Nowcasting economic and social data: when and why search engine data fails, an illustration using Google Flu Trends

Obtaining an accurate picture of the current state of the economy is particularly important to central banks and finance ministries, and of epidemics to health ministries. There is increasing interest in the use of search engine data to provide such ’nowcasts’ of social and economic indicators. However, people may search for a phrase because they independently want the information, or they may search simply because many others are searching for it. We consider the effect of the motivation for searching on the accuracy of forecasts made using search engine data of contemporaneous social and economic indicators. We illustrate the implications for forecasting accuracy using four episodes in which Google Flu Trends data gave accurate predictions of actual flu cases, and four in which the search data over-predicted considerably. Using a standard statistical methodology, the Bass diffusion model, we show that the independent search for information motive was much stronger in the cases of accurate prediction than in the inaccurate ones. Social influence, the fact that people may search for a phrase simply because many others are, was much stronger in the inaccurate compared to the accurate cases. Search engine data may therefore be an unreliable predictor of contemporaneous indicators when social influence on the decision to search is strong.