Classroom Companion: Business

 
Chapter 20 · Big Data Economics

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One problem associated with big data is lack of knowledge about how the data 
can be used in decision-making. Many decision makers and managers lack data 
literacy and do not understand how the enormous amount of data the firm is 
collecting about itself and its customers can be used to improve the business. Big 
data analytics is so new and complicated that it is not taught in management 
courses and at business schools. Investments in big data may then be useless if the 
management does not understand how to use these data in decision-making. On 
the other hand, the output from a big data analysis may be flawed or irrelevant so 
that decision making cannot be based on the data only; the decision maker must 
also use other knowledge and guts feelings as a supplement to avoid fatal mistakes 
(Vigen, 
2015
). One particularly important observation is that in huge data sets 
spanning over several categories of observed data, it is likely to find coincidentally 
correlated data. Obviously, this may lead to wrong and, sometimes, disastrously 
conclusions. An eye opening and amusing account of such coincidences is found 
in (Shah et al., 
2012
).
Decision making was easier before the Zettabyte Era because the business 
processes then depended only on simple and easily comprehensible data 
structures.
20.4
 Abuse of Big Data
Big data often uses personal data. Because personal data may be sensitive and con-
tain private information that the subject do not want to share, there are several 
legal frameworks that big data systems need to adhere to. One such legal framework 
is the European General Data Protection Regulation (GDPR), which came into 
force in the European Union and the EEC in 2018. Other countries, including sev-
eral US states and many Asian countries, have lately adopted similar laws. Such 
regulations limit the amount of personal data that may be harvested. On the one 
hand, this in turn limits the value of big data, since some useful data may not be 
collected due to legal issues.
United Nations Declaration of Human Rights Article 12 states: “No one shall 
be subjected to arbitrary interference with his privacy, family, home or correspon-
dence, nor to attacks upon his honor and reputation. Everyone has the right to the 
protection of the law against such interference or attacks.” One of the key prob-
lems of big data is that it so easy to violate this rule and so difficult to prosecute 
those who do so. One particular problem is that the technology advanced very 
rapidly, while the production of new laws protecting the users progresses very 
slowly. Ownership of personal data is in itself a political question. In China, the 
government claims that it owns all data about the inhabitants.
Despite these regulations and legislations, personal data is used for purposes 
that may be unethical or against the interests of the majority of the population.
Some examples of misuse of big data are presented next.