Data economy research

Methodology for Assessing the Market Value of the Estonian Data Economy

The study "Methodology for Assessing the Market Value of the Estonian Data Economy" was commissioned by the Ministry of Economic Affairs and Communications. The work was carried out by the Centre for Applied Social Sciences at the University of Tartu and STACC OÜ.

The aim of this study was to develop a methodology for assessing the volume and market value of the Estonian data economy, using examples from other countries and international models. In the first phase of the study, an overview of internationally used methods and data for assessing the data economy was conducted. In the second phase, a cost-based assessment of the value of data was
carried out using Estonia as a case study, and a dashboard prototype was created to display data values and indicators characterizing the data economy.

The full report (in Estonian) is available: Eesti andmemajanduse turuväärtuse hindamise metoodika koostamine

The executive summary (in English) is available: Methodology for Assessing the Market Value of the Estonian Data Economy

Research tasks

Analysis of international models: analyse whether and under what conditions it would be possible to apply the Statistics Canada and OECD expert models in Estonia to assess the market value of data.
Adapting the European Commission indicators: review the indicators used in the European Commission's data economy measurement desktop and analyse whether they can be adapted to Estonian public data or data from registers.
Testing the suitability of the methodology: calculate the market value of Estonian data by combining Estonian registry data with assumptions from previous studies.
Mapping the experience of other countries: compare the indicators used in other countries to measure the data economy.
Validation of the methodology: present the methodology to Estonian experts.
Preparation of a desktop prototype: the desktop displays the indicators found during the analysis and links them to other data economy indicators.

In the first phase of the study, internationally used methods and their suitability for Estonia were analysed. It was found that the EDM (European Data Market) tool is versatile and considers the data ecosystem view. The model is classified as a combined solution for both data market and data economy size. Most of the model parameters are usable in Estonia and the data can be collected from national statistics and national databases. However, a disadvantage of the model is the large number of estimates, the bases of which are not publicly disclosed.

The study highlighted that the cost-based model of Statistics Canada and OECD experts allows the market value of data to be assessed through its cost. The advantage of the model is the use of quantitative data, but the disadvantage is the assumptions about how much of the working time is spent working with data, which creates new databases or data intelligence.

In the second stage, a cost-based assessment of the value of data for Estonia was conducted and a desktop prototype was developed that allows the results to be displayed and sensitivity analysis to be performed. The desktop prototype includes indicators based on Statistics Office data and allows the number of data-related employees and enterprises and their economic indicators to be assessed.
The course of the analysis and the data presented on the prototype showed that cooperation with the Estonian Statistics Office is expedient, as a large part of the raw data comes from their databases or registry data available to them.

Main conclusions

European Data Market tool: The EDM tool is versatile and provides a comprehensive overview of the data economy, but requires local adaptations. Its strength is the holistic view of the data ecosystem, but its weakness is the lack of clarity on the basis of the estimates, which makes it impossible to fully reproduce it for Estonia.
International comparison: A comparison of the mapping of the data economy value of neighbouring countries showed that all countries are actively involved in assessing the data economy. There is no single methodology for measuring the data economy between countries or international institutions, which makes data comparison difficult.
Statistics Canada cost-based model: The model is applicable in Estonia, as national registers allow for quantitative data on work. The cost-based model is narrower than the indicator system implemented in the EDM tool, but the end result is an assessment of the value of data both in total and by sector.
Data protection and confidentiality: Based on Estonian registry data employees and their earnings, it is possible to obtain detailed data by industry and field of activity, but data protection restrictions may hinder the making of accurate aggregate estimates. The creation of a desktop prototype showed that cooperation with the Statistics Office is necessary to ensure data accuracy, who could perform calculations in-house to more accurately assess aggregate estimates.
Calculations made for 2023 for the market value of data gave 3.5% of GDP, which, considering the conservative assumptions used in the work and the data protection restrictions resulting from registry data, is rather a lower limit of the estimate. The largest part of the value of data comes from the information and communication sector (21%). This is followed by financial and insurance activities (14%), professional, scientific and technical activities (13%), manufacturing industry (12%) and public administration, defence and social security (10%).

Recommendations

The report highlights the complexity of measuring the data economy and the need for continuous data collection and analysis. Collaboration with the Statistics Office and adaptation of international methodologies to the Estonian context are key to ensuring an accurate assessment of the impact of the data economy.
Further research: Conduct further research, preferably in collaboration with the Estonian Qualifications Authority, to refine the list of data-related occupations and refine the estimates of the proportion of working time spent on data by people working in different occupations.
Collaboration with the Statistics Estonia: Involve the Statistics Estonia in the analysis of data and data economy value to more easily ensure compliance with data protection requirements and greater accuracy of estimates. It is also worth aligning the data value measurement methodology proposed in this study with the approach already used by the Statistics Estonia in assessing the financial value of IT investments. Since the Statistics Office already has an ICT sector desktop, we recommend integrating additional data economy indicators into it.