Big Data in Firms and Economic Research

Abstract

This paper discusses how firms use “big data” and the role and challenges for economists when getting involved in big data research. The firms’ success stories have taken advantage of building the biggest databases, using the best extraction tools, and using the fastest algorithms for data analysis and management. Although there are already great examples of economists entering big data research, analysts involved at present are mostly statisticians and computer scientists. The challenges economists face lie in computation, publication, and replication when using proprietary big data. The opportunities for economists lie in modeling and designing frameworks for analyzing large observational data panels, as well as developing empirical designs and strategies that are motivated by a model framework; in this way, economists can guide large-scale big data experiments toward identifying causal effects, rather than just correlations.