Wednesday, November 17, 2010

Billion Prices Project @ MIT


"The Billion Prices Project @ MIT is an academic initiative that collects prices from hundreds of online retailers around the world on a daily basis to conduct economic research. We currently monitor daily price fluctuations of ~5 million items sold by ~300 online retailers in more than 70 countries. 

BPP Database Key Facts 

Statistics updated every day
5 million individual items
70 countries
Started in October of 2007
Supermarkets, electronics, apparel, furniture, real estate, etc.

Data collection: Our data is collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full population of products sold by individual retailers, allowing us to observe every single price change that takes place. Our data includes information on product descriptions, package sizes, brands, special characteristics (e.g. “organic”), and whether the item is on sale or price control. 

Example: The chart above shows daily price indexes for the U.S. from July 2008 through November 15, 2010, comparing the BPP Index to the Consumer Price Index.

See WSJ article here on the BPP.   

13 Comments:

At 11/17/2010 11:01 AM, Blogger Free2Choose said...

Love this....really cool site. Thanks for sharing

 
At 11/17/2010 11:05 AM, Blogger morganovich said...

using online prices as an inflation proxy has severe shortcomings.

products sold online are exposed to the greatest amount of competition and price shopping.

therefore, a basket of online goods will significantly understate real world inflation.

it also leaves out most of the big expenses like healthcare, housing, food, education, insurance, fuel, etc.

both this project and the similar one from google will have very limited use and may well mask more than they reveal.

you cannot take the most rapidly deflating 5-10% of consumption and use it to stand for the whole.

even the internal wal-mart survey is showing 4% inflation... (and those are also heavy price pressure items that ought to be increasing in cost less rapidly than the full consumer basket)

 
At 11/17/2010 11:49 AM, Blogger Buddy R Pacifico said...

This is a really interesting site and its data provides greater insight into price movements. A really worthwhile chart might show graphs for BBP, CPI, gas prices and healthcare as well as housing rental and housing purchase prices -- to give a big picture.

The two professors that run the sight give personal answers to questions about the Billion Prices Project at their ccomments section.

 
At 11/17/2010 11:50 AM, Blogger bix1951 said...

in my business I have cut my prices from 10% to 20% since the peak. When adjusted for "inflation" my reductions are even greater. I am a housing provider. I haven't seen any indication I can raise my rates now.

 
At 11/17/2010 12:19 PM, Blogger Benjamin said...

The MIT project is fascinating, and may well someday replace some government stats...but keep in mind it is measuring global inflation.

The US core CPI rate just came in at the lowest rate ever recorded, at 0.6 percent y-o-y. This completely smashes any stupid commentary that we have to worry about inflation.

The 0.6 percent level probably overstates real inflation by 0.8 percent or so, according to the conservative Michael Boskin.

We are in deflation now, in the USA.

 
At 11/17/2010 1:28 PM, Blogger sethstorm said...

I'll wait for an index that's not from an arrogant university.

 
At 11/17/2010 1:55 PM, Blogger Hydra said...

To me, it looks like it is in pretty good agreement with the CPI.

Morganovich seems to be saying neither one of them is any good and things are much worse than displayed.

Benji says they don't compare because you are matching a World measure against a US measure.

And Seth says he doesn't believe the data because the source is "arrogant". I read that as a code word for "liberal".

So much for independent evidence.

 
At 11/17/2010 2:40 PM, Blogger NormanB said...

Forget about whether or not this is accurate for CPI what it shows is that internet mining can lead to real time information from which to make decisions on. This is only the beginning and I believe that a whole new branch of economics will soon get serious attention. Prof. Perry, get it going in your department.

 
At 11/17/2010 3:17 PM, Blogger Hydra said...

Norman:

I agree with you. Take the data for what it is worth and make decisions accordingly.

Morganovich seems to say this data understimates inflation and is of limited value.

Bix and Benji think we are in deflation.

"At most, one of them is correct"
Bertrand Russell, on Religion.

 
At 11/17/2010 3:42 PM, Blogger Benjamin said...

MOrganivic--

I love your posts, but you are very wrong about inflation.


"How big is the CPI’s bias? Well, in 1996, the Social Security Administration commissioned a study on the accuracy of the CPI as a measure of the cost of living. This so-called “Boskin Commission Report” said the CPI was overstated by about 1.1 percentage points per year. The commission identified several sources of potential bias, but about half of the 1.1 percentage points resulted from new products and quality changes that were slow or otherwise imperfectly introduced into the price statistic.

Since that time, the Bureau of Labor Statistics has initiated a number of methodological changes that have reduced the CPI’s mismeasurement. In a 2001 paper, Federal Reserve Board economists David Lebow and Jeremy Rudd put the CPI bias at only about 0.6 percentage points. And again, of this amount, the big share of the bias (about 0.4 percentage points) resulted from the imperfect accounting of new and improved goods.

Now, in an article (available to all in its working paper version) appearing in the latest issue of the American Economic Review, Christian Broda and David Weinstein say the earlier estimates of the new goods/quality bias may be a bit understated. The authors examine prices from the AC Nielsen Homescan database and conclude that between 1996 and 2003, new and improved goods biased the CPI, on average, by about 0.8 percentage points per year. If this estimate is accurate, consumer price increases since last October would actually be around zero, or even slightly negative, once we account for the mismeasurement of the CPI caused by new and improved goods."


Given all this, we are in deflation now.

 
At 11/17/2010 7:38 PM, Blogger Jason said...

Can you have deflation AND deflation. Because, for services, there are no abilities to lever better prices. However, my grocery and gas expenses are going up every month.

A puzzle? Or the new reality of the global economy where national economies are similar to the "local economies" models prior to communication and transportation revolutions?

 
At 11/17/2010 8:00 PM, Blogger aorod said...

The base price isn't important, it's the change that is important and the trend...

 
At 11/18/2010 11:09 AM, Blogger Steve said...

In 2008 it's harder to see since even the CPI was falling rapidly, but it looks like the "Black Friday" and holiday shopping season are pretty big outliers in the data. Which is what you would expect from an online-only price index. Very interesting...

Look at Nov. and Dec. for 2009. Pretty big drop in the BPP figure without a corresponding drop in the CPI.

Would be interested to look at this graph again at the start of next year.

 

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