According to an article published in the Wall Street Journal:
''The world of economic data may be headed for a substantial revision.
Private companies are deploying new technology to overhaul a half-century-old approach to tracking changes in the global economy, promising constantly- updated gauges to guide major corporations, hedge funds and governments.
The latest entrant, Premise Data Corp., is the first to create real-time inflation data using hundreds of people snapping photos of store shelves and produce carts around the world daily to track price changes.
The startup, backed by investors Google Ventures, Andreessen Horowitz and Harrison Metal, will be unveiled Tuesday after quietly building itself for nearly two years.
Premise has deployed 700 smartphone-equipped workers across 25 cities to capture images of products as their prices change daily. Software automatically tags the location of the products down to the individual store and analyzes the images—items such as meat and produce—to gauge quality differences. A user viewing the information can zoom in on images of the products at each retail location, making it a store-shelf version of Google Street View.
Premise's computers also scroll through websites to automatically grab prices from Internet stores, a process that still provides about 80% of the data the firm uses to create real-time inflation gauges.
Technological innovations such as efficient supply networks and just-in-time delivery "have completely altered human economic activity," said David Soloff , founder and chief executive of Premise. "Yet the indicators people are looking to are caught in a different era."
Mr. Soloff credits PriceStats for its original breakthroughs in the field. He said Premise's goal is to provide even deeper information—down to the product level rather than just categories of products—and provide the technology platform for a wide range of other economic indicators beyond inflation.
Reports on inflation, employment and consumer spending—generally based on monthly snapshots are released with a lag of weeks or months, and they can be revised months later. The shortcomings create problems for investors and policy makers, who have to act in real time even if the economy is changing faster than existing methods can measure.
Still, building accurate and reliable indicators will face numerous pitfalls. Economists have struggled for decades with sampling errors in traditional economic reports. A crowd-sourced approach, using people with limited training, could take years of work to filter out noise in the system. Premise's own price-collectors are part-timers working a few hours a day, earning 10 cents to 30 cents per image captured.
Outsiders have questioned Argentina's inflation data for years. That inspired Alberto Cavallo , an economist at the Massachusetts Institute of Technology, to create his own measures starting in 2007.
The effort eventually became the academic initiative called the Billion Prices Project, collecting data from online retailers around the world to create daily inflation measures. In 2010 it led to PriceStats, which distributes inflation gauges through the financial-services firm State Street Corp. to about 7,500 clients.
In a demonstration, Mr. Soloff clicked through the Premise website to show store shelves in China and produce carts in India. His data showed when onion prices started surging in India last summer weeks before the press caught on to the public uproar. That kind of data could be useful to a hedge fund trading currencies before official inflation measures are released.
"All these things are sensitive from a political point of view," Mr. Varian said. "Having up-to-date information is quite valuable."
