Understanding data in an inter-connected world

A new way of assessing data, which could improve our understanding of financial crises, is being developed at Essex.

Economist Abhimanyu Gupta is putting together a toolkit, which takes into account the joined-up world we now live in. The aim is to make more reliable information available to decision-makers.

As he explained: “One of the criticisms levelled at economists after the last financial crisis was that their predictions largely failed to take into account the extent to which one bank’s liabilities linked to another – instead each was looked at in isolation. The reality is we live in a highly inter-connected world, which affects us both as individuals and as institutions.

“As economists we are interested in the choices people make. We need to understand to what extent individuals are influenced by the actions of their friends and things they see on social media. This would give us a much better understanding of the bigger picture.

“It is quite difficult technically to deal with all of this publicly-available information, but if you ignore the different networks people are connected to, you may draw incorrect conclusions.”

Abhimanyu has been awarded a grant from the Economic and Social Research Council for a three-year project to develop the mathematical toolkit, which would have a range of applications.