Big Data: Google searches give central banks new tool

Aki Ito and Alisa Odenheimer, The San Francisco Chronicle, August 11, 2012

Margo Sugarman spent months last year searching on Google for double ovens, low-noise mixers and other appliances to complete her dream kitchen. Not only did those queries guide the Tel Mond, Israel, resident to the best deals for her $17,680 renovation, they also helped the Bank of Israel, which looks to searches such as Sugarman's to assess the state of the nation's $243 billion economy.

Israel's central bank is at the forefront of the hunt for new economic indicators. It analyzes keyword counts on Google for everything from aerobics classes to refrigerators to gauge consumer demand before releasing government statistics. The bank is not alone. The Federal Reserve and the central banks of Britain, Italy, Spain, Turkey and Chile have followed Israel's lead with their own studies to see if search volumes on Google correlate with broader economic trends.

At stake is the ability of the central banks to act more nimbly. Greater foresight could make the difference between a slowdown and a recession, a recovery and an inflation-stoked bubble, said Erik Brynjolfsson, a member of the Federal Reserve Bank of Boston's Academic Advisory Council.

"When central bankers were looking at traditional data, they were essentially looking out the rearview mirror," said Brynjolfsson, a professor at the Massachusetts Institute of Technology.

Making better forecasts

The December 2009 study he co-wrote on predicting U.S. home sales using Google search data was cited in studies by three central banks. "If the Fed had had access to this information, they would have been able to make better forecasts of what was happening to the housing market and known more quickly the depth of the problem," he said.

The development of Google as an economic tool started with a hunch at Google's Mountain View headquarters. After developing a new website reporting how often users searched for certain keywords, Hal Varian, Google's chief economist, said he wondered whether these data could foreshadow what traditional economic reports would show later. So he ran the numbers.

The result was a 23-page paper he co-wrote in April 2009, demonstrating how data reported on the Google Trends service improved forecasts of auto and home sales and retail spending.

Tanya Suhoy, a senior economist at the Bank of Israel, released a paper three months later that found newly available Google-mined data helped predict slowdowns and slumps in Israel.

Economists from six central banks, including the Federal Reserve, began to ask similar questions: Did more people browsing for cars predict an increase in auto sales? Was a jump in research on unemployment benefits a hint that people were losing jobs?

One challenge for policymakers is setting rates based on data often gathered weeks before. The Department of Commerce typically publishes its monthly retail report two weeks into the following month. Google makes its updated data available one to three days after searches.

Proceeding cautiously

Even the biggest proponents of Google-as-indicator cite the need to proceed cautiously. The figures go back only to 2004. By limiting its sample to Internet users, the search volumes may not reflect purchases by those who tend to live more offline: the elderly and the poor.

"Potentially, using Google could be interesting, but at the moment its forecasts of macroeconomic variables aren't reliable," said Lucrezia Reichlin, a professor at London Business School. "Google is sexy and something may come of it, but more research is needed."

Despite those limitations, the Bank of England has started tracking Google searches. The popularity of search terms such as "JSA," short for the job seekers' allowance, helped predict unemployment data, according to a June 2011 study authored by bank researchers Nick McLaren and Rachana Shanbhogue. Search counts "are likely to become an increasingly useful source of information about economic behavior," they wrote. At the Bank of Spain, Concha Artola and Enrique Galán analyzed travel-related queries in the United Kingdom in a paper released in March. Their conclusion: Searches predicted the inflow of British tourists into Spain with a lead of almost one month.

At the New York Fed, Rebecca Hellerstein and Menno Middeldorp compared the popularity of the phrase "mortgage refinance" with an index tracking the number of refinancing applications filed. They found that the forecasting model including the Google data predicted the index more accurately than the model excluding the Google data.

"This is all in its infancy, but it's fascinating," San Francisco Fed President John Williams told reporters in March. It's "an enormous amount of information" that will better help "us understand in very real time what's going on."

Aki Ito and Alisa Odenheimer are Bloomberg writers. E-mail: aito16@bloomberg.net, aodenheimer@bloomberg.net

Widening Gap Between Wealthy, Other Classes – and How to Close It – Explored in New E-book from Kauffman Foundation Scholar

Brink Lindsey cites critical need for innovation, investment in human capital in new release from Princeton University Press

Ewing Marion Kauffman Foundation, August 8, 2012

KANSAS CITY, Mo. (Aug. 8, 2012) – The growing divide between those enjoying economic prosperity and those struggling to make ends meet is a subject that commands conversation among politicians, pundits, scholars, journalists, economists and the like. But the means for narrowing the gap have proved elusive.

In his new e-book, HUMAN CAPITALISM: How Economic Growth Has Made Us Smarter – and More Unequal, Kauffman Foundation senior scholar Brink Lindsey explores the reasons behind today's economic disparity and, more importantly, suggests actions that may help to improve the situation for future generations. Released today, Lindsey's e-book original is the first for Princeton University Press. 

