Measuring the UK’s Digital Economy with Big Data

The British mathematician and physicist Lord Kelvin famously said “If you can not measure it, you can not improve it.”

In 1948, the post-war British Government badly needed to improve the nation’s economy. To help it draw up the right policies for jobs and growth, the Government took a very scientific approach – one of which Lord Kelvin would have been proud. Government statisticians were instructed to count, classify and measure the economic activity of every business in the country.

They developed a set of Standard Industrial Classification (SIC) codes and the data they collected was used to shape policy in every aspect of the British economy. This was a remarkable endeavour. Here was a Government using big data to make smart decisions long before it was fashionable. However, 65 years and several revisions later, these SIC codes are no longer adequate. Far from providing an accurate picture of the economy, they only serve to show us how much we don’t know. One in ten companies in the UK are now classified vaguely as ‘other’. One in five have no classification at all.

It is important not just for statisticians, economists and policymakers that we measure the economy accurately but for every one of us who are affected by the major economic decisions that Governments take based on that data. It is clear we need a new way of measuring the economy and that is what is presented in this report by the National Institute for Economic and Social Research, based on the pioneering big data techniques of Growth Intelligence, a UK company who specialise in tracking and measuring the economic activities of companies. The richness of Growth Intelligence’s data, drawn not just from official tables and accounts but gleaned from more than five billion data points, provides us with a level of detail and insight that statisticians in 1948 could scarcely have imagined.