INFORMATION ECONOMICS
ABSTRACT
This paper discusses about aspects of information economics. It also presents basic techniques for evaluation of the benefits of kinds of information technology applications such as information technology in transportation, information technology used in banking and finance and also for teaching and learning and in microeconomics. It also shows other relevant topics about information technology. Benefits of information technology is also presented and techniques for evaluating an IT investment.
INTRODUCTION
Information economics is an area of economics continuing to evolve from time to time. It is important to study such field to develop better ways of information dissemination as well as understand its position in terms of success. Information is a very strong tool to battle ignorance, today it is a necessity that a person is well informed or else he/she will be left out.
Information economics is mainly related with technical innovations like the very popular information technology applications, the Internet for instance. Information marketplace is quite different from what is known as the traditional "marketplace". Information can be found anywhere at almost no cost, easily reproduced and distributed, one just have to identify it and benefit from it in any way.
Information technology is a very interesting field of study. It is required nowadays to at least have knowledge in this matter. It changes the way of living many people and is affecting our everyday lives. It is then important to know the benefits of it and how to evaluate its effect when we invest on one.
LITERATURE ANALYSIS
The Emergence of the Information Society
About thirty years ago, social scientists started to study social and economic development in Western countries, emphasizing the transitory nature of these changes. Colin Clark (1941) analytically divided any economy into three main components: primary sector - agriculture, secondary sector - manufacturing and industry, and tertiary sector - services. Any economy is a mixture in different proportions of each. He argued that as a nation becomes industrialized, a large proportion of the labor force enters manufacturing. As national income rises, because of sectoral differences in productivity, the demand for services and information rises. Several European theoreticians, such as Radovan Richta (1967), Serge Mallet (1963), and André Gorz (1968) have emphasized the decisive role of science and technology in transforming industrial structure in society. Brzezinski (1970), Ellul (1967), Galbraith (1967), and Lewis (1973) have developed theories that affirm the fusion of science and technology with the advanced working class.
Daniel Bell (1973) and Alain Touraine
THREE KINDS OF INFORMATION TECHNOLOGY APPLICATION
Information technology in transportation
This book major new source of information and insight into the role of information technology in the planning, management, control and marketing of transport services. The book is wide ranging in its coverage of modes (private car, bus, rail and air) and of issues - ranging from the automatic identification of vehicles to the development of in-car navigation systems, from the role of expert systems in answering travel enquiries to that of interactive computer graphics in the scheduling of vehicles (P. Bonsall and M. Bell, 2000).
E-business and transportation asdvances are are hand. Nowadays, the people expect a lot of convenience in the transportation process due to high technology advancement. Trends in the transportation now is also due to mechanical and electrical discoveries in transport either for land, water or air. This uses the most modern innovations in the transportation progress. Management practice should be as good as possible in order to arrive at the best results.
Information technology in aviation companies are widely used. Architechture and requirements planning requires LAN systems to work. Also network implementation, optimization, modelling and maintenance. Data warehouse design and other designs such as data life cycle, data and structure analysis. IT is also needed in telecommunications, and wireless implementations. And also on defense information service agency.
Macroeconomics and Information Technology
Information technology (IT) has upgraded teaching process to a new high. Boring lectures are no longer used for students but the new technology on spreadsheet applications as an active approach of teaching, it is more student–oriented. The Mundell-Fleming open economy IS-LM-BP Model was proposed by Goddard, Romily, and Tavakoli to integrate approach to teaching and learning intermediate macroeconomics using spreadsheets (Goddard et.al., 1995).
Some advantages are offered when using IT as the means of teaching. Advantages inclues: users gain a better understanding of the assumptions and internal relationships between the various parts of the model than is normally obtained from studying diagrams showing shifts (for example) in IS and LM curves; by presenting the equations in a form which permits users to build the model for themselves, the assumptions underlying the model are revealed with greater clarity than is often the case with pre-programmed learning packages; users can run simulations of the effects of changes in the exogenous variables, and investigate the implications of such changes for all other variables. Issues concerning model stability and patterns of adjustment can be addressed and explored in an interactive manner; users can enhance their spreadsheet skills while studying macroeconomics; objectives can be achieved with very little use of mathematics, making the method appropriate for both specialist and non-specialist students of economics.