Greater investment in "human capital" is critically needed to stem the divide between society's haves and have-nots, according to Lindsey. He argues that the gap between elites and the rest of the population can best be explained by the ever-growing complexity of modern economies and the barriers to acquiring the skills (human capital) needed to not only survive but thrive in a new economic landscape.

Watch an interview with author Brink Lindsey about his new e-book.

In short, today's economic complexity is making the elite richer — and smarter. Lindsey explains: "As the economy makes ever-greater demands on their minds, the successful are making ever-greater investments in education and other ways of increasing their children's human capital, expanding their cognitive skills and leading them to still higher levels of success. "But unfortunately, as the rich are securely riding this virtuous cycle, the poor are trapped in a vicious one where a pattern of family breakdown, unemployment and dysfunction leads to further erosion of knowledge and skills." Lindsey's research shows that while high-skill jobs are rewarded, mid-level jobs are increasingly automated or outsourced, further widening the gap. Simply retraining workers or teaching skills doesn't address the underlying issues of cultural divisions and polarization that permeate the economy. Fueling the polarization is the resentment of those on the lower end who don't want to hear that the world has changed and that they need better jobs. To redeem the promise of human capitalism, Lindsey says it is necessary to restore the connection between rising complexity and rising human capital across the socioeconomic spectrum. 

 

His recommended solutions include: · maintain growth through policies that encourage entrepreneurship and innovation; · reform K-12 education by unleashing competition; · step up experiments with early childhood interventions that can compensate for disadvantaged environments; · combat social exclusion of low-skilled adults through low-wage job subsidies, changes in disability insurance and penal reform to reduce mass incarceration; · improve higher education by limiting tuition subsidies; and · reform land-use regulation and occupational licensing to facilitate upward mobility. 

 

The e-book is available for $4.99 (ISBN: 9781400845729) from Princeton University Press. An expanded hardcover edition of the book will be published in spring 2013. "Rising income inequality is an issue society can no longer afford to ignore. This book deepens our understanding of the forces behind the problem and is bound to stimulate useful discussion of it." ― Robert H. Frank, author of The Darwin Economy

 

About the Author Brink Lindsey is a senior scholar in Research and Policy for the Ewing Marion Kauffman Foundation, where he uses his expertise in international trade, immigration, globalization and economic development to identify the structural reforms needed to revive entrepreneurial innovation, firm formation and job creation in the wake of the Great Recession. An accomplished author, Lindsey has written several books, including The Age of Abundance: How Prosperity Transformed America's Politics and Culture; Against the Dead Hand: The Uncertain Struggle for Global Capitalism; and, with Daniel Ikenson, Antidumping Exposed: The Devilish Details of Unfair Trade Law. His writings also have been published widely in major newspapers and leading policy magazines, and he has appeared frequently on television and radio. 

 

Media Contact: Barb Schulte, 816-932-1103, bschulte@kauffman.org, Kauffman Foundation

Big Thinkers, Big Data, and "Flawed" Economics

Mark Thoma, The Fiscal Times, July 3, 2012

After attending last year’s Economics Nobel Laureates Meeting in Lindau, Germany, I was very critical of what I heard from the laureates at the meeting.  The conference is intended to bring graduate students together with the Nobel Prize winners to learn about fruitful areas for future research. Yet, with all the challenges the Great Recession posed for macroeconomic models, very little of the conference was devoted to anything related to the Great Recession. And when it did come up, the comments were “all over the map.” And some, such as Ed Prescott, were particularly appalling as they made very obvious political statements in the guise of economic analysis. I felt bad for the students who had come to the conference hoping to gain insight about where macroeconomics was headed in the future.

I am back at the meetings this year, but the topic is physics, not economics, and it’s pretty clear that most physicists think they have nothing to learn from lowly economists. That’s true even when they are working on problems in economics and finance.

But they do have something to learn. Macroeconomic models are far from perfect, but there are still important lessons within them. One important lesson comes from Robert Lucas, a Nobel laureate in economics, and it relates directly to the influx of physicists into the financial sector.

For the most part, the empirical tools used by physicists working in finance are theoretical data grubbing techniques that search for exploitable correlations in historical data. For example, if there is an asset price that is correlated with an observable variable, hopefully with a lag, then price movements can be predicted – the higher the correlation the better the prediction – and used to make profit or hedge against risk. But as the Lucas critique points out, relying on these correlations can be dangerous since they can change when people try to exploit them. 

Physicists are used to thinking about inanimate objects that do not react to policies or experiments that might affect them. To take a simple but illustrative example, suppose you tell your TV that you are about to throw a brick through the screen. Even after being warned, the TV will just sit there and be destroyed as the brick is hurled its way. But if you tell humans you are about to throw a brick at them, and the threat has some credibility, they will take action to avoid harm. People, unlike the objects physicists are used to working with, won’t just stand there and let the brick hit them in the head. This introduces additional complexity that is not present in the models that physicists rely upon – modeling humans is much harder than modeling brainless physical processes.

Old fashion economic models were much like the models that physicists use. That is, expectations were modeled in a way that did not allow people to move out of the way of the brick even if they knew it was coming. They were just like the TV. For example, policies that stimulated the economy by lowering real wages could not be offset and undermined by workers demanding wage increases. Because of this, policy was maximally effective. 

