International Journal of Trend in Scientific Research and Development (IJTSRD)

Volume 6 Issue 3, March-April 2022 Available Online: www.ijtsrd.com e-ISSN: 2456 – 6470

Big Data in Economics: An Introduction

Matthew N. O. Sadiku1, Uwakwe C. Chukwu2, Abayomi Ajayi-Majebi3, Sarhan M. Musa1
1
Roy G. Perry College of Engineering, Prairie View A&M University, Prairie View, TX, USA
2
Department of Engineering Technology, South Carolina State University, Orangeburg, SC, USA
3
Department of Manufacturing Engineering, Central State University, Wilberforce, OH, USA

ABSTRACT How to cite this paper: Matthew N. O.

Big data is a domain which is growing rapidly in every sector. In just Sadiku | Uwakwe C. Chukwu | Abayomi
a few years, big data has impacted industries and activities from Ajayi-Majebi | Sarhan M. Musa "Big
marketing to law enforcement. It is often regarded by optimists as a Data in Economics: An Introduction"
revolution that will change for the better how we live, think, and Published in
International Journal
work. Big data has a great impact on the economy since it helps
of Trend in
companies, organizations, and governments to efficiently manage Scientific Research
large volumes of data. This paper addresses the impact of big data in and Development
the economic field and provides some applications of big data in (ijtsrd), ISSN: 2456-
economy. 6470, Volume-6 | IJTSRD49839
Issue-3, April 2022,
KEYWORDS: big data, economics, economists, applications pp.1749-1755, URL:
www.ijtsrd.com/papers/ijtsrd49839.pdf

Copyright © 2022 by author (s) and

International Journal of Trend in
Scientific Research and Development
Journal. This is an
Open Access article
distributed under the
terms of the Creative Commons
Attribution License (CC BY 4.0)
(http://creativecommons.org/licenses/by/4.0)

INTRODUCTION
Victor Hugo once said, “No power on earth can stop smart meters, satellite imagery, administrative
an idea whose time has come.” Big data is one such records, medical records, weather data, business
wonderful idea. Data is a valuable commodity. As transaction systems, social networks, mobile
shown in Figure 1, data is everywhere in an applications, scientific experiments. etc Data obtained
interconnected world [1]. The role of economists in from non-traditional socio-economic sources are
technology companies is growing due to the ubiquity generally large, heterogeneous and unstructured or
of data. The quality and quantity of data on economic semi-structured. The big data era creates a lot of
activity are growing fast. Today, economists are exciting opportunities for new developments in
increasingly making use of newly available massive economics.
administrative data or private sector data to create
REVIEW ON BIG DATA
new opportunities. They are also increasingly
Big data (BD) refers to a collection of data that
adopting the large-data statistical methods to
cannot be captured, managed, and processed by
complement traditional econometric techniques [2].
conventional software tools. It is a relatively new
Big data refers to data sets of much larger size and technology that can help many industries. The three
higher frequency. It may be regarded as an untapped main sources of big data are machines, people, and
resource that technology finally allows us to exploit. companies. Big data can be described with 42 Vs [4].
It usually consists of large sets of unstructured, semi- The first five Vs are volume, velocity, variety,
structured, or structured data obtained from numerous veracity, and value [5].
sources. Big data comes from various sources, as Volume: This refers to the size of the data being
shown in Figure 2 [3]. It is data generated by the generated both inside and outside organizations
increasing use of digital devices such digital sensors,

