The Information Economy: Definition and Measurement
Porat's nine-volume study for the US Department of Commerce was the first rigorous attempt to measure how much of the American economy was already devoted to the production, processing, and distribution of information.
Writing his Stanford dissertation in the mid-1970s, he developed a classification system that divided economic activity into primary information sectors (computing, telecommunications, publishing), secondary information sectors (information activities within non-information firms), and a residual goods-producing sector.
His conclusion — that roughly half the US workforce was already engaged in information work — predated and directly influenced the "information society" discourse of the 1980s and 1990s, from Bell to Castells.
The study remains a landmark in economic measurement methodology, showing that the transition to an information economy was well underway decades before the internet made it visible to everyone.
Central argument
Porat argues that by the mid-1970s roughly half the US workforce was already engaged in information work, a finding he reached by constructing a rigorous classification system that split economic activity into primary information sectors (computing, telecommunications, publishing), secondary information sectors (information functions embedded within non-information firms), and a residual goods-producing sector. His central thesis is that the transition to an information economy was not a future prospect but an already-accomplished structural reality, invisible only because existing national accounting frameworks were not built to measure it. The methodological contribution is inseparable from the empirical one: Porat had to invent the measurement categories before he could produce the finding.
Critique
Porat's classification system, while pioneering, conflates the volume of information-related labor with the economic value generated by that labor — counting workers in information roles says little about whether information is the primary source of productivity or profit in those roles. The secondary information sector category in particular is methodologically elastic: almost any white-collar function inside a manufacturer or retailer can be labeled 'information work,' which risks inflating the headline figure and obscuring meaningful distinctions between firms where information is incidental overhead and those where it is the core value driver. A thoughtful reader might also note that the framework predates any serious treatment of data as an asset, meaning it measures information activity as labor input while remaining blind to the structural shift in which information itself becomes the product.
Why it matters for product
Porat's distinction between primary and secondary information sectors maps directly onto a recurring organizational design question for CPOs: whether the product and data functions embedded across business units should be treated as support overhead or recognized as a separate, strategically coherent sector with its own investment logic and measurement framework. Teams that lack this distinction tend to underfund and under-govern the information capabilities scattered across the org — analytics, content, internal tooling — because they are never aggregated into a legible budget or strategy. More broadly, Porat's lesson that a structural shift can be well underway before the dominant measurement system can see it is a direct caution against relying on legacy product metrics that were designed for a goods or service logic when the actual value being created is informational.