Thursday, May 06, 2010

The Economics of Internet Search

The comparison of Google Trends data (on the British Election) with polls, bookmakers' odds and prediction markets shows once again that we need to be careful when interpreting search volume data. While the (search-data related) innovations in unemployment forecasting may not be earth-shattering, what else can we learn from trends in seach queries? There needs to be a focus on what the analyst expects when typing in "zombie" or "inflation" or "dole" into a trend-analyser. Hopefully we can all agree that there is no such thing as a zombie. Unemployed people on the other hand, are a very real human problem, and growing in large numbers.

For example, do unemployed individuals looking for information about welfare payments type in "unemployment" or "dole"? Or something else? One experiment (view here) is to type in "unemployment", "dole" and "jobs" into Google Trends, separated by commas. A few observations can be made:

(i) The search volume for "jobs" is relatively stable over the last 6 years
(ii) News reference volume for "jobs" has exploded over the last 2 years, much more so than for "unemployment"
(iii) There is only enough search activity related to "unemployment" for it to register half-way during 2008
(iv) There is only enough search activity related to "dole" for it to register at the start of 2009
(v) There is a fall-off in search volume for "jobs" at the end of every calendar year

While much of this mirrors what we already know about recent economic activity, I had expected "jobs" to have a much higher search volume over the last year. We of course have to be very careful about drawing conclusions, but the stylised facts about search volume suggest that there were more people searching for jobs in 2004 and 2005 than there were in 2008 and 2009. We know that there were more people in need of a job in 2008 and 2009, so what is the explanation? Perhaps job-search is more intense during boom-times. In recessions, maybe people are less likely to search for a job (which they simply believe isn't there). This could of course be incorrect, but now there is an open question.

Other challenging questions about search data are currently at play in the commercial arena; it may be no coincidence that Google Trends was opened up to the public (including academics) in 2006, just as these questions were coming more to the fore. At present, Google, Yahoo and Bing are strongly focused on distinguishing between "interest" and "intent" in search data. There are obvious commercial implications, but solving this problem about interest versus intent would also help academic researchers. When somebody searches for "jobs" do they just want to *see what's out there* (maybe in boom times) or do they *desperately intend* to obtain employment (maybe in recessions)?

Maybe additional keywords would help in solving this interesting puzzle. If you search for "XBOX Price", Google can assume to some extent that you intend to buy an XBOX. Here is an article from last year about Google executives stating that "understanding people, health, communication, education and knowledge" is the next frontier of search. Here is a link to Yahoo!'s "Mindset" research project on 'Intent-driven Search'. Recently, there was an article in the Economist about about Qi Lu: the man behind Bing. According to him, the focus is firmly on "understanding user intent".

It's clear that understanding more about search is the big challenge: for the search-engine based advertising business, and for social scientists. And here is the main reason why search data is (or should be) so interesting for academics: we don't *ask* people for the information they provide in search queries. It's a simple statement, but it has merit. No matter how well-designed surveys are, there will always be things in the ether, trends in society, that will potentially appear in search data first.

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