Let's face it, social media is a part of almost all of our daily lives. Therefore, it stands to reason that sites like Facebook and Twitter offer an accurate depiction of our lives, as well as economic trends in any given region.
Perhaps that's why the Bank of England, one of the oldest banks in the world, is turning to social media websites, as well as Google searches, to get a better picture of the economy in helping the bank set its interest rates.
The bank has assigned a special taskforce to monitor these sites for signs that the UK's economy is going up or down. This is because such information is more timely, and therefore, more relevant, than existing methods, which look at databases that contain information a year or more older.
"Official statistics tend to be lagging and tend to be revised," says Andy Haldane, the Bank of England's chief economist. "And what this scraping of the web can do is give us a better today read on what's going on."
So how would something like this work? Well, the taskforce could look at Google searches for jobs, which gives them an idea on employment. Or following searches for prices can signal whether inflation is affecting the economy. Keywords picked up on social media could show that people are buying things, or not buying things, along with other key important words that point to an economy's successes and failures.
Earlier this year, the bank started using these new sources of data, including their standard databases, on deciding key issues concerning the housing market.
"Some of those interventions were calibrated by analysing this big database on mortgage borrowing by pretty much everyone in the UK," says Haldane. "We have a new advanced analytics team who are constructing little models, algorithms and methods for extracting this data."
This team works for a data lab, Haldane added, saying that this was a "big strategic change for the bank."
This isn't the first time that an organization has turned to social media to look for trends and complement their existing sources of information. Earlier this year, a study showed that following tweets on Twitter could uncover mental illness trends and pinpoint locations more likely to have incidents of mental illness. Twitter was also used recently to accurately track flu outbreaks throughout the U.S. And now, experts are looking at both Twitter and Instagram to track fashion trends.
This is just the beginning of the age of big data, when even our personal statuses, tweets and photographs factor into the decisions of corporations, governments and other organizations.
[Photo Credit: Wiki Commons]
