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GSB economist uses big data to shake up the Internet

The Internet. Economics. The two fields fall into separate departments, but according to Graduate School of Business Professor of Economics Susan Athey Ph.D. ’95, there is a considerable overlap between them.

Athey, who has worked with Microsoft to develop new theories on the effect of the Internet on advertising, news consumption and more, is one of the leading experts in the field. Her research on the convergence of big data and economics, moreover, has even shaken up the way the web works.

Digging into data

Athey first became involved as a consultant at Microsoft in 2007, while she was a professor at Harvard University. Since then, she has played an active role in Microsoft Research, the branch of the company focused on cutting-edge science.

Collaboration with industry is fairly common among Athey’s colleagues. Many professors in fields at the intersection of the Internet and economics, such as e-commerce, seek relationships with companies, according to Athey.

“Most of the research that’s taking place with very large data sets is in some way collaboration with either industry or government, because universities just aren’t creating and generating those large data sets,” Athey said.

According to economics department chair Jonathan Levin ’94, who has collaborated with Athey on research, Athey’s focus is those selfsame large data sets. Levin took classes with Athey while completing his graduate studies when she was an assistant professor at MIT.

“I think she’s always been interested in the application of sophisticated economic theory to real-world problems,” said Levin. “She has been, in her career, often very methodologically oriented.”

Causes and effects

Much of Athey’s work with Microsoft has focused on optimizing the efficiency of the algorithm that place ads alongside Bing search results and in the process generates millions of dollars in standing bids on certain keywords.

“What the job of the market designer is for these platforms is to try to set rules at the auctions and to manage the marketplace in a way that provides enough profits for advertisers so that they keep participating in your marketplace,” Athey said. “You’re also trying to make sure that you get the best advertisements to the users so that you create the most value in your market and, of course, the search engine wants to make money from these auctions.”

Athey has also done research on the impact of the Internet and social media on how people find and read news.

A future transformation

According to Athey, the evolution of the Internet is transforming the field of social sciences research in exciting ways.

“Economics has always been pretty empirical, but a lot of other social sciences have become much more data-driven once you can use Internet data,” Athey said.

In addition to allowing academics in other social sciences – like psychology, anthropology or political science – to obtain quantifiable data through mediums like social networks rather than simply through observations, big data techniques have found applications as diverse as fostering more efficient governance and administration in cities like New York and Chicago.

“The data created on the Internet came along, and it just opened up a whole bunch of new questions…and the ability to answer policy questions that weren’t really possible to address in the past,” Athey said. “It’s an incredible opportunity where professors in universities can really help push the ball forward by creating new methods and doing new research that’s going to affect the productivity of many different parts of our economy.”