What user searches reveal about the economy
At least that's what several researchers are doing, who turn to internet data to "unlock" the secrets of the economy... at internet speeds!
This movement, called "nowcasting," is piqued the interest of policymakers in the United States and around the world, where frustration is expressed over the lack of official statistics, at a time when so-called "timing" is everything, writes Ylan Q. Mui in the Washington Post.
If you want to know what price trends are in 86 different countries on a given day, you can track thousands of retailer prices through a program created by researchers at the Massachusetts Institute of Technology.
For those interested in knowing how many people applied for unemployment benefits in a given week, economists from the University of Michigan monitor Twitter to make the corresponding calculations.
“Statistics are very useful and absolutely necessary as a benchmark for the state of the economy, or more precisely, for how the economy was at a given time,” said economist Matthew Shapiro. “But we don’t have many indicators that tell us what’s happening now, especially when the economy is changing direction.”.
"It's not just the lack of precision, but you're also missing the turning points," Keith Hall, a researcher at George Mason University's Mercatus Center and former head of the Bureau of Labor Statistics, added to the newspaper.
In the midst of the recession, Google's chief economist Hal Varian released a paper showing how the company's search data can be used to measure, among other things, car sales and consumer spending.
Now researchers are trying to calculate everything this way: from unemployment rates to loan delinquencies.
Furthermore, the Bank of Israel and the Bank of England include some statistics from Google in their forecasts.
These models are based on connections between key search terms and related economic indicators.
Of course, there are those who express objections to the use of the internet or social media for the interpretation of various indicators.
“More data doesn’t necessarily mean better,” says Now-Casting Economics co-founder Jasper McMahon.