In modern macroeconomic models expectations are modeled in a more reasonable way, and agents are able to take action to avoid the harmful byproducts of macroeconomic policy. In present day Classical models, agents are sufficiently nimble to avoid harm as they dance effortlessly out of the way when the brick is tossed. In these models, policy doesn’t matter at all. In New Keynesian models agents fully anticipate policies, but frictions prevent them from fully avoiding harm. It’s similar to one of those bad dreams where you know the monster is coming, but your feet just won’t move fast enough to get out of the way. In New Keynesian models, sluggishness allows the brick to deliver a glancing, but not fatal blow – that is, policy is effective, but not as effective as when agents do not move at all.

The point is that when analysts from physics or anywhere else attempt to exploit correlations in the data, someone will be harmed – the profits come from somewhere – and people will take action to insulate themselves from those losses. The actions they take will differ from the historical correlations, and in order to understand and predict what will actually happen a theoretical model of some sort is needed. At the very least, physicists need to understand that people are different from the inanimate objects they are used to modeling, and failing to account for how agents will respond to an attempt to exploit historical correlations can lead to large – sometimes very large – analytical errors. 

I am not arguing that the influx of physicists into finance caused the crisis. But the failure to understand and appreciate what economic theory has to offer, even with all its flaws, exacerbated losses and amplified the downturn. Physicists shouldn’t forget that economists, even with their imperfect theories, can help them avoid these big and costly mistakes.

Panel: The promises and perils of big data

Rachel King, ZDNET, June 5, 2012

Summary: Big data is already enabling many businesses to make better decisions, but it has only made incremental changes in other verticals.

SAN FRANCISCO – Big data offers a lot of promise and opportunities for improving our society — especially for business and education purposes — but there are a lot of hurdles to get around first.

A few of those pitfalls and perils were discussed in detail during a panel discussion at The Economist’s two-day summit about information, which kicked off on Tuesday afternoon.

Economist data editor Kenneth Cukier got the ball rolling during a series of rolling interviews exploring the promise and perils of the data deluge.

Jeff Hammerbacher, chief scientist of Cloudera, posited that the most interesting thing going on in big data today is making data preparation more granular.

“The more you zoom in, the more pathologies you find,” Hammerbacher said.

When Cukier pressed if this meant that big data can’t always be trusted for one reason or another, Hammerbacher countered by asking, “If you can’t trust the data, what can you trust?”

“It’s hard for me to think of a case where measuring more makes you less certain,” Hammerbacher asserted.

One of the barriers towards big data at the moment, Hammerbacher hypothesized, is that we’re in this “brief pocket of time” where people involved in statistics and computer science have an advantage over most of the population in this field, allowing them to draw information and conclusions that most people can’t.

“It’s fun to exploit this inefficiency,” Hammerbacher joked, but he predicting that our tools will automate big data analytics for everyone within 10 to 15 years.

Hammerbacher continued the rolling interview style by following up with Geoffrey Nunberg, an adjunct professor at the School of Information at the University of California, Berkeley.

Nunberg commented that there has been progress in using big data sources in linguistics and how language is used as a tool in different communities, but that change has been more incremental rather than a “quantum leap.”

Looking at Google Translate, Nunberg admitted that the online translation tool is “so much better than systems we had a long time ago.” But the problem is that it is still hard to tell the difference because Google Translate still doesn’t usually produce results that even a “first year” language student would offer.

As an observer of language in the cultural scene, Nunberg said that he uses data analytics this all the time to see the way words are changing in meaning. For example, Nunberg cited the word “elite” used to be usually modified by financial terms, but now it is more associated with the media.

Turning towards social networks, Juliette Powell, author of the book, 33 Million People in the Room, cited social media as a medium “to co-create the future together” using connected technology.

When it comes to understanding data sets, Powell outlined four core elements that any Internet user would recognize that are vital for understanding big data analytics going forward: digital literacy, digital trust, platform transparency, and access.

But what is most interesting to Powell are the people themselves, adding that we shouldn’t get caught up in data sets and forget the relationships.

“It’s all about trust,” Powell asserted, explaining that we choose the information we share and that fact needs to be kept in mind when analyzing big data.

One topic that always seems to come up when discussing either social media or big data is privacy. Circling back, Cukier argued that this is not the central problem to big data, but rather “propensity” and the possibility that we’re going to have algorithims predicting our behaviors.

See also: http://www.economist.com/events-conferences/americas/information-2012

Mary Meeker's Annual Internet Trends Report

The Wall Street Journal, May 30, 2012

Mary Meeker, the former Internet analyst known during the dot-com boom as the “Queen of the Net,” has released her annual (and always massive) slide deck on the latest Internet trends.

The 112 slides are heavily focused on rapid mobile adoption and runs through a number of examples of business models that are being re-invented thanks to fast-evolving devices, better connectivity and new interfaces.

Meeker, who joined venture-capital firm Kleiner Perkins from Morgan Stanley last year, cuts to the hear of Kleiner Perkins’ push into what it calls the “third wave of innovation,” combining social networking, mobile and e-commerce.

