So we crow about the fact that we live in an information economy. We strive to be information workers. Companies invest huge sums in information technology systems... but why? What is it about information that makes it so alluring? And how do you calculate its value- or add value to it?
It amazes me that even companies that consider themselves information-based often have difficulty answering those last few questions. Intuitively we all believe information is good-- and more is better, as long as you can manage it. But objectively, we have a hard time really putting metrics on the economic value of information.
I have a few theories about how to add value to information. And I would love to hear if anyone has figured out their own way to put a formula around the fundamental worth of information.
In terms of the value of information, I would propose there needs to be a unit of measurement that calculates how much work information is performing in any circumstance-- and then that measure of work could be calculated and assigned a value and a cost-- much like we know how much electricity costs, and how much work it can do in any given situation (spinning a motor, powering a light...).
If you go back to the premise that everything that exerts change is a form of information, then calculating 'work' for some forms of information is easy. Gravity performs work that has value (think waterslides, ski resorts and roller coasters for one sort of work). Joules are a unit used to measure this kind of work. A joule is the amount of work required to move one kilogram one meter. it's been around as a measurement for a long time, because this sort of work has been thought about for a long period of time (think 'horsepower...). But other forms of information aren't so easy to quantify this way. How much work does a phone number do? Or a live traffic report on the radio? They are forms of information-- the are essential components in our daily lives...they exert change (listening to a traffic report is key to changing your velocity and direction as you pick a new route to get home...). But if we assume that those sorts of information can also perform a form of work, the we should be able to measure the work they do.
So to start let's divide information into two basic sorts-- physical information- that exerts change directly, and representational information, such as symbols, coding systems, and those that require some sort of interpretation or context to do work.
Now, if Joules are the measure of work for physical information types such as gravity, let's come up with a unit of work for representational information-- we will call it an iJoule.
So what sort of work do we want to say iJoules measure? They measure the more esoteric sort of work done in our information society. The kinds of work that aren't obvious in terms of physicality, but clearly work nonetheless (at least all us information workers hope so). After all, even representational information exerts change-- it simply does it by proxy. The information you get about traffic up ahead causes you to change the route you take to work. Information delivered via websites exerts change on the world by getting you to swap money for materials, music or other purchases. Information received into your brain actually physically changes the connections of neurons to enable memories and new pattern recognition capabilities. The work is done indirectly and requires interaction with other sorts of information systems in most cases, but since change occurs, we can call it work. At least, that's what I tell my kids when they ask me if I work hard at my job...
So we have a unit of measurement, called the iJoule. Awesome. But we need to figure out a couple of other things to have our complete model. First- what is the basic unit of information that the iJoule seeks to measure? After all, having a yardstick is no good if you can't find the edges of the thing you are trying to measure. Here's my proposal-- the smallest unit of information is one that, in context, provides a level of meaning or knowledge. So yes, it is a variable unit, since the context changes constantly. But that's the nature of this sort of information.
So what's an example of a unit of information? A phone number is one-- missing one or two digits, it it provides no meaning and can perform no work. Now with more context, you may be able to get the meaning with fewer digits (say if it was your own phone number...). but either way it is an objective measurement. As long as we can determine the context, (which we typically can) we can determine whether the construct in question can actually provide enough meaning to exert change, and therefor perform work. The traffic report is only a unit of information if you have enough context (where you are, where you are going) to let it do its work. The less context there is, generally the more content will have to be provided to create a useful unit of information.
So now we have a unit called an iJoule... and a way to determine what a unit of information is... next on the list (and for another posting) is a thought about how to calculate the amount of potential energy stored in a unit of information-- and therefore how much work it can potentially do on your behalf.
Why does it matter? Because if we can do it, maybe we can actually help businesses quantify in more concrete terms, the potential energy and value pent up in the terabytes and terabytes of inforamation they are storing every single day. And we can create some simple strategies for adding more potential energy-- and therefore more value, to every unit of information they collect.Maybe it's just me, but I think that's worth doing-- or at least attempting.