Unraveling the association between socioeconomic diversity and consumer price index in a tourism country

Abstract

AbstractDiversity has tremendous value in modern society. Economic theories suggest that cultural and ethnic diversity may contribute to economic development and prosperity. To date, however, the correspondence between diversity measures and the economic indicators, such as the Consumer Price Index, has not been quantified. This is primarily due to the difficulty in obtaining data on the micro behaviors and macroeconomic indicators. In this paper, we explore the relationship between diversity measures extracted from large-scale and high-resolution mobile phone data, and the CPIs in different sectors in a tourism country. Interestingly, we show that diversity measures associate strongly with the general and sectoral CPIs, using phone records in Andorra. Based on these strong predictive relationships, we construct daily, and spatial maps to monitor CPI measures at a high resolution to complement existing CPI measures from the statistical office. The case study on Andorra used in this study contributes to two growing literature: linking diversity with economic outcomes, and macro-economic monitoring with large-scale data. Future study is required to examine the relationship between the two measures in other countries.