Make disclosures machine readable

Anybody who works with numbers knows this. The sheer frustration of looking at PDF sheets of data. The job of turning dumb data into an intelligent one shows up in increasing medical bills to fix your back and neck. And while the physiotherapist chides you for not taking care, you have dark thoughts about those that may have deliberately put out a PDF instead of a usable format.

The entire issue of data disclosure and use fell into place for me during the buzzy breakfast meeting organized by Mint last week. Top chief executive officers (CEOs) met with Richard Thaler of the University of Chicago in New Delhi for a conversation. For those who don’t know Thaler, he is known as the co-parent of behavioural economics—the wonderful new field that allows for us to be Captain Kirk and Penny, and not Mr Spock or Sheldon Cooper. In other words, it allows for irrationality in decision making as the standard state of human beings, rather than a perfect utility maximizing economic agent. His book, Nudge, has put the use of choice architecture to good use in policy, regulation and government.

We were discussing the use of “nudges” in public policy and the setting up of the “Nudge” unit by the UK government. The idea is to use minimum intervention to modify behaviour. Thaler spoke about adding a line in a letter that the UK tax office sends to taxpayers who have not paid the full amount. The line added is: “The great majority of people in your area pay their taxes on time.” Just this line resulted in extra tax revenue of $15 million. But the second example was the one that really got my attention. Cellphone usage data in the UK comes as reams of PDF to subscribers. This is essentially useless because the data cannot be worked upon. The “Nudge” unit is adding two words to the disclosure norm: the data disclosure must be in “machine readable” form. “Now we’ll wait for a 12-year-old to make an app that gives you the best plan based on your usage,” said Thaler.

Machine readable must not be confused with “digitally accessible”. A soft copy of a word document, a PDF (did you know what it stands for? Portable document format), graphics are all digitally accessible but are not machine readable. Machine readable is when data can be understood by a computer making it open for further analysis and interpretation. Excel sheets and CSV (comma separated values) formats are the entry point in the hierarchy of machine-readable. Basically, this kind of data is in a format that can be “understood” and easily organized by a computing system—you can write a software code for it, the code will crawl a database and fetch the data automatically.

Getting access to data in a form that can be downloaded and worked upon is very important for individuals and consumers as we face a world full of complex choices. For example, Mint Money analyses over 300 health insurance product combinations of over 25 companies to arrive at plans that work for individuals. Our knowledge partner, SecureNow Insurance Broker Pvt. Ltd, has to convert static data into dynamic data and that takes hours and hours of back-breaking work, and can lead to errors. What if the regulator mandates “machine-readable” disclosure of key features, costs and benefits of the policies? This will allow analysts, such as us or insurance brokers or financial planners, to trawl through the data and come up with plans that work and those that do not. For example, we could search for health plans with no sub-limits. This means only those plans will filter through that do not put a cap on what you can spend on room rent per night. Or, we could filter out policies that do not cover pre-existing diseases.

Companies in India have used disclosure to transfer responsibility to consumers. But disclosure has become sending out 30 pages of legalese. This is not disclosure; it is obfuscation. Worse, regulators themselves have hidden behind unusable data that downloads in reams of PDFs, or have even introduced password blocks that prevent “search” or “print” commands.

I can think of a world where main product features, costs and fine print are all in a machine-readable format allowing real comparison shopping to happen. Unfortunately, in India, it is not just the companies that will resist such a move, the regulators will actively do so as well.

End note: When I met Thaler a day before Mint’s early morning breakfast meeting, he was terribly jet lagged, having got in just that afternoon. Happily, the next morning, he was in full form and set the cat among the pigeons before the event began by throwing his weight against Net neutrality. His argument: Why should those that guzzle bandwidth not pay more? Should the big tankers that hog the highway not have to pay more? Should almond farmers who drink all the Californian water not have to pay a higher price for water? The CEOs were vociferous in their defence of neutrality. The professor held his ground. The issue remains unresolved—at least for that group of people.

Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, Yale World Fellow 2011 and on the board of FPSB India. She can be reached at expenseaccount@livemint.com