From the advantages posted above, we can see that the spreadsheet model is a powerful device illustrating dynamics in microeconomics. But teaching with the spreadsheets requires knowledge and skills to successfully use it as an IT device.
Central Banks and Information Technology
Information technology applications were also used in banks and in other industrial organizations. Advances in the economic management of information have worked pervasive change throughout the world economy and its financial system. Change due to the adoption of electronic computing and communications has been highly visible. Another kind of advance, in the design of organizations (including financial institutions) to allow them to function well in private information-environments, has been equally significant. In this article, I examine how both types of advance affect a key sector of the financial system: central banking. This examination focuses on the following three areas (Allen and Scott, 1994).
Information technology has been used for the paying system for years and was found very efficient by the users. Electronic payments were used nowadays for buying necessities and even luxuries. Using electronic devices inplies securit of the things while manual usage can be negotiable and more accessible to all. An example for this is the credit card, this technology reduces the risk of of inconvenience on the side of the payee and the payor since transaction is direct and fast (Green, 2001).
IT is being used in banks for for improving payment and settlement services. It is a challenge to the banking sectors to to build and improve this system and surely it will become the users of IT for the past to the future. There is a benefit as well as a threat on the part of the banks. Since access will be for free or at a low cost only.
But IT offers banks with its operations information processing and can reduce what they call 'incomplete information'. If this factor can be reduced or even eliminated, the network development will lead to an economy with no money.
Innovation is a process that mediates between two streams of human activity. Market and technology develop in parallel and independently, save for a linkage through innovation. Innovation, therefore, is a response to changes in one or both of these streams. As the market changes, firms are driven to innovate with new products and services, frequently having to seek out new technology in order to accomplish this. On the other side, rapidly changing technology creates new opportunities and sometimes even creates changes in market structure.
A related change in the information technology of the things is the higher use of computers. There is a higher demand for computers and other devices used for information dissemination. It is used in almost everything we use today from invoices, issue checks, keep track of the movement of stock, and store personnel and payroll records. Patterns of work are almost dependent on computers. The information revolution became a success for it is believed that it was driven by the progress of microelectronic technology. This was also the reason why "micro" objects are in demand these days.
Techniques for Evaluation of the Benefits of Information Technology
First is to select, create a portfolio of IT project investments that maximizes mission performance, using a standard set of criteria for consistent comparison of projects. Then, control meaning measure ongoing IT projects against their projected costs, schedule, and benefits and take action to continue, modify, or cancel them. And lastly evaluate by determining the actual return on investment of an implemented investment against the agency's mission and adapting the existing process to reflect "lessons learned". The control and evaluation phases are conducted throughout the year and their results are fed into the selection phase, which in turn feeds back to the control and evaluation phases (ciogov.webmaster@gsa.gov).
In the selection process, what is done is that we screen the project then establish a project review for it. After that determine whether or not you met the requirements. In controlling it includes consistent monitoring, involving the right people, documenting all actions and decisions, and listing lessons learned. After that one must decide on whether to cancel, modify, continue or accelerate a project. The evaluation phase is he time to conduct post-implementation reviews and measurement of the actual and the projected performance. Then, lastly assessing of the impact of the performance and determining future prospects for the project (www.gao.gov/pplicy/itguide).
This guide begins by identifying three attributes that characterize successful investment processes in best practice organizations. The guide then is organized by the phases of the investment process. Within each phase, the guide will describe: 1) the steps involved, 2) applicable management techniques and tools, 3) key questions to ask, and 4) examples from best practice organizations.
Benefits of Information Technology
Application of information technology comes in basic and also in advanced terms. Some are so simple and accessible while others are complicated and hard to follow. Benefits of these technology applications are information is well represented dynamically in any form possible. People are no longer that ignorant that they are socially aware and confident. Information is communicated effectively through various channels. Modern access has now become a necessity for it keeps the people updated.
Technology has been shown to have positive effects on the instructional process, on basic and advanced skills. Technology is also changing the instructional process itself. To be effective, technology cannot exist in a vacuum, but must become part of the whole educational environment. New measures of evaluation are under development, which would help to better define the role of technology in its wider context (Kosakowski, 1998).
Some factors for the success of technology are evidence of a detailed technology plan; teacher training and continuing education; support from administration; support from community and support from government. Assessments of the impact of technology to the lives depend on the ones that are involved with it. The outcome is highly dependent on the quality of implementation of the said application.