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1749
 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470
and is increasing annually. Some regard big data To thrive in today’s complex business environment,
as data over one petabyte in volume. businesses must adopt a data-driven culture and
Velocity: This depicts the unprecedented speed at leverage analytics platforms to make key decisions
that improve productivity. Industries that benefit from
which data are generated by Internet users, mobile
big data include the healthcare, financial, airline,
users, social media, etc. Data are generated and
travel, restaurants, automobile, sports, agriculture,
processed in a fast way to extract useful, relevant
manufacturing, and hospitality industries. The
information. Big data could be analyzed in real
different stages of a full data lifecycle in the context
time, and it has movement and velocity.
of economic and social analyses are illustrated in
Variety: This refers to the data types since big Figure 4 [9].
data may originate from heterogeneous sources
and is in different formats (e.g., videos, images, BIG DATA ANALYTICS
audio, text, logs). BD comprises of structured, Every day, data is growing bigger and bigger, and big
semi-structured or unstructured data. data analysis (BDA) has become a requirement for
gaining invaluable insights into data such that
Veracity: By this, we mean the truthfulness of companies could gain significant profits in the global
data, i.e. weather the data comes from a reputable, market. Once the big data is ready for analysis, we
trustworthy, authentic, and accountable source. It use advanced software programs such as Hadoop,
suggests the inconsistency in the quality of MapReduce, MongoDB, Spark, Cassandra, Apache
different sources of big data. The data may not be Storm, and NoSQL databases [10]. Big data analytics
100% correct. refers to how we can extract, validate, translate, and
Value: This is the most important aspect of the utilize big data as a new currency of information
big data. It is the desired outcome of big data transactions. It is an emerging field that is aimed at
processing. It refers to the process of discovering creating empirical predictions. Data-driven
hidden values from large datasets. It denotes the organizations use analytics to guide decisions at all
value derived from the analysis of the existing levels [11].
data. If one cannot extract some business value Here are some ways to effectively handle big data [7]:
from the data, there is no use managing and 1. Outline Your Goal: It is of paramount
storing it. importance that organizations should collect data
On this basis, small data can be regarded as having with a laser focus to benefit business objectives.
low volume, low velocity, low variety, low veracity, 2. Secure the Data: We must ensure the relevant
and low value. Additional five Vs has been added [7]: data collected is secured with a broad range of
Validity: This refers to the accuracy and measures.
correctness of data. It also indicates how up to 3. Keep the Data Protected: Organizations must
date it is. safeguard databases against adverse
Viability: This identifies the relevancy of data for environmental situations which would damage
each use case. Relevancy of data is required to data and put forth considerable efforts to protect
maintain the desired and accurate outcome their data.
through analytical and predictive measures. 4. Do Not Ignore Audit Regulations: Irrespective
Volatility: Since data are generated and change at of the data nature being payment data, credit
a rapid rate, volatility determines how quickly scores or data of lesser importance, the data
data change. should be managed accordingly.
Vulnerability: The vulnerability of data is 5. Data Has to Be Interlinked: All organizational
essential because privacy and security are of data must be able to talk to each other.
utmost importance for personal data. 6. Know the Data You Need to Capture:
Visualization: Data needs to be presented Organizations are required to know which data
unambiguously and attractively to the user. has to be collected and also when.
Proper visualization of large and complex clinical 7. Adapt to the New Changes: Software and data
reports helps in finding valuable insights. in all its forms change constantly and almost on a
For example, Figure 3 shows the 8V’s of big data [7]. daily basis, globally and one must be flexible.
In addition, the 10V’s above, some suggest the APPLICATIONS
following 5V’s: Venue, Variability, Vocabulary, We live in a data revolution and this has important
Vagueness, and Validity) [8]. implications for the field of economics. Some

