United States Department of Labor
“Big data” is a buzzword you hear often these days. Long before the term even existed, BLS and other federal statistical agencies have used alternative data sources—that today would be labeled “big data”—to revolutionize the way we do business.
Last week I participated in a panel, sponsored by the American Enterprise Institute, to discuss the current and future role of federal statistical agencies in this era of big data. (See the video of the discussion.)
My fellow panelists and I agreed on one point early on: our dislike for the term “big data”!
Former U.S. Census Bureau Director Robert Groves prefers the term “organic data,” while Burning Glass CEO Matthew Sigelman refers to big data as “open market” data sources. Billion Prices Project cofounder Alberto Cavallo defines big data as “new technologies for data collection.”
Whatever term we use, we all agreed that government and private-sector data should be viewed as complementary or mutually reinforcing.
During my presentation, I discussed how big data can complement government surveys. I talked about how the Billion Prices Project, which Cavallo cofounded at the Massachusetts Institute of Technology, relates to the BLS Consumer Price Index.
The Billion Prices Project provides the extreme timeliness of a daily price index and large sample sizes that serve the almost instant needs of some data users, particularly investors.
The Consumer Price Index measures changes in the cost of living for a representative consumer buying a representative market basket. This comprehensive approach is critical to serving policymakers, Social Security recipients, and many others who use the Consumer Price Index in government programs and private contracts.
Far from being a competition, these two approaches provide important, though different, ways to measure and track the economy. Or, as I like to say, two lenses are always better than one.
I was happy to learn the panelists appreciate the key role that federal statistical agencies must play in the emerging world of big data. All parties need to work together to better use all the information we have, whether survey data or big data. Indeed, blending these two types of data creatively will produce new and better ways to inform sound decision making by our nation’s businesses, families, and policymakers. That’s a win-win for everyone.