Correlation is Not Causation, for Broadband, Internet or Mobility

Some problems are difficult to solve: wealth disparities, including Pareto distribuion patterns; population density and economic growth that benefits most geographies and regions instead of urban centers.   

Though it is widely believed that broadband access leads to economic growth, that cannot be proved, though many studies suggest a correlation. But correlation is not causation. 

“A  positive relationship between broadband expansion and employment growth could arise for other reasons,” says Jed Kolko of the Public Policy Institute of California. “For example, if

broadband providers expand in locations where they anticipate future growth, then the positive relationship would in part or entirely reflect this strategic decision of providers rather than a causal effect of broadband on growth.”

“Alternatively, population growth could cause both broadband expansion and employment

growth: Broadband providers could invest in areas where population (and therefore demand for broadband) is growing, while at the same time population growth could cause employment growth in industries (such as retail, restaurants, and personal services) that serve local populations<” Kolko says. 

Virtually everyone believes it is “a good thing” for people to have access to roads, clean drinking water, electricity and internet access. Yet even when these goods are nearly-universally supplied, disparities in economic growth; job creation; wealth and income persist. Those forms of infrastructure are perhaps necessary but not sufficient to cause the outcomes. 

Likewise, economists Chris Doucouliagos, Professor of Economics, Deakin University and 

Tom Stanley, Professor of Meta-Analysis, Deakin University, examined 59 studies of economic growth in developing and developed countries. 

Even some studies reporting correlation between digital technology use and economic development note the uneven outcomes, ignoring for the moment the issue of correlation or causation. 

As always, we must separate causation from correlation. They find “evidence that ICT has indeed contributed positively to economic growth, at least on average.” In other words, as we all might expect, information and communications technology are correlated with economic growth.

But “benefit” or “contributed” value is not necessarily the same as causation. It is correlation and presumed “advantage,” to be sure.

The researchers find a greater “benefit” from mobile phones than landlines, for example. They argue that mobile service has a growth effect “twice as strong as landlines.” 

source: Researchgate 

But we can note the correlation in the reverse: since mobile phones have a global penetration rate in excess of 100 percent, while landline telephones have adoption only in the 

12 percent range. So one would expect greater correlation between mobile use and fixed telephone impact. 

Perhaps economic growth leads to higher mobile phone use. Perhaps the cost of building mobile networks, compared to fixed networks, is high enough to cause much-higher mobile availability. Perhaps mobile costs are lower, and value are higher,  than for fixed service. 

In other words, perhaps mobile usage is so high because its availability is so high; its costs relatively low; its value considerable for all sorts of reasons not dependent on contribution to economic growth. 

“In contrast, we find little evidence that the Internet has had a positive impact on growth,” say the economists at Deakin University. 

As a matter of public policy, virtually everyone believes all citizens should have electricity, internet, mobile and fixed communications, clean drinking water and sanitation. Most likely believe income and wealth disparities are a problem to be fixed, if possible. 

Most likely believe that economic growth, education and other quality of life measures in rural areas should be close to that of urban areas. 

But disparities stubbornly persist. It is one thing to prefer ubiquitous access to infrastructure. But it is quite something else to believe that once provided, such ubiquitous infrastructure actually can overcome all the other background factors that create disparities of wealth, income, economic growth rates or other social amenities. 

Perhaps another way of stating the issue is that it is one thing to assure that necessary infrastructure is in place. It is quite something else to expect that what is “necessary” is therefore “sufficient” to cause different economic and social outcomes. 

Universal broadband access is a “good thing” to achieve. But it is no panacea for economic growth. In fact, we cannot actually prove that broadband “causes” growth. It might be easier to argue that broadband quality is itself an artifact of economic growth.