The economic nature of information

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Abstract
In 1962, economist Fritz Machlup predicted that by the year 2000 more people would be employed to manipulate information than matter or energy. Marc Porat calculated in 1977 that the primary task of 46 percent of the U.S. workforce was to manipulate information. In America and much of the rest of the world, information is a major consumer good and an input in the production of all goods and services, it is the flow of knowledge by which energy and matter are made to serve us. The embodiment of information in people, machines, and organizational arrangements accounts for the majority of society's progress. The importance of information stems not only from its central role in the daily functioning and progress of all societies but from the effects its unusual characteristics have on human behavior and institutional structures and arrangements. This paper summarizes the unusual economic properties of information as a commodity and highlights their impact on the exchange of information. A heuristic taxonomy of information is provided to more precisely define scientific and technological information and to illustrate the variation in strength of certain characteristics across major types of information. The final section briefly discusses the difficulties that the characteristics of information cause in measuring its value.

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