IDEAS home Printed from https://ideas.repec.org/p/hbs/wpaper/18-022.html
   My bibliography  Save this paper

Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity

Author

Listed:
  • Edward L. Glaeser

    () (Harvard University)

  • Hyunjin Kim

    () (Harvard Business School)

  • Michael Luca

    () (Harvard Business School, Negotiation, Organizations & Markets Unit)

Abstract

Can new data sources from online platforms help to measure local economic activity? Government datasets from agencies such as the U.S. Census Bureau provide the standard measures of local economic activity at the local level. However, these statistics typically appear only after multi-year lags, and the public-facing versions are aggregated to the county or ZIP code level. In contrast, crowdsourced data from online platforms such as Yelp are often contemporaneous and geographically finer than official government statistics. In this paper, we present evidence that Yelp data can complement government surveys by measuring economic activity in close to real time, at a granular level, and at almost any geographic scale. Changes in the number of businesses and restaurants reviewed on Yelp can predict changes in the number of overall establishments and restaurants in County Business Patterns. An algorithm using contemporaneous and lagged Yelp data can explain 29.2 percent of the residual variance after accounting for lagged CBP data, in a testing sample not used to generate the algorithm. The algorithm is more accurate for denser, wealthier, and more educated ZIP codes.

Suggested Citation

  • Edward L. Glaeser & Hyunjin Kim & Michael Luca, 2017. "Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity," Harvard Business School Working Papers 18-022, Harvard Business School, revised Oct 2017.
  • Handle: RePEc:hbs:wpaper:18-022
    as

    Download full text from publisher

    File URL: http://www.hbs.edu/faculty/pages/download.aspx?name=18-022.pdf
    File Function: Revised version, 2017
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jorge Guzman & Scott Stern, 2016. "Nowcasting and Placecasting Entrepreneurial Quality and Performance," NBER Chapters,in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 63-109 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:wiw:wus046:6122 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hbs:wpaper:18-022. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Soebagio Notosoehardjo). General contact details of provider: http://edirc.repec.org/data/harbsus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.