Policy by the Numbers: Pinball & data-driven public policy

Pinball & data-driven public policy

Wednesday, March 21, 2012

Over the last 40 years, copying technology decimated an industry that was once bigger than Hollywood.

What should public policy have to say about the fall of the pinball industry and the technological changes that led to it? Obviously, no one would support a Pinball Protection Act—but why not? If you care about data-driven public policy, it’s an interesting exercise.

As you can learn about in the documentary film, Special When Lit (Hulu; Netflix), pinball made more money for the American economy between 1955-1970 than the movie industry. Though pinball was illegal in many major markets during this time (with New York leading prohibition-style raids on arcades), teenagers went in droves down to “honky tonks” to get their fix, and popular media like Happy Days and Tommy encouraged the trend.

But as video game platforms flourished, the pinball industry faded, and now only a single company manufacturers pinball machines in the U.S.

If we measure innovation by whether competitors copied to get an edge or whether particular competitors were harmed, we’re measuring it wrong. After all, developers for systems like Nintendo copied the idea of pinball and adapted it to their systems; similarly, pinball came preloaded with Microsoft Windows 95, without a license fee being paid to pinball’s original creators. But even though this copying removed some incentive for kids to trek down to arcades and thus clearly harmed traditional pinball companies over the long run, we wouldn’t consider it bad for society.

The right measurements would focus more on the net economic and social impact of a technological shift. Of course, a portion of the impact was negative for some people, but the net impact of the video game industry has been extraordinary. Consider these metrics, for example: video games alone are now an $80B industry; consumers spend more time enjoying games than ever before; and “the art of video games” is now an exhibit at the Smithsonian.

This is a simple example that is meant to illustrate a simple point, because it’s a lesson that has implications for public policy more generally. Technological changes that may initially seem like a net negative to some sectors may end up being huge net positives for those same sectors. In order to harness those changes and expand their impact on society even further, public policy needs to measure them right. Only then can we start to make data-driven policy a reality.

Posted by Derek Slater, Policy Manager at Google

Policy by the Numbers

Pinball & data-driven public policy

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