The Economy and Information : Does More Info Make the World a Better Place?

This week's serial superlatives in things economic -- each day the "events of recent days" were "the most stunning thing to happen since the thirties" -- has led to lots and lots of hand wringing and calls for new kinds or amounts of regulation. And a lot of what folks are saying has to do with information -- more of it, in public, is what we need!

This brings to mind two things I've recently read. One is a 2007 book by Fung, Graham, and Weil called Full Disclosure: The Perils and Promise of Transparency (Cambridge University Press). It is a report on an empirical study of 18 cases of what they call "targeted transparency" -- legislated requirements that corporations (or other private entities) disclose specific information so that the public can make informed choices about their products, services, etc. They looked at the history of disclosure as public policy, why it emerged when it did, whether it's likely to continue to expand, and whether, and under what conditions, it works. In a nutshell, they conclude that it works well in some cases, not at all in others. The process is always political and it works when the results of the political process produce a system that is "user oriented" and "sustainable." I'll post a full review of the book here in the near future.

The other piece I was reminded of was by Malcom Gladwell in a January 2007 New Yorker: "Open Secrets: Enron, intelligence, and the perils of too much information." In it Gladwell builds on, among others, the work of Yale law professor Jonathan Macey who, in a review article about the Enron debacle, argued that the problem was not information that Enron hid, but the fact that no one could put together the puzzle pieces represented by the information they disclosed.

I recommend both Fung et al. and the Gladwell piece as grist for your thought mill this week.

See also this old post on the "is more better" question.