smart disclosure progressing

Smart disclosure can bring to data the people-centric orientation that smart growth has to urban planning.  Data is an increasingly valuable economic resource.  Collecting, sharing, combining, and analyzing massive amounts of data can produce highly relevant, actionable information for individuals.  Data now drive a wide variety of services, including personalized health care, personalized education and entertainment recommendations, personally relevant information search, and personally relevant advertising. Smart disclosure promotes a data ecology that serves the public interest, fosters economic growth, and incorporates beneficial competition among private enterprises.

One flagship of smart disclosure is the U.S. Security and Exchange Commission’s movement to machine-readable financial disclosures.  To facilitate data processing, data-texts have to be well-structured and tagged with standardized, meaningful tags.  Since  2004, the Security and Exchange Commission (SEC) has been developing the application of eXensible Business Reporting Language (XBRL) to SEC financial disclosures.  The SEC calls XBRL-formated financial reports interactive data reporting.  An SEC order issued in April, 2009, requires interactive data reporting for all companies’ financial statements covering a fiscal period ending on or after June 15, 2011.  While the SEC’s current financial-filing access system (EDGAR) shows little signs of interactive data, other enterprises are stepping in to make powerful data tools.[1]  Calcbench, for example, makes SEC financial data computable.  By enabling instant data querying, company comparisons, and industry aggregations, Calcbench unlocks tremendous value from SEC data.

A principle of smart disclosure is that individuals should have access to their personal data in a machine-readable, computable form.  The U.S. Department of Veteran Affairs gives veterans access to their health records via a blue button.  Energy companies across the U.S. are giving consumers access to their energy-use data via a green button.  These buttons allow individuals to get third-party health-care and energy-use analysisTruaxis and Validas have similarly built mobile-phone bill economizing services that analyze phone users’ calling data to offer money-saving recommendations.

Thinking about smart disclosure in retailing compared to billing could be helpful.  To aid consumers with phone bills, Truaxis and Validas collect data on phone companies’ calling plans.  They collect that data largely through phone companies’ retail service offerings, rather than through their bills.  Retail offerings, however, often do not completely describe relevant prices, terms, and conditions. For example, banks advertising consumer accounts typically reveal nothing about their overdaft terms and charges, even though overdraft fees account for 74% of all of banks’ service-charge income from deposit accounts.[2]  On the other hand, consumer-service bills often don’t detail charges and may be largely incomprehensible.  Getting a good disclosure data structure could help to produce a good industry structure for the underlying service provision.

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[1] In August, 2009, the SEC announced plans to replace the EDGAR system with the Interactive Data Electronic Applications (IDEA) system. That system apparently has not thus far been realized.

[2] See 2008 FDIC Study of Bank Overdraft Programs, Executive Summary, point 11, p. III.

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