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

Edward Glaeser, Hyunjin Kim and Michael Luca

No 24010, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: E17 O33 R11 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-geo, nep-mac, nep-pay and nep-ure
Note: EFG PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Published as Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity , Edward L. Glaeser, Hyunjin Kim, Michael Luca. in Big Data for Twenty-First-Century Economic Statistics , Abraham, Jarmin, Moyer, and Shapiro. 2022

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Related works:
Chapter: Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity (2019)
Working Paper: Nowcasting the Local Economy: Using Yelp Data to Measure Economic Activity (2017)
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