Can big data improve economic measurement?

In an era of big data, where our every move is seemingly captured and recorded, traditional means of collecting data for official measures of the economy – from surveys to in-person price checks – appear increasingly outdated. Additionally, as the economy changes with the spread of online shopping, “free” internet sites and the gig economy, traditional methods of measurement may not adequately capture economic activity and variations in living standards. Privately collected big data has the potential to supplement or, in some cases, even supplant standard government indicators used to accurately capture changes in prices, quantities, and quality. However, difficulties related to interpretation and access remain significant barriers to properly utilizing such data.

On March 14, as part of its Productivity Measurement Initiative, the Hutchins Center on Fiscal & Monetary Policy at Brookings examined the potential as well as the obstacles to using big data in economic measurement, featuring several case studies and a panel of experts.