KPCB Internet Trends 2012 (http://www.scribd.com/doc/95259089/KPCB-Internet-Trends-2012)

Social media is reinventing how business is done

Tim Mullaney, USA TODAY, May 14, 2012


When Red Robin Gourmet Burgers introduced its new Tavern Double burger line last month, the company had to get everything right. So it turned to social media.

The 460-restaurant chain used an internal social network that resembles Facebook to teach its managers everything from the recipes to the best, fastest way to make them. Instead of mailing out spiral-bound books, getting feedback during executives' sporadic store visits and taking six months to act on advice from the trenches, the network's freewheeling discussion and video produced results in days. Red Robin is already kitchen-testing recipe tweaks based on customer feedback — and the four new sandwiches just hit the table April 30.

Facebook's initial public offering Friday — the largest by a technology company — is a watershed moment for the consumer side of the Web, but social networking's real economic impact might be ahead as companies learn how to harness "social business" tools. 

Beyond advertising on Facebook or Twitter, companies are using social networks to build teams that solve problems faster, share information better among their employees and partners, bring customer ideas for new product designs to market earlier, and redesign all kinds of corporate software in Facebook's easy-to-learn style.

"At a very basic level, Facebook is the most popular application ever, with a billion people who know how to use it," said Marc Benioff, chief executive of salesforce.com, whose Chatter social-networking tools are used by 150,000 companies. "The ability to access information is much better because it's easier to get to it."

After a slow start, Big Business is embracing social media in a big way. Forrester Research says the sales of software to run corporate social networks will grow 61% a year and be a $6.4 billion business by 2016.

Two-thirds of big companies surveyed now use Web 2.0 tools such as social networks or blogs, with use of internal social networks up 50% since 2008, according to a survey by McKinsey & Co. Nearly 90% said they have reaped at least one measurable business benefit, though most say the improvements have been modest.

Heavy use of social tools has a statistically significant correlation to profitability, said Michael Chui, senior fellow at the McKinsey Global Institute. But it's early: Only about 3% of respondents used social business tools for all three major uses — reaching customers, connecting employees and coordinating with suppliers, McKinsey said.

The Social Web seems to be doing a different job in Corporate America than the first-generation Web. In the late 1990s, companies such as Wal-Mart used the Internet to streamline supply chains and better manage inventories to hold down prices. Banks used the new technology to cut the cost of processing mortgages by as much as two-thirds, by eliminating clerical workers and substituting e-mail for expensive overnight deliveries. If Web 1.0 automated routine processes and warehouses, Web 2.0 is about organizing design work and creativity, said Andrew McAfee, professor of technology and operations management at Harvard Business School.

"We asked ourselves where would social networking go once everyone had a Facebook account?" said David Sacks, president of San Francisco-based Yammer, whose software runs Red Robin's internal social network. "Big ideas always move from the consumer market into the enterprise market."

"Innovation is a two-way street," said Chris Laping, Red Robin's senior vice president for business transformation. "When people see things, they feel things. And when they feel things, they change."

Making connections

Using social networks to foster connections lets companies match the skills of people working all over the world who wouldn't easily find each other, said Eric Lesser, a research director at IBM's Institute for Business Value. It's especially valuable for companies built by acquisition, whose managers in different divisions often don't know each other, he said.

Take SuperValu, a collection of supermarket chains ranging from Shaw's in Boston to Albertsons in California. SuperValu last year used Yammer to build a network to connect 11,000 executives and store managers, chief information officer Wayne Shurts said. They've organized themselves into more than 1,000 groups to talk about specific challenges. 

For example, 182 managers from different chains joined a group to mull common problems of running markets in college towns. Another 153 banded together to talk about running stores in beach communities, where business is seasonal. Those didn't replace any other process, because there was no way to do it before: The managers couldn't all be pulled from their stores for retreats or meetings, and the cost of getting them together would have been prohibitive, Shurts said.

One result: A promotion at college-oriented stores that sold 8,000 $99 mini-refrigerators last fall, each stuffed with $99 worth of coupons to bring the customers back for food. Another discussion led to college-town "beer pong" displays packaging ping-pong balls, red Solo cups and brewskis to fill them up. Both ideas were floated last spring and ready by August, he said.

"You've got to let the conversations happen, even if you might not like all of that conversation," Shurts said. "It's going to happen around the water cooler anyway."

Listening to customers

Companies can also use blogs and social sites to bring customers into their product-design process, said Barton George, director of the Dell computer division that sells to Internet-based companies. Through its IdeaStorm site, Dell has taken in more than 17,000 ideas for new or improved products, and has adopted nearly 500, including backlit keyboards that are better for working on airplanes. 

Other times, Dell puts its own ideas on IdeaStorm, in what it calls a Storm Session, to get feedback before going ahead. On May 6, Dell posted a plan on IdeaStorm describing a proposed specialty laptop, upgrading an existing machine to target people who write wireless apps and other Web-based software using a variation of the Linux operating system called Ubuntu, George said.

