Are Internet Shutdowns Crippling Economies? The Shocking Truth About Digital Blackouts
"A groundbreaking study reveals the massive economic impact of internet shutdowns, challenging previous estimates and highlighting the critical need for reliable digital infrastructure."
In an era defined by digital connectivity, the internet has become the backbone of modern economies. From e-commerce and online banking to remote work and social networking, our daily lives are increasingly intertwined with the digital world. But what happens when governments pull the plug, shutting down the internet in the name of security or political control? The consequences, it turns out, are far more devastating than many realize.
Internet shutdowns, defined as deliberate disruptions of internet or electronic communications, have become an increasingly common tactic used by governments around the world. India, in particular, has a troubling record, having shut down the internet at least 646 times between 2018 and 2023, primarily to quell protests, suppress communal violence, or prevent cheating during examinations. While the stated intentions may vary, the impact on the economy is undeniable.
Traditional methods of assessing the economic costs of internet shutdowns often rely on broad estimates of the digital economy's size and assumed multiplier effects. However, a new study takes a more granular approach, directly measuring the impact of a specific internet shutdown on economic activity. The findings are alarming: the true cost of these digital blackouts is significantly higher than previously thought, with potentially long-lasting consequences for individuals, businesses, and entire economies.
How Do You Measure the Economic Impact of an Internet Shutdown?
Researchers from the University of Michigan developed a novel methodology to assess the economic impact of internet shutdowns, focusing on a shutdown imposed by the Rajasthan state government in India on September 26, 2021. This shutdown was intended to prevent cheating during a teacher eligibility exam, but it inadvertently created a unique opportunity to study the economic effects of digital blackouts.
- Mobile Signal: The researchers created a metric called "Pings," which measures the total mobile device pings per 5x5 km grid between 6 a.m. and 6 p.m. on the shutdown day relative to the average in the same time window on the preceding three Sundays. This provided a direct measure of the disruption to mobile connectivity.
- Economic Activity: They recomputed the Pings measure for a subset of devices that emitted a signal during both the shutdown period and the three Sundays prior. This subset was assumed to represent devices with continuous background location collection activated, making them less susceptible to signal disruption. By focusing on the activity of these devices around "economic areas" (points of interest in SafeGraph Places or OpenStreetMaps related to commercial or public use), the researchers were able to proxy economic activity.
- Free Discontinuity Regression: The study proposed a non-parametric regression method that estimates the location and size of discontinuities by segmenting the regression surface. This estimator is based on a convex relaxation of the Mumford-Shah functional, for which identification and convergence are established.
A Wake-Up Call for the Digital Age
The research paints a stark picture of the economic consequences of internet shutdowns. The study estimated that the shutdown in Rajasthan resulted in a 25-35% reduction in economic activity, far exceeding previous estimates. This number remains in effect for both rural and city areas, and all areas are effected more or less the same.