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Yelp Local Data Reveals Neighborhood Changes in Real Time

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According to a new analysis from Harvard Business School, location and local business data from digital platforms, like Yelp, offer powerful insights when it comes to “shedding light on the evolution of neighborhoods.” The authors argue location data can complement Census Bureau data, which takes a long time to collect and has limited information about the types of businesses in a neighborhood.

The report is specifically interested in understanding gentrification, using real-time data from Yelp on how businesses in a given neighborhood correlate to housing prices. Combining the Yelp data with American Community Survey (ACS) data, one of the most interesting findings was that the entry of Starbucks and cafes are indicative of housing price growth across the U.S.

Additionally, the study reported a significant correlation between change in the number of college graduates in a given neighborhood and change in the number of cafes, bars, restaurants, barbers, wine bars, convenience stores, fast food, florists and “pricey” restaurants. There was also a correlation between change in young people and change in restaurants, barbers and florists.

The results were reproduced in cities across the country including Boston, Chicago, Los Angeles and San Francisco. The takeaway here is the opportunity to use online data to understand the offline world. According to the report:

“Our results also relate to a growing body of research exploring the ways in which digital platforms contain valuable data that can be used to enhance our understanding of the economy. While these platforms are not a substitute for traditional government statistical data, they provide an important complement – offering novel insights into the economy, often in close to real time.”

Location data has shown itself to be a versatile tool for numerous marketing purposes, helping to identify real world consumer behaviors. But there are many more “offline” uses for location and other digital data. This Harvard Business School analysis reflects one such case and shows that economic and demographic insights from digital platform data hold implications for real-world policy making and planning.

Just as data from online and offline actions are being connected to improve marketers’ efficiency, some of this same digital data can be used to better understand and address real-world problems that might otherwise seem unrelated. As these types of insights become more accessible, through AI and other tools, a broad spectrum of organizations and institutions will be able to better understand the world around us.

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