School of Economics
Institutional Affiliation: University of New South Wales
Information about this author at RePEc
NBER Working Papers and Publications
|March 2019||GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy|
with Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers: w25695
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.