Chapter 8:

Economic and Social Significance of Information Technologies


Chapter Overview

The revolution in information technologies (IT) has been likened to the industrial revolution in terms of its potential scope and impact on society (Alberts and Papp 1997; Castells 1996; Freeman, Soete, and Efendioglu 1995; and Kranzberg 1989). With the exception of electrification, no other modern advances in technology have had the capacity to affect so fundamentally the way people work, live, learn, play, communicate, and govern themselves. Indeed, some social philosophers expect that IT might affect the nature of what it means to be human-changing values, emotions, and cognitive processes.

Science & Engineering Indicators -- 1998 attempts to benchmark certain dimensions of the growing role of information and information technologies in American society. At present, there is little systematic data on either the diffusion of IT or its impacts on society. Metrics are confounded by both the fuzziness of IT as a concept and the interactive effects of so many social variables-including age, ethnicity, income, learning processes, individual attitudes, organizational structures, and management styles. In addition, the rate of technological change since the early 1980s has often outpaced our ability to define what it is we want to know and what data ought to be collected.

As a consequence, this chapter focuses on three core areas where the analytical questions have stabilized and where there is a large body of existing research:

Each of these areas illustrates the ways in which science-based technology can have profound social consequences (both positive and negative) and the difficulties in defining, measuring, and tracking a technology that is still emerging.

Three generalizations can be made about the state of our empirical understanding of IT's effects on society. First, quantitative indicators of IT diffusion are relatively abundant but not necessarily regularly updated. Second, indicators of the actual effects of IT on individuals, institutions, and markets are extremely difficult to establish. Currently, statistical studies in many areas of interest are both nonrepetitive and noncumulative; that is, studies do not necessarily use the same methodologies (thus generating different statistics) and do not build on one another (findings from one study are not verified and expanded on in others). This state of affairs has less to do with the quality and rigor of the research than with the complexity and dynamism of IT as a subject of study. Moreover, experts have not determined how to measure some elements of considerable interest, such as productivity in some service industries.

Third, the state of existing research makes it difficult to draw any definitive conclusions about the impacts of IT on society. For example, evidence exists of both increased and decreased productivity, as well as of both a lowering and an upgrading of skills in the labor force. Both positive and negative consequences may also be found. For example, computer-aided instruction may clearly enhance some forms of student learning, but extensive use of some computing environments may interfere with aspects of child development. Positive effects (such as enhanced business performance or student learning) are often highly contingent upon the presence of a number of other factors, such as appropriate organizational structures, managerial style, the adequacy of teacher training, and the attitudes of the individual using IT. All that may be said definitively about IT's social and economic impacts is "it depends": both on how we have measured and modeled the subject of study, and on the all-too-human conditions surrounding its use.

The evidence and indicators presented in this chapter do cohere as a somewhat sketchy image of the social and economic impacts of IT as of the mid-1990s. The predominant feature reflects the scope and presence of IT in the economy, schools, and the home. In many industries, the level of computer use (as measured by the number of employees with computers on their desktop) exceeds 50 percent. More than 70 percent of large firms in key manufacturing sectors (such as machinery, electronics, and transportation) use computer-aided design and/or numerically controlled machine tools. In addition, many services (such as automated banking, credit card sale authorization, express delivery, and electronic commerce) could not exist in the absence of an IT infrastructure.

Elementary and secondary schools have similarly high rates of IT adoption. By the early 1990s, 80 percent of all K-12 schools had 15 or more instructional computers, and the national median number of students per computer was 14-essentially one computer per classroom. Less pervasive is access to the Internet in schools; in 1996, only 14 percent of the instructional classrooms nationwide were linked to the Internet. At the household level, roughly one-quarter of all homes had a personal computer (PC) in the early 1990s; these households were disproportionately wealthy and white. As discussed in several sections of this chapter, IT is not necessarily ubiquitous, and schools and homes reflect a real inequality in access to computers and other information technologies.

The effects of IT are most clearly visible at the "micro" level-that is, the level of the individual firm, classroom, household, etc. For example, the strongest indicators of economic enhancements from IT are seen with firm-level data sets and for impacts that reflect improvements in firm-level activities (such as transaction processing time, product quality, cycle times, and customer service and convenience). The measurable learning effects of computer-based instruction (CBI) are most pronounced for the elementary grades and for rote learning; computer-enhanced higher order thinking skills are harder to demonstrate, perhaps because of a lack of appropriate software, but also because of the greater emphasis on building computer skills in secondary school rather than on content learning.

Chapter Organization

This chapter begins with a discussion of the nature of information technologies and the issues involved with measuring the effects of IT on society. Subsequent sections address (1) the role of IT in the economy, (2) the effects of IT on K-12 education, and (3) IT and the citizen. The final section addresses the need for better IT metrics.

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