The Billion Prices Project: Using Online Prices for Measurement and Research
New data-gathering techniques, often referred to as “Big Data” have the potential to improve statistics and empirical research in economics. In this paper we describe our work with online data at the Billion Prices Project at MIT and discuss key lessons for both inflation measurement and some fundamental research questions in macro and international economics. In particular, we show how online prices can be used to construct daily price indexes in multiple countries and to avoid measurement biases that distort evidence of price stickiness and international relative prices. We emphasize how Big Data technologies are providing macro and international economists with opportunities to stop treating the data as “given” and to get directly involved with data collection.
This paper was prepared for the Journal of Economic Perspectives. We thank the editors, Timothy Taylor, Ann Norman, Enrico Moretti, and Gordon Hanson for their helpful comments and suggestions. We thank Manuel Bertolotto, Maria Fazzolari, Diego Aparicio, Belen Bazano, and Augusto Ospital for outstanding research assistance at various stages of our Billion Prices Project research, and Pilar Iglesias and all the team at PriceStats for sharing their indexes and micro data. We also thank Chris Sims for detailed comments on an earlier version of this paper, as well as seminar participants at the MIT, IMF, IADB, Census Bureau, BEA, ECB, CEMLA, NYU, Federal Reserve Bank of San Francisco, UNECE/ILO CPI Experts Conference, NBER CIRW Conference, Bureau of Labor Statistics, and the State Street Annual Research Conferences. All remaining errors are ours. Financial support for this research was provided by MIT Sloan. Publicly available Billion Prices Project datasets can be downloaded at http://bpp.mit.edu. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Alberto Cavallo and Roberto Rigobon have an ownership stake in PriceStats LLC, a private company that uses scraped online data to compute inflation indices. Several of PriceStats' indices are shown in this paper.Roberto Rigobon
The author has an ownership stake in PriceStats LLC, a private company that uses scraped online data to compute inflation indices.
Alberto Cavallo & Roberto Rigobon, 2016. "The Billion Prices Project: Using Online Prices for Measurement and Research," Journal of Economic Perspectives, vol 30(2), pages 151-178. citation courtesy of