Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach

26 Pages Posted: 14 Nov 2007 Last revised: 23 Aug 2010

See all articles by Jeremy Greenwood

Jeremy Greenwood

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Karen A. Kopecky

Federal Reserve Bank of Atlanta; University of Western Ontario - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: November 2007

Abstract

The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 to 3 percent of consumption expenditure.

Suggested Citation

Greenwood, Jeremy and Kopecky, Karen A., Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach (November 2007). NBER Working Paper No. w13592. Available at SSRN: https://ssrn.com/abstract=1029933

Jeremy Greenwood (Contact Author)

University of Pennsylvania - Department of Economics ( email )

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HOME PAGE: http://jeremygreenwood.net

National Bureau of Economic Research (NBER)

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Karen A. Kopecky

Federal Reserve Bank of Atlanta ( email )

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Atlanta, GA 30309-4470
United States

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8
Canada
519-661-2111, ext. 80446 (Phone)
519-661-3666 (Fax)

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