We Don't Know What We Don't Know

One fascination I have with public policies is how often we have no idea whether our policies actually work. That perhaps is not surprising, given the complexity of most “human, civic and social problems.” And, for many reasons, not the least of which is ethical, we never can do controlled studies. 

Some of that uncertainty can be seen in public policies to support home broadband, where we still do not have conclusive and consistent evidence that municipal networks actually produce outcomes greater than the opportunity costs and actual investment.  

Study / report	Year	Geography	Method	Headline finding (summary)
Christopher S. Yoo & Timothy Pfenninger, “Municipal Fiber in the United States: A Financial Assessment” (UPenn)	2017 (report); published versions 2022	United States (sample of municipal FTTH projects)	Financial statement analysis of 20 municipal fiber projects (multi-year cash flow and debt repayment projections)	Found 11 of 20 municipal fiber projects generated negative cash flow over the sample period; only 2 of 20 were on track to recover total project costs within expected useful life — authors conclude many municipal projects would not cover costs without subsidies or external support. (Penn Carey Law)
Casey J. Mulligan / Jonathan Kolko (Public Policy Institute of California), “Does Broadband Boost Local Economic Development?” (Kolko, PPIC)	2010	U.S. counties / metro areas (United States)	Econometric analysis of broadband penetration vs local economic indicators	Concluded broadband expansion had limited measurable effects on local employment and wages in their models — economic benefits to residents appear limited and do not clearly outweigh large public deployment costs in some settings. (Public Policy Institute of California)
Grant S. Ford, “The rewards of municipal broadband: An econometric assessment” (Journal article / working paper)	2021	U.S. cities with municipal investments	Econometric evaluation of labor-market / economic outcomes after municipal broadband investment	Found no economically or statistically significant effect of municipal broadband on labor-market outcomes — casts doubt on large local economic returns sufficient to justify big public subsidies. (ScienceDirect)
C. S. Yoo (earlier working material / analyses summarized in press), “Municipal Fiber in the United States: An Empirical Assessment of Financial Performance” (UPenn summary & press)	2017 (widely reported)	Sample U.S. municipal FTTH projects	Empirical accounting of cash flows, break-even projections	Reported multiple high-profile municipal projects that would not repay costs within realistic timeframes (e.g., extremely long payback estimates for some cities), concluding that fiscal risks to municipalities can be material without subsidies. (Penn Carey Law)
ITIF / policy analyses (myth-debunking & affordability critiques), “Are High Broadband Prices Holding Back Adoption? / Broadband Myths” (ITIF)	2021	United States (policy analysis)	Policy literature review & data analysis	Argues that affordability/subsidy programs are likely to be a blunt tool in many contexts; recommends targeted subsidies instead of broad infrastructure subsidies because wide public subsidies may not be cost-effective in driving adoption or economic gains. (Policy critique relevant to subsidy cost-effectiveness.) (ITIF)

The issue, in all cases, is that careful investigators do point out that correlation is not causation. 

They argue that there might be a correlation between higher home broadband investment and economic outcomes, though not suggesting the home broadband investment “caused” the increases. 

The broad problem is that it never is clear whether home broadband investment follows economic growth and reflects it, or somehow enables it. Economic growth, when it happens, is likely the result of a lot of interconnected causes, and home broadband might not even be among the drivers. 