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1750
 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470
researchers and media believe that big data will company’s financial problems using mathematical
transform business, government, and other aspects of methods. Financial engineering uses tools and
the economy. Big data is increasing in importance as knowledge from the fields of computer science,
a source of information about the economic world. big data, data science, data analytics, statistics,
The success of modern economics largely depends on economics, and applied mathematics to address
the availability of data sources which allowed us to present financial issues and innovative financial
quantify human behavior. Common applications of products. It is helpful in derivative pricing,
big data in economics include the following: financial regulation, execution, corporate finance,
portfolio management, risk management, etc. For
Economic Analysis: The application of big data
example, financial engineering is used by
in economic analysis could be associated with
Commercial Banks, Investment Banks, Insurance
two notions [12]: (a) "Multidimensionality": in
companies, and other fund hedging agencies. Big
terms of number of variables per observation,
data, data science, and data analytics in financial
number of observations or both. (b)
engineering can be used as a successful tool at all
“Granularity": Big data sets often provide useful
stages of insurance business management
micro-level data for analyzing agent behavior.
practices [15].
traditional survey data. The high level of
granularity in the data makes it possible to link Behavioral Economics: Behavioral economics
the individual scores to the school tests and the may be regarded as economic analysis that applies
corresponding tax records for a large sample, psychological insights into human behavior to
which would have been impossible with explain economic decision-making. Much of our
aggregate data or a smaller sample daily life is influenced by “big data” and
Economic Statistics: This describe the state of an “behavioral economics.” Pricing and comparison
economy. They span several sectors such as strategies are meant to influence our decision-
business statistics, macroeconomic statistics, making in such a way to facilitate buying a
economic accounts, and energy, industry, particular product at a particular time to meet our
financial, tourism, and labor and trade statistics. perceived need. The coronavirus disease 2019
(COVID-19) pandemic has placed a magnifying
Traditionally, much economic data are collected
glass on how individuals in our society make
through surveys of individuals, households, and
administrative systems. Big data sources can be decisions that affect themselves, their immediate
used to produce economic statistics using online family, and the general public. Both big data and
behavioral economics have played an enormous
price data, scanner data, mobile phone data, Earth
role in how pandemic care is implemented across
Observations, financial transactions data and
the country [16].
smart meter data. There is a multitude of big data
projects in the area of economic statistics BENEFITS
undertaken by various nations [13]. The rise of big data is an exciting time with
opportunities for economists, policymakers, or social
Predictive Modeling: Recent advances in the
fields of statistics, machine learning, and scientists. Never before has so much data been
available to test existing theories and develop new
econometrics have generated interest in economic
predictive models and many predictors. The most ones. The benefits of using big data for economic
common uses of big data by companies are for analysis are numerous. Big data allows for better
tracking business processes and for building a prediction of economic phenomena and improves
causal inference. Economists have thus moved from
wide array of predictive models. For example,
being forecasters to now casters.
Amazon and Netflix recommendations rely on
predictive models of what products a customer More data potentially available for research is better
might want to purchase. Google’s search relies on than less data.
algorithms that predict the relevance of particular
Big data is having a significant impact on our
web pages. Online advertising and marketing rely
knowledge of the world, which plays a vital role in
heavily on automated predictive models that
increasing economic activity and living standards. For
target customers. One Palo Alto company,
example, we are often excited about data on weather,
Palantir, develops algorithms to identify terrorist
stock performance, and crop plantings. It is now
threats and to detect fraudulent behavior in health
possible to cost-effectively collect these data, use
care and financial services [14].
them in an informed manner, and turn them into
Financial engineering: This is the process of actionable knowledge. The effective use of data has
creating innovative solutions for the existing the capacity to transform every industry.

