The German parliament is considering legislation that would require the government to delete certain statistical data it collects about firms after 10 years, a change that would deal a severe blow to important economic research that depends on longitudinal data. In addition to threatening to derail important research, this proposal demonstrates how poorly some policymakers understand the government’s critical role in producing high-value data sets. Not only should the German parliament reject this proposal, it should affirm the value of government efforts to produce ever more comprehensive and complete statistical data for research and analysis.
Until recently, Germany had a very positive story to tell about how it was enabling important economic research through its innovative data management practices. The German government frequently surveys firms to collect detailed data about the economy. While these surveys provide useful information on their own, the government recognized that their value would be enhanced considerably if data from multiple surveys could be brought together so that more variables could be analysed at once and these variables could be tracked over time. To achieve this, the German government uses the same identifier for each firm in every survey and has combined these data sets through a project known as AFiD (Amtliche Firmendaten für Deutschland or “official firm data for Germany”).
However, the viability of these combined data sets is at risk. On April 27, 2016, the Civil Liberties Committee of Germany’s Parliament, the Bundestag, will debate a proposal to amend the Federal Statistics Act (BStatG, Bundesstatistikgesetz) to require the Federal Statistical Office (Destatis) to delete the company identification numbers used to match data across surveys after 10 years. Deleting these records will prevent researchers from tracking firms over time, thus depriving economists and policymakers of an important tool for monitoring and understanding the changing conditions of the German economy.
The reaction from researchers has been fierce. As Theresia Bauer, Minister of Science, Research, and the Arts for the German state of Baden-Württemberg warned, imposing this restriction would jeopardize many important research projects that rely on longitudinal data about firms that spans decades. The German Economics Association—which has 4,000 members—echoed a similar concern in an open letter of protest.
This proposal is a misguided attempt to protect confidential firm data that would do more harm than good. Some policymakers mistakenly believe that limits should be placed on how much data an organization retains because less data means more privacy. Unfortunately, this type of thinking often threatens data-driven innovation. In reality, the length of time an organization retains data does not affect the security of the data, but it does impact the usability of the data. Moreover, in this particular case, the Federal Statistical Office already employs a number of safeguards to protect the confidentiality of the information it collects from firms including anonymizing the data, requiring researchers to access the data through secure research facilities, and imposing strict terms of use on all researchers.
Given the benefits of these longitudinal data sets and the existing protections in place to safeguard the confidentiality of firm data, German lawmakers should reject attempts to limit how long the Federal Statistics Office retains its merged survey data. Instead, lawmakers should be working to support efforts to improve the quality, timeliness, and completeness of government statistics not only to enable better academic research, but also to help policymakers better understand the economy. And going forward, lawmakers would be wise to listen to the concerns of scientists and researchers before proposing policies that would erase data that is vital to research.
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