In an attempt to better understand the behavior of UK citizens, the Bank of England has started tracking search trends on Google. The bank has high hopes that this will improve the speed of economic reporting, especially as it relates to mortgage behavior, inflation perceptions, and the demand for durable goods.
How the Tracking Works
This isn't a case of the Bank of England examining Google's trends and taking the search data's (key)word for it. Rather, since both economic data and Google's search trends have years of data points to look through, the work is correlative. By connecting specific search behaviors with historical economic trends, the Bank of England hopes to get indicators that can be applied to current data.
The predictive abilities of Google search data, when coupled with the historic economic trends, have shown to be quite powerful. According to Rachana Shanbhogue and Nick McLaren, two researchers at the Bank of England, "These appear to be as useful as existing indicators. For house prices, the results are somewhat stronger: search term variables can outperform some existing indicators." The data being examined to determine the effectiveness of the Google search indicators stretches back a full seven years (to 2004).
While Google's search data is the only search data being used, a representative stated that the techniques being used with Google "could equally well be applied to data from other search engines if they were to make similar statistics available."
What the Bank of England Is Learning
The Bank of England is currently looking at indicators of several key behaviors, including:
- The demand for durable goods (such as flatscreen TVs or fridges).
- Behaviors related to mortgage debt, including active repayment and property sales.
- Inflation perception, in part to track/understand dissatisfaction with the Bank of England itself; studies have shown that higher inflation perception rates lead to great dissatisfaction, and the Bank of England is now struggling against a declining rate of reported satisfaction.
Representatives have stated that the applications are far broader, however, and researchers are actively comparing the economic and search data for more viable indicators. All data will be applied to help increase the bank's general knowledge of current trends, allowing for more informed policy-making and other choices.
While the vote of confidence in Google's data is important to take away from this story, there's another element that webmasters should pay attention to: The study of 2004 to 2011 search data and its correlation to economic trends validates, scientifically, the viability of search data as a way to predict consumer behavior. In other words, keep your eyes on that data!