Study / report	Year	Geography	Method	Headline finding (short)
Qiang, Rossotto & Kimura (World Bank — Information and Communications for Development)	2009	120 countries (developed + developing)	Cross-country growth regressions (endogenous growth framework)	Found broadband diffusion associated with higher GDP growth: estimated sizable positive effects of broadband penetration on GDP per capita for both developing and developed countries. (World Bank)
Koutroumpis — The economic impact of broadband on growth (Oxford / OECD analyses)	2009 (and follow-ups)	OECD countries (multi-country panels)	Simultaneous macro + micro modelling / panel IV	Estimates that faster broadband adoption and higher speeds measurably raise GDP — e.g., a 10% increase in penetration or speed changes produce nontrivial % gains in GDP. (ITU)
Czernich, Falck, Kretschmer & Woessmann — Broadband Infrastructure and Economic Growth (Economic Journal)	2011	OECD panel (1996–2007)	Instrumental-variable panel regressions	A 10 percentage-point increase in broadband penetration raised annual per-capita growth by ~0.9–1.5 percentage points (IV estimates). (OUP Academic)
Briglauer et al. — Socioeconomic benefits of high-speed broadband (peer-reviewed / 2024)	2024	Cross-country / country-level analyses	Econometric analysis of adoption & speed vs GDP outcomes	Reports positive short-run and pandemic-era effects of increased adoption/speeds on GDP; quantifies significant returns to adoption increases. (ScienceDirect)
Brattle Group — Economic Benefits of Fiber Deployment	2024	United States (nationwide modeling)	Benefit-cost modeling (NPV of housing value, income, employment, social benefits)	Finds large net present value benefits from fiber deployment (authors estimate substantial NPV and argue public support may be justified because private returns under-capture social benefits). (Brattle)
Brattle Group — Paying for Itself: ACP delivers more than it costs (Affordable Connectivity Program analysis)	2025	United States (program level)	Program cost-benefit modeling (health, education, labor market savings)	Concludes reinstating ACP yields net economic benefits greater than program cost via health, education, and labor productivity gains. (Brattle)
ITU / CITI (Columbia) — The Impact of Broadband on the Economy (Raul Katz)	2012	Global literature review + case analyses	Literature review + case studies; synthesis of empirical evidence	Summarizes broad evidence that broadband has positive effects on growth, productivity, and jobs and outlines policy issues for maximizing social returns. (ITU)
Broadband Commission / OECD syntheses	2013–2020	International	Literature syntheses / cross-country summaries	Survey of literature: typical estimates show a 10% rise in penetration can raise GDP growth by 0.24%–1.5% depending on context; policy reports argue public intervention can be warranted to capture social returns. (Broadband Commission)

Do Home Broadband Speed Rankings Really Matter Much?

Ookla’s May 2024 report on mobile and home broadband shows Singapore and Hong Kong leading the list of countries with the fastest speeds, which is not surprising at all. 

You might not have expected Chile to rank third, the UAE and Iceland in spots four and five. The United States ranks sixth, which is sort of an anomaly. Over the past half century or so, it would not have been uncommon for U.S. metrics to rank anywhere from 12th to 20th on measures of tele-density or internet access bandwidth. 

We might reasonably ask how much importance such speed rankings actually mean. One might argue the rankings generally suggest that small city-states and small countries can produce good broadband infrastructure faster and better than any large country, simply because the physical facilities are smaller in coverage area, with higher density. And network size and population density directly affect the cost of such facilities. 

Hong Kong, Singapore and other such areas will always be able to create high-performance access infrastructure faster than any continent-sized country with low population density. 

Nor, looking only at city-states and small countries, might we see clear correlations between growth and home broadband speeds. Singapore and UAE might be strong performers in that regard. But other small countries might not show the same strong correlations. It might be the case that only rarely, if ever, are home broadband and economic growth rates uncorrelated. 

But the correlations are not consistent. So it is worth speculating about how important such rankings actually are, when it comes to applying the tools and wringing business or economic value out of them. 

To be sure, lots of studies suggest there is a correlation between economic growth (gross domestic product) and home broadband availability and speed, with perhaps greater correlations related to availability than speed. 

Study	Year	Key Findings
Ericsson, Arthur D. Little, and Chalmers University of Technology	2011	Doubling broadband speeds can add 0.3% to GDP growth
World Bank	2009	10% increase in broadband penetration associated with 1.38% increase in GDP growth for developing countries
OECD	2011	Positive but diminishing returns from increased broadband speeds on economic growth
ITU (International Telecommunication Union)	2012	Broadband has a statistically significant impact on GDP growth, but effect varies by region and level of development
Rohman and Bohlin	2012	Doubling broadband speed contributes 0.3% GDP growth in OECD countries

But it might also be worth noting that there are similar correlations between gross domestic product gains and educational attainment; rule of law; capital investment; income and wealth; or infrastructure density and availability. 

