to find “grey charge” patterns on credit cards and debit cards. (Disclosure: Tim O’Reilly is on BillGuard’s Advisory Board and is a shareholder in the startup.)

“To get an idea of the potential here, think about what has happened to the travel agent business,” said Thaler. “That industry has essentially been replaced by websites servings as choice engines. While this has been a loss to those who used to be travel agents, I think most consumers feel they are better served by being able to search the various travel and lodging options via the Internet. When it comes to choosing a calling plan or a credit card, it is very difficult to get the necessary data, either on prices or on one’s own utilization, to make a good choice. The same is true for mortgages. If we can make the underlying data available, we can help consumers make much better choices in these and other domains, and at the same time make these industries more competitive and transparent. There are similar opportunities in education, especially in the post-high school, for-profit sector.”

Recent data releases have the potential to create new insights into previously opaque markets.

“There are also citizen complaint registries that have been created either by statute (Consumer Product Improvement Safety Act of 2008) or by federal agencies, like the Consumer Financial Protection Bureau (CFPB). [These registries] will create rich datasets that industry can use to improve their products and consumer advocates can analyze to point out where the marketplace hasn’t worked,” said Meyer.

In 2012, the CFPB, in fact,began publishing a new database online. As was the case with the Consumer Product Safety Commission in 2011, the consumer complaint database did not go online without industry opposition, as Suzy Khimm reported in her feature story on the CFPB. That said, the CFPB has been making consumer complaints available to the public online since last June.

That data is now being consumed by BillGuard, enabling more consumers to derive benefit that might not have been available otherwise.

“The CFPB has made their consumer complaint database open to the public,” said Samid. “Billing disputes are the No. 1 complaint category for credit cards. We also source consumer complaint data from the web and anonymized billing disputes directly from banks. We are working with other government agencies to share our findings about grey charges, but cannot disclose those relationships just yet.”

“Choice engines” for an open data economy

Many of this emerging class of services use multiple datasets to provide consumers with insight into their choices. For instance, reviews and experiences of prior customers can be mashed up with regulatory data from government agencies, including complaints. Data from patient reviews could power health care startups. The integration of food inspection data into Yelp will give consumers more insights into dining decisions. Trulia and Zillow suggest another direction for government data use, as seen in real estate.

If these early examples are any guide, there’s an interesting role for consumer policy makers and regulators to play: open data stewards and suppliers. Given that the release such data has an effect on the market for products and services, expect more companies in affected industries to resist such initiatives, much in the same way that that CPSC and CFPB database were opposed by industry. Such resistance may be subtle, where government data collection is portrayed as part of a regulator’s mission but its release into the marketplace is undermined.

Nonetheless, smart disclosure taps into larger trends, in particular “personal data ownership” and consumer empowerment. The growth of an energy usage management sector and participatory health care show how personal data can be used, once acquired. The use of behavioral science in combination with such data is of great interest to business interest and should attract the attention of policy makers, legislators and regulators.

After all, convening and pursuing smart disclosure initiatives puts government in an interesting role. If government agencies or private companies then choose to apply behavioral economics in programs or policies, with an eye on improving health or financial well-being, how should the policies themselves be disclosed use? What principles matter?

“The guideline I suggest is that if a firm is keeping track of your usage and purchases, then you should be able to get access to that data in a machine-readable, standardized format that, with one click, you could upload to a search engine website,” said Thaler. “As for the proper balance, I am proposing only that consumers have access to their raw purchase history, not proprietary inferences the firm may have drawn. To give an example, you should have a right to download the list of all the movies you have rented from Netflix, but not the conclusions they have reached about what sort of movies you might also like. Also, any policy like this should begin with larger firms that already have sophisticated information systems keeping track of consumer data. For those firms, the costs of providing the data to their consumers should be minor.”

Given the growth of student loans, more transparency and understanding for higher education education choices is needed. For that to happen, prospective students will need more access to their own personal data to build the profile that they can then use to get personalized recommendations about education, along with data from higher education institutions, including outcomes for different kinds of students, from graduation rates to job placement.

Disclosures of data regarding outcomes can have other effects as well.

“I referenced the hospital-acquired infection battle earlier,” said Meyer. “In 1999, the Institute of Medicine released a study, “To err is human,” that showed tens of thousands of consumers were dying because of preventable medical harms. Consumers Union started a campaign in 2003 to reduce the number of deaths due to hospital-acquired infections. Our plan was to get laws passed in states that required disclosure of infections. We have helped get laws passed in 30 states, which is great, but getting the states to comply with useful data has been difficult. We’re starting to see progress in reducing infections but it’s taken a long time.”


This post is part of our ongoing investigation into the open data economy.

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