How Google can tell the Bank of England what to do next
Posted in: Internet Use/New Technologies at 13/06/2011 21:38
Researchers at the Bank of England have discovered that internet searches for specific related terms are a powerful predictive tool for seeing where unemployment and house prices will go in the future.
Taking search terms such as "estate agent", "mortgage", "unemployed" and "jobseekers allowance" and comparing their frequency over a period of years with actual subsequent movements in house values and the claimant count produced results that "have the potential to be useful for economic policy making" and in some cases beat existing guides such as surveys of public opinion.
Bank of England turns to Google to shed light on economic trends
They may not know it, but web users who type "unemployment", "estate agents" or "VAT" into Google are helping the Bank of England to gather information on the state of the British economy.
The central bank is turning to internet search data as it seeks to widen its understanding of unemployment, consumer spending and the housing market.
Internet Can Predict Economic Trends
Internet searches help predict results, but they are also capable of giving a better understanding of some economic trends.
Unbeknown to most Internet users, each time they search certain words on Google they are helping to provide an indicator of economic activity.
Economists at the Bank of England have cottoned on to this.