The Economics of Maps

Inspired by “the map is not the terrain,” we argue that maps matter for economic outcomes and examine the economic antecedents and consequences of mapping distortions. Our starting point is the observation that distortions in mapping information shape the course of history. We highlight the example of the Martellus Map that was used by Columbus to argue for a westward route to India. We then review and unify recent papers across the economics literature that imply the importance of maps for central economic outcomes. For example, London subway maps distort distances and affect route choice, Italian satellite data was used to combate property tax evasion, and HOLC redlining maps affected urban segregation. We also provide an overview of the business of mapping and the geospatial industry informing the casual reader about this historically important and fast growing $400 billion dollar industry.

Our second point is that even though maps matter, the “map is not the terrain.” Maps must necessarily abstract away from some features of the terrain and highlight others. We argue that maps distort our view of the terrain on two dimensions–data and design. They might simply not possess certain pieces of data about the terrain, or even conditional on the same data maps might look vastly different based on design choices. A prominent design choice is level of aggregation. Thus, data and design distortions are not random, but are systematic deviations shaped by economic forces. We conclude that an underinvestment in mapping data and design is likely and that design is additionally problematic because of overuse, i.e., overproduction due to imitative copycats.

Beyond the question of over/undersupply, our core argument is that who is mapping and why they are mapping matters a great deal for what type of map is produced and thus differences in maps are not random. Our core framework highlights 5 key forces that shape mapping distortions: (1) costs of mapmaking, (2) nature of demand, (3) intellectual property and competitive environment, (4) innovation in mapmaking technology, and (5) incentives of mapmaking organizations or individuals. For each one of these forces, we provide comparative statics that clarify how they are likely to shape mapping distortions. Maps are powerful forces that can shape economic outcomes in fields like development, public finance, urban economics, and innovation, among others. We call for more studies documenting maps’ market effects and more theory on equilibrium properties of maps in addition to more work on how policy makers can use biased maps most efficiently from a social welfare perspective. Finally, while our discussion has largely been limited to geographic maps, a lot of these points apply to other kinds of data, including genomic maps in pharmaceutical decision making and a lot of the current discussion on bias in training data and AI.