By Monday, customers had posted 83 ideas for refinements to the machine on IdeaStorm, covering specific software bugs to broader issues such as whether the screen should be shiny or not. In addition, 35,000 people visited George's Web posting about the new laptop — 10 times more than any other posting he's ever made, he said. The laptop is due on the market by year's end. Dell says the process produces more detailed feedback than traditional focus groups, and builds links to an important group of customers.

So far, the social Web hasn't boosted U.S. productivity growth the way the first-generation Internet did in the late 1990s. But economists such as MIT's Erik Brynjolfsson say it takes about five years for a new technology to show its full impact on companies that deploy it. Social networking is about two or three years in at most companies, McAfee said. 

Companies are tinkering with the technology and their own business processes, trying to find ways to match them up to get the most impact and learn how to interpret all the unorganized data users disclose about themselves on the sites, Lesser said.

In the meantime, the trend has already generated one IPO for a smaller company, Jive Software, that sells social-networking tools to companies. Jive went public at $12 a share in December and now trades around $19.50, achieving a $1.2 billion market value, though it's not yet profitable.

Facebook hasn't actively pursued the social business market. It let companies such as Yammer and Jive mimic its look and feel, because making Facebook-like features an industry standard helped cement Facebook's leadership in consumer social networks, Yammer's Sacks said.

Social media has the potential to be as important to the broader economy as more obviously business-related information technologies such as mobile phones and cloud computing, said Stacey Bishop, a venture capitalist at Scale Venture Partners, in Foster City, Calif.

"I'd put the cloud first, but they're all important and they're all related," Bishop said. "Mobile is an extension of the cloud, because it lets you get your data wherever you are. And social is the layer on top of that, making it easier to cross-communicate."

New WEF report: Rethinking Personal Data: Strengthening Trust

Rethinking Personal Data: Strengthening Trust examines how the appropriate use of personal data can create enormous value for governments, organizations and individuals. 

Produced in collaboration with The Boston Consulting Group, the report provides a multistakeholder perspective on how the potential value of personal data can be unlocked.

The report aims to foster dialogue around some of the key questions that need to be resolved to ensure long-term and sustainable value creation. Who owns personal data? How can privacy be protected? What is the role of context in setting permissions? How can organizations be held accountable? What is the role of regulators?  It outlines concrete steps that stakeholders can take, focusing on three areas: upgrading protection and security, agreeing on rights and responsibilities for using data based on context, and driving accountability and enforcement. The report concludes with a call for leaders to work together to achieve a coordinated yet decentralized approach to this global challenge.

Big data is worth nothing without big science

As with gold or oil, data has no intrinsic value, writes Webtrends CEO Alex Yoder. Big science, which bridges the gap between knowledge and insight, is where the real value is.

Alex Yoder,  CNET News, May 15, 2012 

We are living in "the age of big data," according to The World Economic Forum. Renowned futurist Ray Kurzweil agrees. I do too. 

As the likes of Google, Facebook, Adobe Systems, and IBM embrace big data with gusto, startups are also popping up with the promise to help companies discover what one of the most valuable assets in the world can accomplish for them. No industry is untouched by big data, which is notably transforming the way social networks work today. However, the key factor that will determine success for companies in this age is not simply big data, but big science. 

The World Economic Forum's report on data equated it with an asset such as gold. Others have declared that data is "the new oil." But, as with gold or oil, data has no intrinsic value. 

Gold requires mining and processing before it finds its way into our jewelry, electronics, and even the Fort Knox vault. Oil requires extraction and refinement before it becomes the gasoline that fuels our vehicles. Likewise, data requires collection, mining and, finally, analysis before we can realize its true value for businesses, governments, and individuals alike. 

Gold requires mining and processing before it finds its way into our jewelry, electronics, and even the Fort Knox vault. Oil requires extraction and refinement before it becomes the gasoline that fuels our vehicles. Likewise, data requires collection, mining and, finally, analysis before we can realize its true value for businesses, governments, and individuals alike. 

According to IDC, the amount of data that companies are wrestling with is growing at 50 percent per year -- or more than doubling every two years. Many organizations are rich in data but poor in insight. That's where big science comes in. 

The collection and mining of massive amounts of digital data currently defines the term big data. Those are processes that businesses largely handle. However, the analysis of that data -- that magic ingredient of algorithms and advanced mathematics that bridges the gap between knowledge and insight -- is big science. It is where the value is. It is the future. 

Put simply, the analysis that big science brings to the table makes big data relevant. I envision big science combining with big data to create big opportunities in three significant ways: real-time relevant content, data visualization, and predictive analytics. Although I think that these trends will be especially important for my industry, digital marketing and analytics, I have no doubt that they will impact all industries, as chief marketing officers are inevitably drawn closer to chief information officers in an effort to tame and harness big data. 

Getting right message to the right customer at the right time is the promise of relevant, real-time marketing. Big science, not big data, will bring this to life. 

