(this page is part of my Open Data, Open Society report. Please follow that link to reach the introduction and Table of Content, but don’t forget to check the notes to readers!)

Quoting from a 2009 workshop on the socioeconomics effects of PSI “if efficiency improved in the public sector by only 1 percent as a result of free or improved access to the geospatial element of PSI, the sum saved would be the equivalent of eight times the cost to the state of collecting the data in the first place”. As it happens with transparency, in many cases what’s really great is not even the services that actually become available thanks to data openness: it’s the fact that others did it at no cost for taxpayers. Giving away the data saves the money that otherwise should have been spent for building more or less complex websites or to provide the same services based on the same data, because any private businesses or group of volunteers can now offer them: “the State brings its data and they do the rest”. Here are some cases of public officials explicitly mentioning that allowing citizens to use PSI data for free saved public money:

Something amazing has happened in UK since the government spending recorded in the COINS database was made openly available to everyone. The impressive range of free, and in many cases open source, products to display the COINS data beats the alternative of using public funds to pay for these tools when the skills and enthusiasm are clearly out there in the community”.

Still in UK, the London Datastore article reports that “we simply put out an open call on Twitter for anyone interested in helping us free London’s data and they have given us their time, energy and creativity in spades. The lesson? Do draw on the expertise and learning already there.”

Skip Newberry, Economic Development Policy Advisor, City of Portland, OR, wrote in an email to the author that “in the case of New York and its Big Apps contest, the public investment was $20k and the estimated return was $4M in economic activity ($100k per app; 40 apps created). This analysis is not terribly precise, but the point is that the citizens of NYC received something valuable for a relatively modest investment of public dollars”.

Click Fix in Bronx is another cases where allowing citizens to enter data into an official, previously closed database lowered public expenses.

The first round of the Apps for Democracy competition in Washington DC saw 50 new software services and data analysis applications created in 30 days: “The city gained $2.5m in development work outlaying just $50,000 in prize money for the winner. The Californian government introduced a transparency website costing $21k with $40k annual operational costs. As a result of citizens reporting on unnecessary spending the state saved a whopping $20m in a few short months.”

The common thread in all these stories is that opening PSI often makes it possible (more on this later) to cut public expenses without cutting existing services or innovation. Savings may come from elimination of most indirect costs that an administration is forced to have when its data are closed. Zijlstra, in The business case for Open PSI reports that: “the Dutch Ministry of Education finds that by providing standard information products as open PSI, the demand for specific information products declines, while the remaining specific questions are easier to answer… A lot of time is spent responding to requests for information from the public and journalists. (Opening data) reduces the time needed to deal with these requests and frees up resources where they are most needed.” The same point is confirmed in a 2009 report on UK postal codes: “It was trivial for us to show that it costs more to restrict the use of the CodePoint database than it actually benefits the economy… the fees paid to lawyers are greater than the cost of the database license, and of the benefits that would be paid to someone who can’t find a job”.