Infrastructures, such as broadband, are associated with a wide range of social benefits. Broadband allows people to watch television on their PCs, make phone calls, download music and access a wealth of information. These social benefits have been subject to social and psychological research, but hardly to economic research. How does broadband facilitate transactions between different actors? And, ultimately, how can the benefits of broadband be expressed in economic terms?
“There is a broad feeling in society that broadband makes our lives easier, personally as well as professionally,” says prof. John Groenewegen, “but at the same time, the economic benefits are never really taken into account in the decision making of governments and market players.”
Groenewegen points out that broadband has a potential to improve democratic processes by providing information and a platform for discussion. It supports our knowledge-based society, which indirectly improves our competition potential on the international market. “Still, policy makers and companies hardly take these benefits into account in their planning, because it is hard to value them in monetary terms. Sometimes this results in unfavourable decisions, based on a false notion that the costs outweigh the benefits.”
Groenewegen’s research focuses on how to quantify these benefits and how to internalize them in decision making. “Putting a price tag on processes is incredibly complex,” says Groenewegen. “Take for instance pollution: it is hard to price but at least you can measure it. Processes like democratization, on the other hand, are even more intangible.”
Groenewegen and his colleagues don’t aspire to design a pricing system themselves. Rather, they study how, and to what extent, the economic aspects of social benefits are taken into account. They hope to identify situations in which quantification is indeed possible. “Broadband influences consumer behaviour,” explains Groenewegen. “It doesn’t only entertain people, but it also allows them to seek medical advice, for instance, or to follow online classes. These are things that are indeed quantifiable. In time, it will be possible to calculate how much money is saved nationally in terms of education and health care costs. Our task is to pinpoint how this kind of reasoning develops. Which role do the various parties play, and which factors influence their decision making?”