Marketers, using analytics to collect massive amounts of digital information, have been working with big data for years now. In fact, they are flooded with geographic, demographic, and ethnographic data about their customers. The big science of processing and analyzing this data, through human expertise and machine intelligence, will empower marketers to identify and segment their customers, tailor and target the most relevant content to them, and deliver these experiences in real time across a range of digital channels and devices. 

As was stated, human intelligence is a part of the big science that will help to deliver relevant content in real time. The human intelligence of big science will be fueled by data visualization. 

Visualizations of Web traffic have been around for years. These are relatively simplistic, however, and they typically visualize data that is historical. Big science will take the raw potential of big data and make it digestible for the human mind in real time. Imagine a retailer being able to visualize and track both the shipments of new goods and the intake of returned or unused items in real time through a bright, simple, and dynamic user interface. The opportunities for optimizing business processes, and revenue in just this one scenario are endless. 

But what if you could use your big data to see not just what's happening now, but also to model what you could be doing to optimize outcomes for the future? Enter big science fueling predictive analytics. 

The big science of predictive analytics will take advantage of the historical patterns ingrained in big data to unlock insights to inform current and future strategies. Should you change the image in an advertisement from a black-and-white graphic to a color photo? If you did, what sorts of results could you expect? Big science can help show you the way. 

It takes complex algorithms, powerful computing and, perhaps most of all, human analysts to build and administer the big science that turns the "then and now" nature of big data into "when." Last year, the McKinsey Global Institute projected that the United States alone needs 140,000 to 190,000 more workers with "deep analytical expertise." 

Those who become experts in the science behind the big-data phenomenon will become the next wave of digital and corporate geniuses. One potential genius, Gilad Elbaz, the influential investor and inventor behind big-data startup Factual, recently told The New York Times, "I have been thinking that we need to get more personal data. I want to get people to figure out a way to get people to leave their data to science."

Paul Krugman: Wasting Our Minds

Paul Krugman, The New York Times, April 29, 2012

In Spain, the unemployment rate among workers under 25 is more than 50 percent. In Ireland almost a third of the young are unemployed. Here in America, youth unemployment is “only” 16.5 percent, which is still terrible — but things could be worse. 

And sure enough, many politicians are doing all they can to guarantee that things will, in fact, get worse. We’ve been hearing a lot about the war on women, which is real enough. But there’s also a war on the young, which is just as real even if it’s better disguised. And it’s doing immense harm, not just to the young, but to the nation’s future. 

Let’s start with some advice Mitt Romney gave to college students during an appearance last week. After denouncing President Obama’s “divisiveness,” the candidate told his audience, “Take a shot, go for it, take a risk, get the education, borrow money if you have to from your parents, start a business.” 

The first thing you notice here is, of course, the Romney touch — the distinctive lack of empathy for those who weren’t born into affluent families, who can’t rely on the Bank of Mom and Dad to finance their ambitions. But the rest of the remark is just as bad in its own way.

I mean, “get the education”? And pay for it how? Tuition at public colleges and universities has soared, in part thanks to sharp reductions in state aid. Mr. Romney isn’t proposing anything that would fix that; he is, however, a strong supporter of the Ryan budget plan, which would drastically cut federal student aid, causing roughly a million students to lose their Pell grants. 

So how, exactly, are young people from cash-strapped families supposed to “get the education”? Back in March Mr. Romney had the answer: Find the college “that has a little lower price where you can get a good education.” Good luck with that. But I guess it’s divisive to point out that Mr. Romney’s prescriptions are useless for Americans who weren’t born with his advantages. 

There is, however, a larger issue: even if students do manage, somehow, to “get the education,” which they do all too often by incurring a lot of debt, they’ll be graduating into an economy that doesn’t seem to want them. 

You’ve probably heard lots about how workers with college degrees are faring better in this slump than those with only a high school education, which is true. But the story is far less encouraging if you focus not on middle-aged Americans with degrees but on recent graduates.  

Unemployment among recent graduates has soared; so has part-time work, presumably reflecting the inability of graduates to find full-time jobs. Perhaps most telling, earnings have plunged even among those graduates working full time — a sign that many have been forced to take jobs that make no use of their education. 

College graduates, then, are taking it on the chin thanks to the weak economy. And research tells us that the price isn’t temporary: students who graduate into a bad economy never recover the lost ground. Instead, their earnings are depressed for life. 

What the young need most of all, then, is a better job market. People like Mr. Romney claim that they have the recipe for job creation: slash taxes on corporations and the rich, slash spending on public services and the poor. But we now have plenty of evidence on how these policies actually work in a depressed economy — and they clearly destroy jobs rather than create them. 

For as you look at the economic devastation in Europe, you should bear in mind that some of the countries experiencing the worst devastation have been doing everything American conservatives say we should do here. Not long ago, conservatives gushed over Ireland’s economic policies, especially its low corporate tax rate; the Heritage Foundation used to give it higher marks for “economic freedom” than any other Western nation. When things went bad, Ireland once again received lavish praise, this time for its harsh spending cuts, which were supposed to inspire confidence and lead to quick recovery. 

And now, as I said, almost a third of Ireland’s young can’t find jobs. 

