NASA made news this week when it was reported the agency had conducted a major study of aviation safety, interviewing over 20,000 pilots, and then sat on the data. An official defended that decision because the findings could damage the public’s confidence in airlines and affect airline profits, according to an Associated Press story.
Similarly, the Minnesota Department of Health recently sat on information about deaths of mining workers from mesothelioma. Then-Commissioner Dianne Mandernach said the delay in releasing the data was necessary while the department designed a research program to study them.
The question of what information should be available to whom – and when – is a knotty one. Information is valuable to an economy. More information generally lets people and businesses make better decisions. Markets function more efficiently when information is plentiful for buyers and sellers than when it is scarce.
However, personal privacy rights and legitimate needs of business confidentiality dictate that much government information be withheld from the public. Some information clearly should be public and some not. And then there are gray areas in between.
The government accumulates much information. Some comes from administering taxes, supervising financial institutions or handling farm-subsidy payments. Some is tabulated from recurring censuses and surveys. Some comes from research projects commissioned by the government.
In both the NASA and state Health Department cases, an administrator decided that because the pubic might not interpret information correctly, it should not be released at all. This is patronizing to the public. Mining workers exposed to asbestos can make better decisions about their own health care if they know the full risk of their past exposure. The public can make better decisions about flying if they have more information about safety. If there are serious concerns about data being misleading, that can be addressed when the data are released.
Moreover, public disclosure of data allows others to analyze them. They can announce findings that confirm, refute or alter initial impressions created by the raw data. Open access to data that permits others to replicate research is a key aspect of modern science.
There are legitimate reasons not to disclose data. Filling out a tax return or a census questionnaire should not expose one’s private life to the public. Nor should filing government forms benefit a business’s competitors. Besides privacy rights, there is the practical consideration that if government does not keep personal and business information confidential, people have incentives to lie to the government.
The Census Bureau tabulates much information about manufacturing, agriculture and other business activities, but it generally avoids publishing data that would reveal information about a specific company.
Banks are an exception. Periodically they must submit detailed financial information to the government in a “call report.” The data largely are available to the public for each bank, under the rationale that banking is a business in which government grants a specific privilege or franchise in the form of a bank charter.
Depositors run greater risks entrusting their life savings to a bank than they do buying a new shirt at the mall. Hence, banks must disclose financial information that clothing stores need not. But regulatory agencies do not disclose information from bank examinations.
Except for call-report data, however, information about banks and other financial firms usually is kept secret. The Federal Reserve and Treasury Department have much information about the solvency of banks and investment firms. Individual households and businesses might make better savings and financing decisions if they knew everything that regulators know.
The problem is that public fears about financial problems of banks and investment companies may generate a self-fulfilling prophecy of economic doom. There is a long history of public fears about banks leading to panicked withdrawals of deposits that in turn led to recessions. Reactions to adverse information about financial institutions can spill over into greater harm to the economy as a whole than can reactions to cancer mortality data or aviation near-collisions. At least, that is the theory.
© 2007 Edward Lotterman
Chanarambie Consulting, Inc.