If you haven’t heard of the The Billion Prices Project, you should check out this New Yorker article by James Surowiecki. In short,
The B.P.P., which was designed by the M.I.T. economists Alberto Cavallo and Roberto Rigobon, gathers price data not via survey but, rather, by continuously scouring the Web for prices of online goods around the world. (In the U.S., it collects more than half a million prices daily—five times the number that the government looks at.) Using this information, Cavallo and Rigobon have succeeded in building what amounts to the first real-time inflation index. The B.P.P. tells us what’s happening now, not what was happening a month ago. For instance, after Lehman Brothers went under, in September, 2008, the project’s data showed that businesses started cutting prices almost immediately, which suggested that demand had collapsed. The government’s numbers, by contrast, didn’t show this deflationary pressure until that November. This year, there’s been a mild uptick in annual inflation, and again the B.P.P. detected the new trend before the Consumer Price Index did. That kind of early heads-up could help governments make more timely decisions.
It’s a brilliant example of how the smart combination of computing power and vast amount of data on the Internet to produce something not possible otherwise. Read the rest of the article to find out more of the B.P.P.