What should we do to help America’s young? Basically, the opposite of what Mr. Romney and his friends want. We should be expanding student aid, not slashing it. And we should reverse the de facto austerity policies that are holding back the U.S. economy — the unprecedented cutbacks at the state and local level, which have been hitting education especially hard. 

Yes, such a policy reversal would cost money. But refusing to spend that money is foolish and shortsighted even in purely fiscal terms. Remember, the young aren’t just America’s future; they’re the future of the tax base, too. 

A mind is a terrible thing to waste; wasting the minds of a whole generation is even more terrible. Let’s stop doing it.

Kauffman: Leverage big data to control healthcare costs

Opening Up Big Data is the Big Solution to Curing Health Care Ills, according to Kauffman Report

Media Contacts:
Rose Levy, 646-660-8641, rose@goldinsolutions.com, Goldin Solutions
Barbara Pruitt, 816-932-1288; bpruitt@kauffman.org, Kauffman Foundation

Kauffman Foundation task force offers incremental approaches to unlocking obstacles to efficient health care reform

WASHINGTON (April 19, 2012) – Cost trends in U.S. health care consistently increase at about 2.5 percentage points faster than the general rate of inflation – clearly an unsustainable rate. To address what it called "America's most urgent public policy problem," the Ewing Marion Kauffman Foundation released a report at The Atlantic's fourth annual Health Care Forum in Washington today that focuses on improving the cost-benefit balance in American health care through open access to medical data. The conference will be live streamed at http://events.theatlantic.com, and tweeters can follow the conversation on @Atlantic_Live, with the hashtag #HealthCare2012.

The report, "Valuing Health Care: Improving Productivity and Quality," is based on the recommendations of 31 experts from related fields, whom the Kauffman Foundation convened to reframe thinking around the question, "How can the productivity and value of American health care be increased, in both the short-term and long-term?"

While acknowledging that there's no shortage of reports and recommendations for health care reform, the task force took a unique approach to tackling health care value and productivity challenges.

"Rather than look for a 'one-shot-fix' solution, the task force focused on incremental reforms that cumulatively can both reduce costs and enhance the value of health care delivered to Americans, regardless of whether and how the Affordable Care Act is implemented," said Robert Litan, vice president of research and policy at the Kauffman Foundation and a task force co-organizer. "The underlying thread to the recommendations is leveraging big medical data."

"Using proper safeguards, we need to open the information that is locked in medical offices, hospitals and the files of pharmaceutical and insurance companies," said John Wilbanks, Kauffman senior fellow and an author of the report. "For example, combining larger datasets on drug response with genomic data on patients could steer therapies to the people they are most likely to help. This could substantially reduce the need for trial-and-error medicine, with all its discomforts, high costs and sometimes tragically wrong guesses."

Specifically, the report recommends:

· Unleashing the power of information by breaking down silos and encouraging data sharing between research centers, medical offices, pharmaceutical companies, insurance firms and others; and that a new corps of data entrepreneurs be incentivized to collect and analyze existing medical data to discover and then disseminate new therapies.

· Funding more translational, cross-cutting research, with larger average grants made available to larger teams, many of them with participants from multiple institutions; and requiring collaboration across research institutions.

· Reforming medical malpractice systems to streamline new drug approvals and remove counter-productive restrictions on health insurance premiums.

· Empowering patients by, among other means, providing unbiased information on treatment options' benefits and drawbacks, and helping them make choices about the relevant lifestyle implications and risk-reward tradeoffs.

Further, the task force contends, health care delivery deserves its own national research program, one focused on comparative efficiency research. More efficiency (with acceptable quality guidelines) leads to profitability, and corrects the easy practice of simply passing costs down the health care stream.

Intellectual Property and the U.S. Economy: Industries in Focus

Economics and Statistics Administration, U.S. Department of Commerce, April 10, 2012
 
WASHINGTON, April 11, 2012 /PRNewswire via COMTEX/ -- The U.S. Commerce Department today released a comprehensive report, entitled "Intellectual Property and the U.S. Economy: Industries in Focus," which finds that intellectual property (IP)-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to, or 34.8 percent of, U.S. gross domestic product (GDP).

"This first of its kind report shows that IP-intensive industries have a direct and significant impact on our nation's economy and the creation of American jobs," said Commerce Secretary John Bryson. "When Americans know that their ideas will be protected, they have greater incentive to pursue advances and technologies that help keep us competitive, and our businesses have the confidence they need to hire more workers. That is why this Administration's efforts to protect intellectual property, and modernize the patent and trademark system are so crucial to a 21st century economy that is built to last."

While IP is used in virtually every segment of the U.S. economy, the report identifies the 75 industries that use patent, copyright, or trademark protections most extensively. These "IP-intensive industries" are the source - directly or indirectly - of 40 million jobs. That's more than a quarter of all the jobs in this country. Some of the most IP-intensive industries include: Computer and peripheral equipment, audio and video equipment manufacturing, newspaper and book publishers, Pharmaceutical and medicines, Semiconductor and other electronic components, and the Medical equipment space.

