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‘Big Data’ grant for research on online prices and comparative living standards

29 March 2017
Robert Inklaar

Understanding why some countries are richer than others requires good measurement of living standards across countries. Crucial for such measurement is information about prices of the products that people are buying in different countries. The growing availability of online price data now makes it possible to bring much more extensive and frequent data to bear on this issue, promising improvements in our understanding of how comparative living standards evolve over time. To grasp this opportunity, the Transatlantic Platform has awarded a Digging into Data grant of €375,000 to an international team of researchers, with the team for the Netherlands led by Robert Inklaar at the Faculty of Economics and Business (FEB).

The Digging into Data program is in its fourth round, having stimulated international research to exploit ‘big data’ since 2009. The Transatlantic Platform for the Social Sciences and Humanities, which funds the program, consists of 16 funding agencies, including the Netherlands Organization for Scientific Research (NWO). In this project, FEB researchers Inklaar and Marcel Timmer collaborate with researchers in the United States, at MIT and the University of California Davis, and in Canada, at the University of British Columbia.

Data combination

The Penn World Table (PWT) database is the most widely-used database for cross-country research, with almost 100,000 users per year. Robert Feenstra (University of California Davis), Inklaar and Timmer have been responsible for developing and extending these data since 2013. An important limitation of the database is that the international price comparison data it relies on is only available once every six years and with a large delay.

The Billion Prices Project (BPP), co-founded by MIT’s Alberto Cavallo, has been ‘scraping the web’ on a daily basis for the past decade to develop more timely measures of inflation in 60 countries and, in countries where official statistics are suspect, such as Argentina, it serves as an independent source of reliable inflation data.

The aim of this project is to use the online prices collected in the BPP to develop more accurate and timely measures of cross-country prices. This will be important for the reliability of the PWT database, as well as for economic research, which has been puzzled in the past decade by large revisions to cross-country price estimates. Another aim is to show statisticians how the use of online data in compiling official statistics is a useful way of improving the frequency and reliability of official statistics without also raising costs.

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Last modified:31 January 2023 11.48 a.m.
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