How better information transformed a fragmented fishing economy into a more efficient marketplace
By Abdul Shameer
Some of the clearest demonstrations of economic theory don’t come from textbooks or trading floors, but from places like the early-morning fish markets of coastal Kerala. A 2007 paper in the Quarterly Journal of Economics titled “The Digital Provide” by Robert Jensen, then a Harvard professor, captures one such case.
Jensen investigated the intricacies of Kerala’s fish markets during a period in the late 1990s and early 2000s when mobile phone infrastructure was being rolled out in the area. This rollout provided what economists call a “natural experiment” because it allowed for the comparison of the markets with and without mobile phones.
The difference made by mobile phones was dramatic. It improved incomes for fishermen, reduced prices for consumers and almost completely eliminated wastage.
Kerala’s fishing industry is enormous and consists mostly of small operations evenly spread out along the coast. Fish is a daily staple for much of the population, and hundreds of thousands of livelihoods depend on the industry.
Fishermen would head out several hours before dawn to catch fish in the coastal seas, some dozens of miles from the coast. They would then head back with their catch to one of the early wholesale beach markets where fish resellers or large restaurants would come and buy their stock for the day. These beach markets would end by around 8 a.m. after which the resellers would go and sell fish in nearby towns and villages.
The problem with this arrangement is that you don’t know in advance how much fish will come to any given beach market. If the boats coming to a market caught too much fish that day, some of the catch will not find buyers. Much of the remaining catch would end up being sold for low prices as boats undercut each other.
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Cold chains to efficiently store and transport fish were expensive and not well developed at that time, so any excess fish would have to be dumped in the ocean. Conversely, if the boats coming to the market don’t have enough fish that day, some buyers are likely to go empty-handed, while those that do get fish will likely end up paying exorbitant amounts.
Jensen realized that the impending rollout of cell towers in Kerala’s northern districts of Kozhikode, Kannur and Kasaragod provided an opportunity to see the impact this had on the beach fish markets. Of the approximately 35 beach markets in the three districts, he chose five markets per district for a total of fifteen to conduct weekly surveys. He chose a sample of sardine fishing boats originating in these markets and asked each boat for granular details about the day’s catches, sales, market of sale and whether they had a mobile phone.
He conducted these surveys every week for five years starting in 1996. Cell phone towers eventually started operating in early 1997 in Kozhikode, in mid-1998 in Kannur and mid-2000 in Kasaragod. Since the major cities and cell phone towers were right on the coast, cell signals would reach out into the sea and give the fishing boats an opportunity to check market conditions and decide which market to land at.
The impact was immediate and measurable. Wasted fish dropped from an average of 8 percent of the total catch to virtually zero and daily price differences between the markets narrowed considerably.
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The surveys also showed that around a third of boats now opted to land at different beach markets, where previously they invariably went to their home markets. The same pattern was repeated successively in each district as the cell towers came online there, providing further evidence of the usefulness of the new technology.
One of the most interesting findings is that both producers and consumers benefited, something economists do not always predict. Fishermen’s profits increased on average by 8 percent while the consumer price declined by 4 percent, which also resulted in consumers buying more fish.
The study highlights a key insight often missed in debates about technology and development: that information itself is a form of infrastructure. Roads move goods physically, while communication moves knowledge about where goods need to go.
Critics of digital infrastructure have often argued that developing regions should prioritize basics like health and nutrition over technology. But for workers and traders whose livelihoods depend on markets, better information can directly improve those fundamentals by raising incomes and reducing waste. Today, the opportunities for sharing market information online are vastly larger, and the improvements to welfare are also evident.
(Abdul Shameer is a technology professional living in the Seattle area.)