Paper Summary
Title: Crowdsourced data indicates broadband has a positive impact on local business creation
Source: arXiv (4 citations)
Authors: Yifeng Philip Chen et al.
Published Date: 2023-08-29
Podcast Transcript
Hello, and welcome to paper-to-podcast. Today, we're going to dive into a riveting research paper that answers the question we've all been wondering: Does faster internet make for a more productive society? The answer, as you might have guessed, is a resounding "Yes!" But it's the details that make this paper by Yifeng Philip Chen and colleagues, published in 2023, a real page-turner.
Grab a cup of coffee and settle in as we journey to England between 2011 and 2015, where our researchers have discovered that a 1% increase in download speed causes a 0.0574% increase in the annual growth rate of businesses. That's right, folks. Faster broadband means more businesses popping up like mushrooms after a rainstorm.
But don't put down your coffee just yet because the plot thickens! The impact of broadband was particularly noticeable in areas with either high or low levels of human capital. That's right, whether you're living in Einstein's neighborhood or not, better internet can boost business. The sectors that benefited the most from this speedy internet were the arts, entertainment, and recreation services, and knowledge-intensive business services.
So, the next time your Netflix buffers or your video call freezes, instead of cursing out your router, consider the potential businesses out there that could be skyrocketing if the internet was just a smidge faster!
Now, you may be thinking, "How did these researchers come to such mind-blowing conclusions?" Well, my friends, this study is essentially a detective story. Only instead of hunting down a killer, they're tracking the effects of faster and more available broadband internet on local business creation. They've gathered heaps of data, sifted through it with high-resolution panel data analysis, and even used an "instrumental variable approach" to make sure they're not playing a game of whodunit with the cause and effect.
The strength of this research lies in the precise, high-resolution crowd-sourced data and the meticulous methods used, like the 2-stage least squares model, to ensure the accuracy of their conclusions. They've also done a fantastic job controlling for various factors and conducting numerous robustness checks to validate their results.
However, every detective story has its limitations, and this research is no exception. The data only covers a five-year period, which means the economic impacts of broadband deployment before or after this period might not have been captured. Also, the data might not accurately represent the actual download speed experienced by specific businesses. Lastly, the choice of instrument used in the study could introduce possible bias.
But let's not forget about the potential applications of this research. Policymakers and city planners can use the findings to promote the expansion of broadband connectivity, especially in areas with low human capital. It's also a great resource for entrepreneurs, business owners, telecommunication companies, and educators.
So there you have it, folks! Faster broadband is not just about seamless video calls or binge-watching your favorite shows; it's a key ingredient for local business growth. And on that note, it's time for us to log off. You can find this paper and more on the paper2podcast.com website. Until next time!
Supporting Analysis
Well, brace yourself for a bit of a shocker - apparently, faster internet speeds actually help businesses grow! No, really. This paper looked at England from 2011 to 2015 and found that a 1% increase in download speed was associated with a 0.0574% increase in the annual growth rate of business establishments. So, in essence, the faster the broadband, the quicker the businesses popped up. And it gets even juicier! The impact of broadband was particularly noticeable in areas with either high or low levels of human capital. So, whether you're in a brainy hotspot or not, better internet can boost business. The study also found that businesses in the arts, entertainment and recreation services, as well as knowledge-intensive business services, benefited the most from faster broadband. So, the next time your Netflix buffers or your video call freezes, just think about all the potential businesses out there that could be growing if the internet was just a little bit faster!
This study is like a detective story with a twist. Instead of solving a murder, the researchers are trying to figure out if faster and more available broadband internet helps create new businesses at a local level. The data for the investigation came from England, specifically between 2011-2015. The research team got their hands on heaps of data about broadband speed, and they used some fancy math to make sure they were comparing apples to apples. This math is called "high-resolution panel data analysis" and it's used to control for other stuff that might impact business creation, like population size or how easy it is to get to the supermarket. But the plot thickens! They also used a method called "instrumental variable approach" (like a secret tool in a spy's toolkit) to make sure they're not mixing up cause and effect. After all, we wouldn't want to blame the butler for the crime if he was just in the wrong place at the wrong time! All this clever detective work helps ensure the conclusions they draw are as accurate as possible.
This research is compelling due to its use of high-resolution, crowdsourced data, which provides a detailed and granular view of broadband impact on local business creation. The researchers follow several best practices that add credibility to their work. They use a robust econometric method, the 2-stage least squares (2SLS) model, to tackle potential endogeneity issues. They also take care to control for various factors, including local amenities, living conditions, economic conditions, and more. Furthermore, they conduct numerous robustness checks to validate their results, including testing for the strength of their instrumental variable and exploring various model specifications. The researchers also thoughtfully stratify their data based on different characteristics, such as London/non-London regions and levels of human capital, to explore nuanced effects. This attention to detail and rigorous methodology make the research both comprehensive and reliable.
This research has a few limitations worth considering. Firstly, the data only covers a short period of five years, mainly during or just after the main phase of NGA broadband deployment. This means that the economic impacts of broadband deployment before this period might not have been captured. Also, any benefits of faster broadband speeds that emerged after 2015 are not included in the analysis. Secondly, the data, which is based on average broadband speed within each MSOA, might not accurately represent the actual download speed experienced by specific businesses. Some businesses could have chosen to purchase premium broadband service that is significantly faster than typical residential speeds. Lastly, the results could be sensitive to the choice of instrument used in the study. While the use of historical ADSL coverage is supported by logical reasoning, it could still introduce possible bias.
This research could be highly beneficial for policy makers and city planners as it highlights the importance of broadband infrastructure in stimulating local business growth. The findings could be used to inform policies promoting the expansion of broadband connectivity, particularly in areas with low human capital, to drive economic development. Furthermore, this research may also be useful for entrepreneurs and business owners, supporting the idea that locations with robust broadband infrastructure might offer competitive advantages for launching and growing businesses. Telecommunication companies could also use this study to identify potential markets for expansion of Next Generation Access (NGA) technologies. Finally, educators could use this research as a teaching resource to illustrate the real-world economic impact of technological infrastructure.