Chapter 8:

Economic and Social Significance of Information Technologies

Highlights

IT and the Economy

The use of information technologies (IT) is pervasive in the United States. The real net computing capital stock in the private sector was $155.8 billion in 1995. And, in many industries, the number of employees who use a computer at work is more than 50 percent; in the banking industry, it is 85 percent.
IT is believed to have contributed to the country's structural shift to a service economy. In the United States, growth in services as a proportion of gross domestic product has been led exclusively by IT and knowledge-intensive industries such as finance, insurance, real estate, and professional services.
The U.S. Bureau of Labor Statistics projects employment in IT-producing industries to nearly double from 1986 to 2006. This expansion is due almost entirely to growth in computer and data processing services (including software manufacturing); employment declines are projected for the IT hardware industries. Since precise projections are always difficult, this should be taken as a general direction, not an exact level of employment.
Several comprehensive studies, using a variety of data and methods, indicate that there is an overall skill upgrading taking place in the labor force, a trend attributed to the greater use of IT in many occupations.
The incidence of IT-related injury and employee surveillance in the workplace are on the rise, but impacts on individuals are uncertain.
Recent research suggests-unlike past evidence of a "productivity paradox"-that there may be measurable productivity gains from IT. Nonetheless, it is difficult to predict the precise organizational and firm-level conditions that foster the effective use of IT.

IT and Education

By 1992, 80 percent of all K-12 schools had 15 or more microcomputers for instruction. In 1996, 85 percent of all schools had access to multimedia computers, 65 percent had Internet access, and 19 percent had a satellite dish. Internet linkages are not necessarily widely accessible within schools-in 1996, only 14 percent of instructional classrooms had an Internet hook-up.
In fifth grade, more than half (58 percent) of the instructional use of computers is for teaching academic subject matter. By 11th grade, less than half (43 percent) of computer-based instruction is for content; 51 percent is for computer skills training.
Meta-analyses of educational studies conducted between the late 1960s and the late 1980s consistently reveal positive impacts of computer-based instruction at the K-12 level. Estimates of the order of magnitude vary, but one meta-analysis of 40 studies gave evidence of learning advantages that ranged from the equivalent of one-third to one-half of a school year for K-6 education.
The cost effectiveness of computer-based instruction relative to other forms of instruction has not been demonstrated. As pressures to increase IT spending grow, it is likely that school districts will face greater opportunity costs between IT and other education-related expenses.
There is significant educational inequity in access to computers and the Internet. Schools whose student body is represented primarily by minority or economically disadvantaged students have one-third to three times less access to these technologies than do schools attended primarily by white or nondisadvantaged students.
Poor and minority students cannot compensate for less computer access at school in their homes. In 1993, blacks and Hispanics had half as much ownership of home computers as whites. The poorest and least educated groups had about one-tenth the access to home computers as the most affluent and educated groups. Research indicates that when the "informationally disadvantaged" are given access to computers and the Internet, they use these resources effectively for self-empowerment.

IT and Private Citizens

Concerns about information privacy are growing larger and stronger. In a 1996 Equifax/Harris privacy survey, two-thirds of the respondents said that protecting consumer information privacy was very important to them.
The vast majority of Americans believe that companies should be prohibited from selling information about consumers-including their income, bill-paying history, and product purchases-and that stiff restrictions should be placed on access to medical records. Unfortunately, most Americans also believe that they have already lost control of personal information about themselves.