Using smartphones to collect important economic data

Virginia Postrel describes a new app used in a number of countries to gather economic data on the ground:

Founded in 2012, the San Francisco-based startup Premise began by looking for a way to supplement official price indices with a quick-turnaround measure of inflation and relative currency values. It needed “a scalable, cost-effective way to collect a lot of price data,” chief executive David Soloff said in an interview. The answer was an Android app and more than 30,000 smart-phone-wielding contractors in 32 countries.

The contractors, who are paid by the usable photo and average about $100 a month, take pictures aimed at answering specific economic questions: How do the prices in government-run stores compare to those in private shops? Which brands of cigarette packages in which locations carry the required tax stamp? How many houses are hooked into power lines? What’s happening to food prices? Whatever the question, the data needed to answer it must be something a camera can capture…

The result is a collection of price indices updated much more frequently and with less time lag — although also fewer indicative items — than monthly government statistics. For Bloomberg terminal subscribers, Premise tracks food and beverage prices in the U.S., China, India, Brazil and Argentina, using indices mirroring government statistics. It gets new information daily; Bloomberg publishes new data twice a week. Premise tracks a similar index in Nigeria for Standard Chartered bank, which has made the aggregate data public. (Premise clients can drill down to see differences across products, types of retailers, or regions.) While more volatile than official statistics, the figures generally anticipate them, serving as an early-warning system for economic trends…

Premise has government clients, and it carefully positions its work as a complement to official statistics, as well as to the academic Billion Prices Project, which scrapes massive amounts of price data from online sources but can’t say what cooking oil sells for in a corner shop. Make no mistake, however: Its methods also provide valuable competition to the official data. The point, after all, is to find out what’s actually happening, not what government reports will say in a few weeks.

This is an innovative way to get data more quickly. It would be interesting to see how reliable this data is. Now it remains to be seen how markets, governments, and others will use more up-to-date information.

More broadly, smartphones could be used to collect all sorts of data. See previous posts on using the microphone and the use of additional apps such as Twitter and Waze.

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