Research Suggests That Software Piracy Lowers Poverty

When copyright holders discuss online piracy, they often highlight the associated losses. However, not all pirated downloads equal a loss.

While there is certainly a group of pirates who simply refuse to pay for content, there are also people who simply can’t afford it.

Piracy and Poverty

This is particularly true for software, which can be rather pricey. Interestingly, software piracy can also open up a door to escape from poverty. Mastering coding or editing skills, for example, allows people to start a business or join the workforce.

The Internet is rife with examples of top designers who started with a piece of pirated software, mastered their skills, and went on to become a professional. This raises the question: can software piracy mitigate poverty?

A new paper published in the Balkan Journal of Social Sciences tries to provide some insight into the matter. The researchers examine the effect of software piracy on poverty in developing and Latin American economies between 2003 and 2017.

The piracy rate is determined by the per capita usage of pirated software or the claimed losses. Poverty is measured through six indicators including the percentage of the population living below the poverty threshold.

Study Links Software Piracy to Less Poverty

The overall conclusions based on those data are quite clear. Higher piracy levels are linked to less poverty. This effect is consistent and statistically significant for all six poverty indicators.

“[T]here is a statistically significant reverse relationship between usage of pirated software and poverty in all six poverty models for both developing and Latin American countries samples,” the researchers write.

This link between piracy and poverty remains intact when the model is controlled for other variables such as unemployment and health expenditure. This means that the hypothesis that “increases in usage of pirated software decrease poverty” seems likely.

Less Poverty Leads to More Piracy?

As highlighted earlier, it would make sense to find such an effect. That said, the methodology section of the paper is rather short and there is no discussion section that elaborates on the findings. However, people should always be cautious to explain such links as causal effects.

If we frame the research question the other way around, the results could also make sense. In other words, does a decrease in poverty lead to more software piracy?

It’s not hard to imagine that people living far below the poverty line aren’t particularly concerned with downloading copies of Photoshop. However, as poverty decreases, they might be able to buy a computer, which undoubtedly increases their likelihood of pirating anything at all.

So perhaps software piracy lowers poverty, while lower poverty also leads to more piracy. This flywheel effect may explain the significant results and could be particularly strong in developing countries.

The paper doesn’t mention this reverse relationship but it wouldn’t be a surprise if it plays a role here. Unfortunately, the researchers didn’t respond to our request for comment, but it might be worth a follow-up study.