Social media and Consumer Confidence Index

According to Wikipedia, the U.S. consumer confidence index (CCI) is an indicator designed to measure consumer confidence which is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. Global consumer confidence is not measured. Country by country analysis indicates huge variance around the globe. In an interconnected global economy, tracking international consumer confidence is a lead indicator of economic trends.
From this definition we get three important statements: firstly, that CCI is a measurement of  the degree of optimism on the state of the economy, second, that global CCI is not measured (?) and thirdly, that CCI is a leading indicator of economic trends.
As a behavioral economist, I can assure you that this kind of measurements are accurate and very helpful but they also face a design limitation. The CCI is derived through a monthly survey of a sample (let’s say 5.000) households. By design you have the following issues: sample size and costs for marginal sample increases, time to gather the next measure and non global measurement but country to country (by different agencies…)
From a statistical point of view, this is the way surveys are conducted, while we have much evidence that their results are an accurate indication of consumer expectations in the population. Right and as good as they could be. But on the other hand, psychologists would argue, that with so much information today, deliberately given on social media, one could design a proxy of CCI based on those data and probably some initial research to properly match new variables, their regression and their explanatory power as an alternative CCI. In reality, a giant research is taking place every moment when Facebook-ers or twitter-ers do a new post. It’s also global, instant and covers more than 20% of global population within a day! Hot, eh? Right from the “horses mouth”.

I don’t follow conspiracy theories and honestly speaking I believe that there are no such guts or patience to make huge investments and such a time horizon for connecting any social media existence to this kind of measurements willingness. To the best of my understanding, this is a pure side effect of another intention. But the result remains the same. One can accurately imitate several research measurements, or better redesign the platforms to get proxy results on several costly qualitative and quantitative focus groups. We have already several studies and here is an example from Wharton here.

I am only pointing the obvious. We, as a community, already know where we’re heading. Maybe not all of us, maybe not the right people, but surely some university labs. We could start digging and mining using big data analytics and understand better the factors which are moving our economic foundations at any point in time. CCI is just an example, imaging only some implications on it. Besides the “new oracle” has a name today and it has also the most visited internet page…

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