And correlation is not causation. 

In fact, “causality” might even be the reverse of what we might think. 

Keep in mind that economists generally economists might generally agree there is a  “causal” relationship between growth and:

• Capital accumulation (both physical and human)  

• Innovation and technological progress (research and development; creation of new ideas)

• Macroeconomic stability helps (Low and stable inflation; sound fiscal policies)

• Openness to trade

• Quality Institutions (rule of law and low levels of corruption)

• Financial markets well developed

So we might consider education an input to future capital; innovation or technology development. We might consider home broadband another form of capital. 

But it's often unclear whether some factors said to cause growth are themselves caused by growth. Does financial development, trade openness and political stability cause growth, or does growth cause financial development, trade and political stability? We cannot really say. 

Consider “good schools,” quality home broadband, medical care or other supposed platforms aiding growth. 

It might plausibly be the case that demand for good schools and fast internet access, for example. Are the product of demand from citizens who already have the resources to pay for such quality broadband, as well as the use cases. 

Likewise, if local schools are funded by property taxes, then “good schools” might be “caused” by affluent citizens who can afford expensive housing, which comes with high property values, leading to high tax revenues to fund schools. 

In fact, one might well argue that often, the prevalence of quality home broadband, transportation infrastructure or any number of other supposed producers of economic growth might instead be a result of pre-existing strong economic growth. 

Rather than robust economic growth being “created” by quality broadband; educational attainment and other drivers, it is equally plausible that pre-existing high growth creates wealth and resources that in turn lead to the other outcomes. 

You might suspect educational attainment, for example, is correlated with stronger economic growth, and studies support that notion. But a flywheel might be at work, where pre-existing high attainment leads to more attainment; high growth reinforcing more high growth. 

Study/Source	Correlation/Finding
Georgia Tech study	0.75 correlation between years of education and GDP per capita. 1 year increase in education associated with 34.4% increase in GDP per capita.
Hanushek & Peterson analysis	Raising US student test scores to Canadian levels estimated to add $77 trillion to US economy over 80 years.
International comparison	Countries with top test scores (e.g. Singapore, Hong Kong) had ~2% higher annual GDP growth compared to average.
OECD countries analysis	Positive correlation between education expenditure at all levels and GDP, stronger over 5-10 year periods.
Developing countries analysis	Positive correlation between primary education spending and GDP growth. Negative correlation for secondary/higher education.
General finding	Education is "intrinsically linked to economic growth", influencing both personal salaries and national GDP.

Likewise, studies of transportation infrastructure also tend to be correlated with gross domestic product, but sometimes only moderately. 

Transportation Mode/Metric	Correlation with GDP	Time Period	Source/Study
Civil aviation (freight)	0.907 (high)	1990-2007	IOP Science study
Civil aviation (freight)	0.711 (strong)	2008-2017	IOP Science study
Inland waterway (freight)	0.816 (strong)	1990-2007	IOP Science study
Inland waterway (freight)	0.789 (strong)	2008-2017	IOP Science study
Road transport (freight)	0.715 (strong)	1990-2007	IOP Science study
Road transport (freight)	0.741 (strong)	2008-2017	IOP Science study
Railway (freight)	0.668 (strong)	1990-2007	IOP Science study
Railway (freight)	0.558 (moderate)	2008-2017	IOP Science study
Water transportation (freight)	0.750 (strongest)	1989-2018	E3S Conferences study
Highway (freight)	0.709 (strong)	1989-2018	E3S Conferences study
Pipeline (freight)	0.700 (strong)	1989-2018	E3S Conferences study
Railway (freight)	0.678 (strong)	1989-2018	E3S Conferences study
Civil aviation (freight)	0.593 (moderate)	1989-2018	E3S Conferences study

The point is that we cannot be very sure that faster home broadband is the result of growth or the cause of growth. Nor can we know very much about how the “quality” of broadband (speed and latency performance, for example) produces growth or is a reflection of growth.