No, private data can’t replace public data
Whether it’s the jobs report, gross domestic product or the Consumer Price Index, public data is key to understanding what’s going on in the economy. But under the Trump administration, public data increasingly looks to be at risk of disappearing, or even fall under the influence of Elon Musk, which begs the question: can private data take the place of public data?
“If we think about the ways that companies collect data, it ranges so widely from different company practices and styles,” said Tara Sinclair, professor of economics at George Washington University. “That’s why it’s so important that we have government statistical agencies.”
Sinclair spent nearly a decade working in the world of private data at Indeed, where she served as chief economist and founded the Indeed Hiring Lab. She spoke to “Marketplace” host Kai Ryssdal about what private data can, and can’t, do.
Kai Ryssdal: You have spent a good chunk of your career working on private indicators about this economy, and I guess the first thing I want to get your sense of is how hard it is to take data from private sources and make it useful to the public.
Tara Sinclair: Well, that’s a fantastic question, because it is really, really hard. If we think about the ways that companies collect data, it ranges so widely from different company practices and styles, and to be able to try and take that data and condense it into something that answers a question that is important to the general public really takes specific tools, specific skills, and it’s typically outside the scope or objectives that any one particular company has. That’s why it’s so important that we have government statistical agencies.
Ryssdal: Yes, go back to that thing you just said, “Outside the scope of what any specific business has.” These businesses are collecting this data for their business purposes, not to clarify things for the public.
Sinclair: Right, exactly. And they have their own objectives, and those objectives can change over time, so they don’t have necessarily a need to keep things consistent from month to month or quarter to quarter. The way that it’s so important for us to have that information to be able to make longer run decisions for the general public.
Ryssdal: You’ve got a couple of decks that you put together as you were doing presentations on this throughout your career, and there was a phrase that hit me that I’d like it explained. You talk about “unstructured data,” and you call that something of a peril, and I want to know why.
Sinclair: Well, oftentimes people think that if we can just go and get the data directly from companies, it’s going to be this, you know, amazing archeological find. And it is, but it requires you all of the tools and digging of archeologists, like it’s not just sitting there as this glorious, perfect data set. It’s rather this giant, unstructured mess that has several perils. One of them is that we might find the wrong story from that data, rather than if we had a more comprehensive view from all of the companies in the economy, rather than just a few select ones that are willing to offer the data. I think that’s one of the biggest concerns.
Ryssdal: It does bear a mention here that private data — sometimes called high frequency data, we’ve done stores on that in the past — this private data already plays a role in government policy decision making. You know, on the margins, but it’s there.
Sinclair: Oh, absolutely. And it can be a great input. In fact, it may be one way that we can save people time, because instead of filling out a survey, maybe we can just collect the data of their shopping habits directly from the store. That sort of thing is already being used at statistical agencies and is really improving their efficiency, but it’s got to be done carefully, because we need to make appropriate adjustments for the fact that that data is coming from a select set of sources. We have to make sure that what we’re observing is actually answering the question that we want to be answering.
Ryssdal: So here comes the more subjective question, what is the risk for this economy if government economic data becomes unreliable or something short of unreliable, just gets called into question?
Sinclair: Right, That is really, really scary, because that’s something that I think the statistical agencies have worked very hard to get that credibility. It may be the case that the typical American household isn’t looking up what’s going on with inflation from month to month, or GDP from quarter to quarter, but it is the case that it’s affecting them because it’s affecting decisions that are being made on their behalf, by their employers, by their local and state governments, and without that clear information, we’re going to be in the dark making our decisions. Forward-looking decisions are just already hard enough.
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