Book Trek: A Review of “Everybody Lies – Big Data, New Data and What the Internet Can Tell Us About Who We Really Are”

The Author

Seth Stephens-Davidowitz

Background: A New York Times op-ed contributor and former Google data scientist.  B.A. from Stanford in Philosophy, Ph.D. in Economics from Harvard.

Length and Readability

284 pages of text, plus notes and forewords/acknowledgements

I found the book highly readable and well organized.  There are many case studies that bring the author’s ideas to life, most of which are highly relatable real world examples.

Recommendation

Highly recommended.  This book makes the daunting challenge of “Big Data” analysis approachable to any reader.  It reorients the discussion away from nerdy calculations of regression statistics/modeling and puts it squarely in the human realm.

Anything Wrong with It?

This is not a gentle book; you will learn things about America, human sexuality and even yourself that are not necessarily easy to read. Most of the data used here comes from Google searches, so it is hard to argue with the numbers.  But that doesn’t mean you will like all the conclusions, and you may not agree with all of them.

What is the “Big Idea” in this book?

Information technology can and will remake how we analyze and understand human nature.  Much of the book focuses on Google Trend analysis: how often users search for specific words, where they live and when those searches occurred.  Other sources, from Facebook to adult websites, offer their own takes on the human condition.  This approach differs completely from existing social sciences practices, which center on small-scale surveys and lab experiments with a select population.

The book offers an important message for investors who would like to use “Big Data” to systematically beat the market: this is very, very hard.  The author points out that Big Data works best when “The existing research in a given field is weak”.  This is not the case in most capital markets. Moreover, there are scores of large hedge funds already data mining Google and any other source that might yield an investment edge.  Lastly, there is so much data available to an investor that the whole process of “Big Data” research can easily yield historically correlated inputs that are not actually predictive of future results.

All is not lost, however, for capital markets professionals. The book offers a very clear template for using Big Data analysis to make better investment decisions even if it doesn’t point directly to a pot of gold.  For example, Google Trends is useful in fundamental company analysis to assess market share trends.  It can also yield actionable information about macro economic trends such as unemployment and consumer confidence.

In the end, “Everybody Lies” is a great primer on the use of Big Data in understanding the world around us.  You will find yourself taking mental notes on how to use its lessons in your investment process.  And it is one of those books that can change how you look at the world as a whole.

Resources:

The Author’s Website

http://sethsd.com

Other Reviews of the Book

From The Economist: https://www.economist.com/news/books-and-arts/21722612-data-mining-becoming-more-and-more-precise-how-find-out-what-people-really-think

From UK newspaper The Guardian: https://www.theguardian.com/books/2017/aug/17/everybody-lies-seth-stephens-davidowitz-review

Reader reviews from the Goodreads website (4 stars, 2900 ratings): https://www.goodreads.com/book/show/28512671-everybody-lies

From online news site Quartz: https://qz.com/1043019/how-big-data-tells-us-when-the-united-states-literally-became-one/

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