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1751
 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470
In addition, these are the ways big data will affect the and confidentiality concerns. There is the common
economy [17,18]: perception that big data tools focus exclusively on
Producing new goods and services, such as the prediction at the expense of causal inference.
Nest home thermometer or mass customized
Other challenges of big data economics include [3]:
shoes. A major challenge for economists is the scale of
Big data allows for better prediction of economic modern data sets. The sheer size of the data
phenomena and improves causal inference. involved may require more powerful data
manipulation tools.
More-targeted marketing that injects customer
feedback into product design. Big data is costly to collect, store, and analyze
because it requires investments in technology and
Better organizational management.
human skill.
Faster innovation through a shorter research and
development cycle. The data collected is raw, inconsistent, and
therefore subjected to more noise.
Errors inside the business are known
Big data struggles with security issue, especially
immediately.
on the social media front.
The plan of action of your opposition is seen
Pinpointing data that flows into an organization
promptly.
on a daily basis is a lot more challenging than
Extortion can be recognized the minute it finding the proverbial needle in the haystack.
happens and legitimate measures can be taken to
Data selection is bias.
restrict the harm.
The principal points of interest of big data New data sets may change the statistical methods
include the increased speed, capacity, and used by economists.
scalability of storage and having the measures Lack of skilled data scientists.
and tools to deal with the data all the more
Analyses based on big data will focus too much
proficiently.
on correlation and prediction.
Big data technologies help companies store large Big data can create a new digital divide.
volumes of data while enabling significant cost
benefits. In spite of these challenges, the next few decades are
likely to be a very exciting time for economic
Improves law enforcement and security. research.
Creates new business opportunities.
TRAINING FUTURE ECONOMISTS
Contributes to the living standards of people Economists mostly deal with the problems of two
around the world and reduces poverty. types. First, they figure out how n big variables, like
inflation and unemployment, interact with each other.
CHALLENGES
The unprecedented rate at which high-dimensional Second, they make practical policy recommendations
for the business executive. Economists have
individualized data are being generated means that
big data poses a host of challenges. Data traditionally dealt with data that fits in a spreadsheet,
but that is changing fast as new more-detailed data
opportunities raise some important challenges. A
becomes available.
major challenge of big data is managing large-scale
data with many variables. As the amount of available It is crucial to train the next generation of researchers,
data increases, all methods will tend to improve in policy leaders, and economists on methods to study
terms of their predictive accuracy. New sources of and improve economic opportunities. Such training
data often create challenges that may require new should complement traditional economics courses.
skills [19]. Topics may include equality of opportunity,
In spite of the enormous potential of big data, education, health, the environment, and criminal
integrating and analyzing the wide variety of justice [20].
heterogeneous sources cannot be tackled with the CONCLUSION
traditional methods used in economics. Predictions Due to technological advances, data will become even
based on big data may have privacy concerns. Some easier to collect, transmit, store, and analyze. In the
methods should be developed for researchers to recent past, big data has experienced significant
access and explore data in ways that respect privacy growth because institutions, organizations, and

