The Price Network

What could you learn about global prices if you simply paid people around the world to take photos of their stores and markets? Maybe, everything.
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Reuters

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?"

A Big Data Answer to Food Scarcity

Soloff's ambitions are broader than helping a handful of investment bankers get an edge on Mexico City retail. He sees his company as something like a blend of Google Street View and the Consumer Price Index: a window into the world's stores to help us learn about the experience of the people behind the prices.

In the thousands of photos uploaded to Premise each day, literally seeing where food is out of stock in, say, Chennai, India, or which Rio bodegas have lines stretching out the door, can help policymakers see the beginnings of food scarcity before violent riots hit the streets. "Look at corn riots in Mexico, the food strikes in Egypt, and Syria," he said. "Water and food scarcity has become a huge story.”

I ask him about Indian inflation, which famously began with the skyrocketing price of onions. Soloff opens his laptop and swings it around to face me. There is the Premise chart of Indian onion inflation: the steady day-to-day creep, the peak, and the slow, jaggedly decline.

He takes me to the home page for India's Food and Beverage inflation. At the top is the key graph of price movements going back to May. 

More than 300,000 food details—each tagged for location, time, and price—make up this index, including 27,000 observations of grains and 81,000 photos of vegetables. Double-clicking on the vegetables category takes us to a separate page for vegetable (including onion) inflation.

At the bottom of the page is the array of vegetable photos, which make up th data. Premise isn't just an inflation report, Soloff says again. It's map that tells you where prices are going up—“city by city, neighborhood by neighborhood, store by store”—to help governments and agencies track the tremor of inflation from its epicenter. Each vegetable observation comes with a price and a drop-pin on a map, to show Premise exactly where prices are moving and where they're not moving.

"From our 7,000 observations in India over last few weeks, I can go down to Chennai, I can say, when did [prices] start spiking in Chennai versus Mumbai and Calcutta?” Soloff says.

“One of the overall lessons we've learned is not just that government data is wrong, but that it's a blunter instrument than people need. And by being so blunt, people might be making wrong decisions.”

The Android Network

With the government shutdown, the country could miss at least one inflation report. Most Americans will notice nothing, but monthly reports on prices and jobs influence economic policy that affects the national economy. The Federal Reserve’s recent, surprising decision to continue buying bonds at the same, accelerated rate shocked investors, but it was driven by the sort of data points that Soloff and Premise want to make more available.

It's possible to corral a team of data collectors around the world thanks to Android, which could be the closest thing we've ever had to a universal operating system. Before smartphones, hundreds of people taking photos around the world was just sightseeing. Now it just might provide the backbone of a dataset that rivals international governments.

"People are plugged into a global infrastructure in a way they never were before," Soloff said. "In many places, people walk around with a computer, and they can be paid incrementally for it, on their way to school or their jobs. This is how Android in the last two years has become an amazing story, not just in the U.S., but around the world. It's become a global operating system. It allows us to synchronize their work."

***

In Sao Paulo, Luis Garcia is a member of a motley team of men and women, including part-time-workers, unemployed workers, and students ranging from 18 to early 50s who discover Premise on sites like Craigslist. Some Brazilians have quit their jobs to document prices for Premise full-time, Garcia said in an email:

One worker was an event and wedding photographer in his 40s. He lives in a very poor neighborhood and he has family. He answered the ad and now is making double what he was making before and working less, so he has more time to help with his family.  His wife called the city manager to thank him for the difference that they were making.

When he and his team go to bed, a student in New Delhi is waking up, packing his smartphone, and stopping by a market before class to take pictures of a vegetable stand.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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