UC SAN DIEGO
Faculty Club
Feb. 18, 2010 7:30 a.m.
Admission: $50
On Thursday, Feb. 18 at 7:30 a.m., the place to be for UCSD econ nerds — along with the diehard “quants” from poli sci — will be the Faculty Club. A few undergrads with their post-collegiate sights set on a Silicon Valley career might even show up — at least, those willing to fork over the $50 lecture fee.
Hal Varian is on leave from UC Berkeley professorship, and is currently Google’s go-to guru for everything from selling ad space and improving products to predicting our search behavior. He’s known as chief economist at Google, but you might recognize his name from a New York Times business column or your ECON 100A and 113 textbooks — yeah, he wrote them. Now, Varian will be holding court on campus as part of UCSD’s Economics Roundtable Lecture Series.
Varian’s lecture — “Predicting the Present With Google Trends” — will likely be based on a paper he penned in April 2009 with Hyunyoung Choi, a colleague at Google. In the paper, the two argue that Google searches can often serve as a reliable indicator of current economic activity.
Your Varian textbooks will tell you that many economic indicators are subject to time lags; for example, a report on this month’s car sales won’t be published until next month. And unemployment rates are based on survey data from past months.
Google Trends, a section of the site, allows you to track keyword searches over time. Varian and Choi believe that if there is a surge in “Prius” searches, for instance, that might indicate a similar surge in Prius sales. Or, if the volume of searches for “unemployment benefits” is decreasing, that might indicate a similar decrease in unemployment.
You won’t know for sure until sales reports are published or the joblessness surveys are compiled and analyzed in a study — but, as Varian will likely argue on Feb. 18, analyzing Google searches can help make short-term predictions more accurate when coupled with existing forecast models. This is useful for those who want to get ahead of the market — like investors, or social scientists looking to make their research more precise.
Varian’s lecture, like his paper, will probably be full of technical lingo and fancy econometrics — chart- and graph-heavy PowerPoints included. Jargon aside, though, it isn’t too difficult to comprehend his hand in the monopolistic success of Google. During his stint at the company, Varian has overseen a drastic transition in the way Google does business. Instead of selling ad space “Mad Men” style, companies bid for the coveted spots in an electronic auction. The winner is determined by mathematical formulas that also take into account how well the ad matches up with our search terms. This way, when we Google “happy hour,” links to buy Viagra won’t show up in our search results — no matter how much the pharmaceutical companies bid. You can thank Varian for that.
