GDP-B: ACCOUNTING FOR THE VALUE OF NEW AND FREE GOODS IN THE DIGITAL ECONOMY
The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US.
This can shed light on the debate regarding the potential of the digital economy to generate productivity, economic growth and welfare gains. If measurement is lacking, through methodological challenges, statistical agency budgets or data availability, then we are severely hampered in our ability to understand the impact of new technologies, goods on the economy, and consequently the prospects for future productivity, economic growth and welfare.
GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy
Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox
NBER Working Paper No. 25695
JEL No. D6,E2,O0,O4,O47
© 2019 by Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox. All rights reserved.