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1752
 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470
businesses are heavily utilizing big data to achieve [10] M. N. O. Sadiku, J. Foreman, and S. M. Musa,
their objectives. It is significantly affecting the “Big data analytics: A primer,” International
global economy. Since the growth in data production Journal of Technologies and Management
is highly unlikely to abate, the big data bubble will Research, vol. 5, no. 9, September 2018, pp.
continue in the near future. The advantages of using 44-49.
big data for economic analysis are legion. More
[11] C. M. M. Kotteti, M. N. O. Sadiku, and S. M.
information about big data in economics can be found Musa, “Big data analytics,” Invention Journal
in the books in [21-28] and the following related
of Research Technology in Engineering &
journals: Management, vol. 2, no. 10, Oct. 2018, pp.
Journal of Big Data
2455-3689.
Journal of Economic Perspectives
International Journal of Social Science add [12] K. Balar and R. Chaabita, “Big data in
Economic Research economic analysis: Advantages and
challenges,” International Journal of Social
REFERENCES Science add Economic Research, vol. 4, no. 7,
[1] R. Krishanmurthy, “Big data in economics and July 2019, pp. 5196-5205.
policy,” October 2020,
https://www.analyticssteps.com/blogs/big-data- [13] “Big data for economic statistics,” Stats Brief,
economics-and-policy no. 28, March 2021.
[2] L. Einav and J. Levin, “Economics in the age of [14] L. Einav and J. Levin, “The data revolution and
big data,” Science, vol. 346, no. 6210, economic analysis,” Innovation Policy and the
November 2014. Economy, vol 14, 2014.
[3] “The world of big data,” August 2019, [15] V. Chakravaram et al., The role of big data,
https://www.geeksforgeeks.org/world-big-data/ data science and data analytics in financial
engineering,” Proceedings of the 2019
[4] “The 42 V’s of big data and data science,” International Conference, June 2019.
https://www.kdnuggets.com/2017/04/42-vs-
big-data-data-science.html [16] R. Jhaveri, “Big data and behavioral economics
in infectious diseases,” Clinical Therapeutics,
[5] M. N. O. Sadiku, M. Tembely, and S. M. Musa,
vol. 43, no. 10, 2021.
”Big data: An introduction for engineers,”
Journal of Scientific and Engineering Research, [17] J. Kennedy, “ Big data’s economic impact,”
vol. 3, no. 2, 2016, pp. 106-108. https://www.ced.org/blog/entry/big-datas-
economic-impact
[6] P. K. D. Pramanik, S. Pal, and M.
Mukhopadhyay, “Healthcare big data: A [18] L. Robinson, “The central European review of
comprehensive overview,” in N. Bouchemal economics and management,”
(ed.), Intelligent Systems for Healthcare https://www.austriancenter.com/big-data-
Management and Delivery. IGI Global, chapter global-economy/
4, 2019, pp. 72-100. [19] “Big data in economics,”
[7] S. Josh, “What is the effective way to handle https://wol.iza.org/articles/big-data-in-
big data?” April 2017, economics/long#:~:text=Big%20Data%20refer
https://www.zarantech.com/blog/effective-way- s%20to%20data,to%20outperform%20more%2
handle-big-data/ 0complex%20techniques
[8] J. Moorthy et al., “Big data: Prospects and [20] R. Chetty, “Using big data to solve economic
challenges,” The Journal for Decision Makers, and social problems,”
vol. 40, no. 1, 2015, pp. 74–96. https://opportunityinsights.org/course/
https://www.grandviewresearch.com/industry- [21] L. Matyas et al. (eds.), Economics without
analysis/industrial-wireless-sensor-networks- Borders. Cambridge University Press, 2017.
iwsn-market
[22] K. G. Abraham et al.. (eds.), Big Data for
[9] D. Blazquez and J. Domenech, “Big data Twenty-First-Century Economic Statistics.
sources and methods for social and economic University of Chicago Press, 2019.
analyses,” Technological Forecasting and
Social Change, vol. 130, May 2018, pp. 99-113. [23] C. Tang, The Data Industry: The Business and
Economics of Information and Big Data.
Hoboken, NJ: Wiley, 2016.

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1753
 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470
[24] I. Aldridge and M. Avellaneda, Big Data [27] B. Schmarzo, The Economics of Data,
Science in Finance. Wiley, 2021. Analytics, and Digital Transformation: The
[25] S. Consoli, D. R. Recupero, and M. Saisana theorems, laws, and empowerments to guide
your organization's digital transformation.
(eds.), Data Science for Economics and
Finance: Methodologies and Applications. Packt Publishing, 2020.
Springer; 2021. [28] A. M. Dima and M. Kelemen (eds.),
Digitalization and Big Data for Resilience and
[26] R. D. Francesco, Big Data Economics, Towards
Economic Intelligence: Proceedings of 4th
Data Market Places: Nature of Data, Exchange
International Conference on Economics and
Mechanisms, Prices, Choices, Agents &
Social Sciences, ICESS 2021, Bucharest,
Ecosystems. Independently Published, 2018.
Romania. Springer, 2022.

Figure 1 Data is everywhere in an interconnected world [1].

Figure 1 Big data comes from various sources [3].

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1754
 International Journal of Trend in Scientific Research and Development @ www.ijtsrd.com eISSN: 2456-6470

Figure 3 The 8V’s of big data [7].

Figure 4 The different stages of a full data lifecycle in the context of economic and social analyses [9].

@ IJTSRD | Unique Paper ID – IJTSRD49839 | Volume – 6 | Issue – 3 | Mar-Apr 2022 Page 1755