The Numerati: Big Brother in a Chip

Dec. 7, 2008— -- Numbers, numbers everywhere -- and nowhere to hide. This is the theme of BusinessWeek columnist Stephen Baker's book, "The Numerati."

With gee-whiz enthusiasm, he tells a number of fascinating stories about ever cheaper, ever more powerful computer chips and the tools and techniques they make possible -- tools and techniques that will increasingly and dramatically affect nearly every area of our lives.

Smart Carts in Supermarkets

The bulk of the book is devoted to examples.

A particularly nice one concerns the chips and new software being developed that will monitor our buying habits in supermarkets via the use of store cards and smart carts. These will note what we buy and infer from our purchases whether we're on a budget (relatively constant expenditures), whether we're following a diet (low- fat foods), and whether we've fallen off of it (high-fat ice creams).

The cart will also remind us if it finds that we've forgotten something and determine how brand-loyal and price-sensitive we are. It will discover our buying personalities and likely demographic characteristics, track our path through the store, and suggest changes in layout to stimulate sales of high-profit items.

Through interviews with scientists at various software companies, ranging from giants like Yahoo and Google to a number of smaller boutique firms, Baker attempts to humanize the story of those he terms the numerati. They are the mathematicians, computer scientists, and others who are, every day, devising better software models of us as consumers, workers, patients, lovers, voters, and even terrorists.

Despite its topic, the book contains no mathematics although Baker does periodically hint at notions from statistics, operations research, graph and network theory that make the new software possible.

Interestingly, a few numerati are even analyzing blogs because bloggers provide unfiltered, raw, generally honest reactions to products (from diarrhea medicines to golf clubs) that information-hungry companies want.

Countless blogs are scanned for mention of these products (or issues) and the computer is taught to determine the sex, approximate age, and other demographic characteristics of the bloggers. The information thus obtained helps the companies discern tastes and target ads (much like Google and Amazon are doing already).