“So let me get this straight, they guarantee my money will be there no matter what? Then they pay me storage fees for keeping my money in a really safe place? Then they pay me even more money on the storage fees they already paid me? And finally, they do this forever? Ok I”m in.”

Thus began my childhood lesson in compound interest. (Thanks Mom!) The premise banks pay interest on their own interest was fascinating. It’s a great lesson for anyone to learn at a young age. When you learn it you aren’t taught this is part of a larger economic cycle, nor does a lesson in compound interest come with the fact it’s a homonym. To most people compound interest is associated with banks and savings, and that’s a good thing.

Another form of compound interest is what happens when economists apply statistics and math modeling to our known universe. Sound complex? Let’s set up some examples that will make it easier. As you read these keep in mind that house fly’s eye is a compound eye allowing it to see many images at once and process them all to better understand the world around them.

Camel Camel Camel

Amazon, a site Techlife readers use to purchase anything and everything has millions of customers. Each time customers buy Amazon makes adjustments to their prices and product availability. Amazon is using the compound interest of their customers to modify the data in two very important aspects of supply and demand. What if you could use that data to better understand when to buy a product at its lowest point? This is the idea behind CamelCamelCamel.com.

The site has evolved from Price Drop and Inventory Alerts to include Price History Charts, Browser Extensions, support for six different Amazon locales, personal settings and tracking tools, even importing your Amazon Wishlist and notifications via Twitter. Amazon puts big data to work for them and now shoppers can as well.

Freakonomics

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The partnership of an economist and a writer, Steven Levitt and Stephen Dubner are the force behind “Freakonomics: The Hidden Side to Everything“. They have books, videos, a website and even a movie about their efforts of taking a compound interest in such topics as:

• The Economics of Piracy (the Real Kind, With Peglegs and Pieces of Eight)
• Do Game-Theory-Playing Traffic Lights Reduce Congestion?
• Bribing Kids to Try on Tests
• Fighting Over the Width of Airline Seats
• How to Best Incentivize Organ Donations?

As an avid fan, their formula has always been to take something understandable that most people either miss or get wrong and crunch big data to show their findings. It’s always a great read, and certainly readers feel smarter after looking at the world through their compound eye. They also have a great collection of online readers who often provide additional insight into crowd sourced, hands on opinions.

FiveThirtyEight

Another data darling is Nate Silver and his team at FiveThirtyEight. With attention grabbing headlines that pull readers into New York Times length articles this site doesn’t shy from using big data and attempting to focus compound interest on variety of subjects such as Economics, Science, Life, Sports and their original main focus Politics. This site is all data, all the time.

Even their contributors section, with currently 22 people listed, only has one sentence per person. With great content organization making use of their five general areas, often articles have a compound interest intersecting various main topics. If smart readers are sick of linkbait headlines that fail to deliver more than a slideshow of images then Five Thirty Eight is for you. They provide in-depth analysis making use of  great data repositories yet the easy to read style keeps your focus the entire length of the article. A sample headline from each main area:

• Politics – Partisan Loyalty Begins at Age 18
• Economics – Inequality in College Towns
• Science – Disasters Cost More Than Ever – But Not Because of Climate Change
• Life – Flight Delayed? Your Pilot Really Can Make Up the Time in the Air
• Sports – What Would’ve Happened If Nobody Had Gotten Hurt in the NBA This Year

Compound Interest Three different ways big data is shared with all of us in that other definition of compound interest. Which begs the big data question – “When if ever will banks interest rates rise again to make saving and compound interest once again valuable?”