"Strong intellectual property protections encourage our businesses to pursue the next great idea, which is vital to maintaining America's competitive edge and driving our overall prosperity," said Deputy Commerce Secretary Rebecca Blank. "The report released today shows that wages for jobs in IP-intensive industries are higher than average and continue to increase, meaning that these jobs aren't just important for businesses and entrepreneurs - they are important for working families. The IP protections we put in place today are helping support economic security for America's middle class now and in the years to come."

The report has several important findings, including:

IP-intensive industries contributed $5.06 trillion to the U.S. economy or 34.8 percent of GDP in 2010.

40 million jobs, or 27.7 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010.

Between 2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries, faster than the 1.0 percent growth in non-IP-intensive industries.

Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports.

"Every job in some way, produces, supplies, consumes, or relies on innovation, creativity, and commercial distinctiveness," said Under Secretary of Commerce for Intellectual Property and USPTO Director David Kappos. "America needs to continue investing in a high quality and appropriately balanced intellectual property system that will promote innovative, open, and competitive markets while helping to ensure that the U.S. private sector remains America's innovation engine."

The report is a joint product of the U.S. Commerce Department's Economics and Statistics Administration (ESA) and the U.S. Patent and Trademark Office (USPTO). Secretary Bryson was joined today by Deputy Secretary Rebecca Blank, Under Secretary for Intellectual Property and USPTO Director David Kappos, U.S. Chamber of Commerce President and CEO Tom Donohue, and American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) President Richard Trumka at a White House event, to unveil the report.

The Department of Commerce and USPTO are unleashing new innovations and new industries by advancing a robust framework of intellectual property protections for a global economy. The USPTO has already implemented eight provisions of the recently passed America Invents Act, which are enhancing the speed and quality of patent processing, connecting businesses with the tools they need to develop their technologies, and speeding up patent applications. Since President Obama took office, the backlog has been reduced by nearly 15%, from about 750,000 to just under 641,000 today. That reduction has come despite the acceleration of American ingenuity, and patent filings in the U.S. grew 5% in FY 2011. By re-engineering the IP system from the ground up, the USPTO is creating a 21st century innovation architecture that's built to last and will help America remain a global leader going forward.

Patents, trademarks, and copyrights are the principal means for establishing ownership rights to inventions and ideas, and provide a legal foundation by which intangible ideas and creations generate tangible benefits to businesses and employees. IP protection affects commerce throughout the economy, including by: providing incentives to invent and create; protecting innovators from unauthorized copying; facilitating vertical specialization in technology markets; creating a platform for financial investments in innovation; supporting startup liquidity and growth through mergers, acquisitions, and IPOs; making licensing-based technology business models possible; and, enabling a more efficient market for technology transfer and trading in technology and ideas.

The full report can be found online at http://www.esa.doc.gov/Reports/intellectual-property-and-us-economy-industries-focus .

To learn more about the Department of Commerce's efforts to spur innovation and protect IP, visit www.uspto.gov .  News Media Contact:Sarah Horowitz, Department of Commerce Office of Public Affairs, (202) 482-4883 SOURCE U.S. Department of Commerce

Internet accounts for 4.7% of U.S. economy

Annalyn Censky @CNNMoney March 19, 2012

NEW YORK (CNNMoney) -- The Internet contributes more to the American economy than the entire federal government, according to a new study by the Boston Consulting Group.

The Internet accounted for $684 billion, or 4.7% of all U.S. economic activity in 2010, Boston Consulting Group found. By way of comparison, the federal government, contributed $625 billion, or 4.3%, to the nation's output.

If it was considered its own separate industry, the Internet would also be larger than America's education, construction or agricultural sectors.

In the retail sphere alone, e-commerce accounted for 5% of U.S. sales in 2010.

"All businesses are increasingly digital and need to think about how to take advantage of these opportunities," said Dominic Field, a BCG partner and co-author of the report. "And for policymakers, we would hope they recognize the importance of Internet growth and making sure their countries are taking advantage of these opportunities."

As a share of gross domestic product, only three countries have larger Internet economies: the United Kingdom, South Korea and China. The U.S. is tied with Japan.

Boston Consulting Group predicts the Internet will grow about 10% a year through 2016 in the Group of 20 nations. It will grow nearly twice as fast in emerging markets as in developed economies, with Argentina and India accounting for the fastest growth, the study said.

"The U.S. is relatively mature as an Internet economy, whereas some of the developing economies are further behind -- so their growth rates are higher," Field said.

Granted, measuring the full impact of the Internet can be a fuzzy matter. In the Boston Consulting Group study, the researchers included the impact of e-commerce, what consumers pay to access the Internet and money spent by businesses and the government on building Internet infrastructure.

The study also looked at some other slightly silly metrics to measure how consumers value the Internet. It found for example, that 77% of Americans would be willing to give up chocolate for an entire year, rather than go without the Internet. Only 21% though would give up sex, and an even smaller 7% would go without a shower.

Americans perceive the Internet to be worth about $3,000 a year, even though on average, they spend only $472 each year on devices, applications, services and access.