Every day around 6pm, Luis Garcia—Brazilian, 26 years old, married without children—finishes work at his Sao Paulo bank and prepares for his night job. He takes out his Android smartphone to learn the evening’s assignment. A daily list of subjects has been forwarded from the United States. Recognizing the names on the screen, and knowing precisely where to find them, Garcia gets on his motorcycle and drives. Minutes later, arriving at his destination, he comes face-to-face with his first mission. It's a loaf of bread.
Garcia pulls out his smartphone again. He snaps a picture and uploads the image, location, time of day, and, crucially, the price. In two hours, he'll have visited a handful of stores and taken scores pictures of food, drinks, and other products. The next day, it will be the same: He will leave the bank, check his smartphone for instructions, get on his motorcycle, and take more photos.
What is Luis Garcia doing, exactly? He’s working with a team of economists in the United States who are paying people in the U.S., Brazil, India and around the world to help build a real-time measure of global prices.
One Brazilian bank employee taking photos of bread after work is, well, just a weird hobbyist. But hundreds of people in 25 cities around the world collecting the daily prices of bread, soap, fruit, razors, paper napkins, and more, every day, and merging their data with even more prices collected from millions of e-commerce sites? That could be the foundation for something bigger: A daily economic database for the world economy, powered by smartphones, smart software, and a mischievously grand ambition. Can you build a real-time stock market of world prices?
'Premise' and Prices
David Soloff—motor-mouthed, mostly unshaven—doesn’t touch his lunch as he cycles through his reasons for founding Premise, the company that pays Luis Garcia and his 700 international colleagues to take pictures of fruit and shampoo aisles in their spare time. Of course, Premise is more than an international photo-collage project. An economist, activist investor, and world-renowned leader in analytics, Soloff has designed an infrastructure that crawls e-commerce sites and merges their prices with on-the-ground data captured by people like Garcia to product a price and inflation tracker in India, China, Brazil, and the United States.
Americans have struggled to understand prices even before we could fully call ourselves “American.” During the Revolutionary War, we voraciously printed money to pay for the military. As prices soared, Massachusetts established perhaps the first price index in U.S. history to adjust soldiers’ wages as the dollar's value crashed. But it wasn't for another century that we built the first index for food, in 1904, collecting prices of 30 popular items from 800 big-city merchants.
The great challenge of measuring prices isn’t just how to measure them, but what to measure. Since it’s impossible to keep track of literally every price in the world, economists typically select a limited “basket” of goods whose prices we can follow. The contents of the basket change over time, for instance when American eating habits shift, or when different products, like new electronics, become mainstream.
The ambition to offer a clearer look at the world of prices isn't unique to Premise, which uses this same "basket" approach. MIT's Billion Prices Index monitors millions of prices on websites around the world to build a daily index. The controversial Shadowstats site offers a conspiratorial alternative to official government figures.
Soloff prizes faster data—imagine, for example, how strange it would be if the Dow only reported one number a month, and that's what we're getting for consumer prices—but faster data isn't what most excites him. With boots on the ground, he says, Premise can also build custom indices that reveal the vastly different lives of each country's citizens. Want to use prices to understand how the poor are getting by in Rio? How the rich are faring in Mumbai? What's really happening behind the bizarre official figures in China? Those are just different indices, built from different baskets, powered by different data. It’s only a matter of sending a new batch of photo assignments to 700 phones.
Even more, Premise’s photos create a portrait of local shopping culture that offers unique details for investors and policymakers. "If an analyst wants to track all of the Walmarts in Mexico City to gauge how busy or not busy they are, we can do that," Soloff said. "We can send 10-20 workers to take pictures at those Walmarts and tell: How many people are exiting and entering at 10am? How many of them are holding bags? How long are the check-out lines? How many people walked by the meat case? How many of them bought something at the meat case?"