INFLATION is a simple concept, but price rises are surprisingly hard to measure. First, statisticians must work out what stuff people buy, and in what proportions (the “basket” of goods). Then they must track the prices of those goods over time. Finally they must decide how to account for new products, changing tastes and the fact that if the price of, say, apples rises, some people will buy another fruit instead rather than pay more.
Big data could make all of this easier. At the moment, calculating America’s consumer-price index (CPI) involves sending people into shops to note down prices. The basket is based on a survey of consumers which is updated only every three years or so. This looks increasingly cumbersome in a world where every online purchase is logged, somewhere, in a database. In theory online baskets and prices, at least, could be tracked digitally.
Adobe, a technology firm, is trying to do just that. The firm collects anonymised sales data from websites that use its software. The amount of data available is vast: according to the firm, it includes three-quarters of online spending at America’s top 500 retailers....Continue reading
Source: Business and finance http://ift.tt/1RoOoO8
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