Googling the future; Economic indicators, Economist (Apr 18)
Economists might turn to Google Trends to extract some data about consumer behaviour for econometric models.
"In a new paper written with Hyunyoung Choi, a colleague at Google [of Hal Varian], he argues that fluctuations in the frequency with which people search for certain words or phrases online can improve the accuracy of the econometric models used to predict, for example, retail-sales figures or house sales. Actual numbers for such things are usually available only with a lag. But Google's search data are updated every day, so they can in theory capture shifts in consumer behaviour before official numbers are released." ...
"For example, using data on searches for trucks and SUVs to predict the monthly sales of motor vehicles reduces the average error by up to 18% compared with the predictions from a model that did not incorporate the search data. The volume of searches for Hong Kong carried out in countries like America, Britain, Australia and India also seems to predict eventual tourist arrivals to the territory from these countries rather well."
Posted by Gwen at April 19, 2009 11:48 AM