‘The Digital Provide: Information (technology), market performance and welfare in the South Indian fisheries sector’ by Robert Jensen, a paper to be published in the Quarterly Journal of Economics in August 2007, looks at the impact of cell phones on the economic gains of fishermen in Kerala, southern India.
The study follows the fortunes of fishermen and surveys the prices of sardines at 15 beach markets along the Keralan coast, before and after the introduction of cell phones, in 1997.
Before that date fishermen late to their local market after a good day’s fishing risked finding it oversupplied and, since fish are perishable, might have to dump some or all their catch back into the sea — even though there may be buyers for them a little farther along the coast.
According to Jensen, an average 5-8% of the total catch used to be wasted. On January 14th 1997, for example, 11 fishermen at Badagara beach had to throw their catches back into the sea, but on the same day 27 buyers at markets within a radius of 15km who would have been prepared to buy the fish.
After cell phones were introduced, the fishermen were able to call coastal markets from sea and bring in their supply to meet the demand. This gradually reduced waste, variations in prices fell dramatically and a single rate for sardines was established all along the coast.
The more efficient market brought benefits for everyone, with fishermen’s profits increasing by an average 8% and consumer prices falling by 4%.
‘Information makes markets work, and markets improve welfare,’ concludes Jensen, a development economist at Harvard University.