Crowdsourcing Mobile App Takes the Globe’s Economic Pulse

Tom Simonite in MIT Technology Review: “In early September, news outlets reported that the price of onions in India had suddenly spiked nearly 300 percent over prices a year before. Analysts warned that the jump in price for this food staple could signal an impending economic crisis, and the Research Bank of India quickly raised interest rates.
A startup company called Premise might’ve helped make the response to India’s onion crisis timelier. As part of a novel approach to tracking the global economy from the bottom up, the company has a daily feed of onion prices from stores around India. More than 700 people in cities around the globe use a mobile app to log the prices of key products in local stores each day.

Premise’s cofounder David Soloff says it’s a valuable way to take the pulse of economies around the world, especially since stores frequently update their prices in response to economic pressures such as wholesale costs and consumer confidence. “All this information is hiding in plain sight on store shelves,” he says, “but there’s no way of capturing and aggregating it in any meaningful way.”
That information could provide a quick way to track and even predict inflation measures such as the U.S. Consumer Price Index. Inflation figures influence the financial industry and are used to set governments’ monetary and fiscal policy, but they are typically updated only once a month. Soloff says Premise’s analyses have shown that for some economies, the data the company collects can reliably predict monthly inflation figures four to six weeks in advance. “You don’t look at the weather forecast once a month,” he says….
Premise’s data may have other uses outside the financial industry. As part of a United Nations program called Global Pulse, Cavallo and PriceStats, which was founded after financial professionals began relying on data from an ongoing academic price-indexing effort called the Billion Prices Project, devised bread price indexes for several Latin American countries. Such indexes typically predict street prices and help governments and NGOs spot emerging food crises. Premise’s data could be used in the same way. The information could also be used to monitor areas of the world, such as Africa, where tracking online prices is unreliable, he says.”