Effects are mostly visible on the younger generations. This is due to the maximum exposure of the children to computers and other high-tech gadgets present nowadays. Children spend more hours in front of the computers than reading books and doing other things. This implies many risks other than health concerns, but is taken for granted especially by their parents. The reason for this is that they would rather want their children to engage in computers than to drugs or other vices.
Benefits are likely to be visible especially if the technology was utilized properly and wisely. Evolution of the Internet is seems as desirable as it does inevitable. Automated agents are not like people; they make decisions and act on them in great speed and accuracy. They are less sophisticated, less flexible, less able to learn, and lacking "common sense".
Information Economics Management has become a course (University of Michigan Bloomfield
Until the nineteenth century all communications were greatly impeded by distance and limited to direct verbal speech. Communication and travel were synonymous, and communication channels overlay transportation networks in the form of roads, waterways, and later, railroads. Transportation innovations, such as the tramway and automobile, and new communication channels, such as the telephone, began the conquest of the distance barrier and have altered both the speed and location of interaction. Increased mobility permitted expansion of city boundaries, dispersion of residential landscape, and location of industry (Fathy, 1995).
Evaluation of IT-based systems also has limitations. This will affect individual performances or not the whole process. Information technology could be claimed as good but also has some flaws and difficulties with it. Innovative strategies can also be a risk or a benefit to the transportation business. Effective implementation of advanced information technologies is the life cycle of transportation systems.
A REVIEW OF INFORMATION TECHNOLOGY AND STRATEGY
The integration of Information Systems/Information Technology (IS/IT) planning and strategy with corporate strategy and the strategic use of information systems have been of topical interest to management practitioners and IT theorists for some time. For example, from 1988-91, the issue of most concern to data-processing (DP) managers in the UK
The shift of emphasis can be linked to improvements in connectivity and cost performance ratios in technology. It can also be related to consequent changes in potential applications: from data processing (administrative, mainframe computing) and management information systems (MIS), to individual and office support on PCs and office systems, and then to electronic data interchange (EDI) and inter-organizational systems, organizational 'platforms', and networks. The merging of computer and communications technologies, and the more widespread use of databases, networks, and integrated systems requiring long-term planning perspectives, also stimulated IS managers' interest in IT planning. The 'progressive' hype and 'follow-my-leader' ideologies were sufficient to sustain the dramatic growth of IT expenditures (Bloomfield
Advanced microelectronics-based information and communication technologies (ICTS) are at the heart of recent social and economic transformations in both the industrialised and many developing countries. The costs of ICTs are continuing to fall. As their capabilities increase, they are being applied throughout all sectors of economies and societies. The increasing spread of ICTs opens up new opportunities for developing countries to harness these technologies and services to serve their development goals. In the last few years, there have been many initiatives at the highest levels of government and industry to promote the construction of a global information infrastructure. Developing countries are being encouraged to invest in their national information infrastructures so that they can participate in knowledge-based development and experience the predicted social and economic benefits (Mansell and Wehn, 1998).
This states that we also have misconceptions about information technology. It is not the sole drivers of major changes in the way people live their everyday life. Though the trend today is technology-driven, we cannot say still that it is the main reason for all of these (Dutton and Peltu, 1996)
REFERENCES
Allen, Thomas J., M. Scott Morton (1994). Information Technology and the Corporation of the 1990s. Oxford University
Bonsall, P. and M.Bell.1995. VSP, P.O. Box 346Zeist , The Netherlands
Dutton, William H. and Malcolm Peltu (1996). Information and Communication Technologies: Visions and Realities.Oxford University
Fathy, Tarik A. (1995). Telecity: Information Technology and Its Impact on City Form.
Praeger Publishers, New York
Goddard A., et.al. (1995). The Virtual Edition Volume 9, Issue 1.
Green, Edward J. (2001). Central banking and the economics of information Journal Economic Perspectives, Vol. 25.
Kowaskowski, John. (1998). ERIC Clearinghouse on Information and Technology Syracuse NY
Pérez-Castrillo, David and I.M. Stadler (2000) An Introduction to the Economics of Information: Incentives and Contracts. Oxford University Oxford
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www.gao.gov/pplicy/itguide
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