What the GDP Gets Wrong (Why Managers Should Care)

Sloan Management Review, Vol. 51, No. 1, pp. 95-96

Posted: 6 Oct 2009

See all articles by Erik Brynjolfsson

Erik Brynjolfsson

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Adam Saunders

University of British Columbia (UBC) - Sauder School of Business

Date Written: October 1, 2009

Abstract

We see the influence of the information age everywhere, except in the GDP statistics. More people than ever are using Wikipedia, Facebook, Craigslist, Pandora, Hulu and Google. Thousands of new information goods and services are introduced each year. Yet, according to the official GDP statistics, the information sector (software, publishing, motion picture and sound recording, broadcasting, telecom, and information and data processing services) is about the same share of the economy as it was 25 years ago - about 4%. How is this possible? Don’t we have access to more information than ever before?

The answer isn’t about quantity, it’s about price. The bits that comprise today’s information goods are supplanting the atoms that formed yesterday’s encyclopedias, movie theaters, music CDs and newspapers. Online information may be updated every minute of the day and accessible almost anywhere in the world, but its price is usually radically lower than that of its physical counterpart, if there even is a price.

Keywords: Information Technology, GDP, Internet

Suggested Citation

Brynjolfsson, Erik and Saunders, Adam, What the GDP Gets Wrong (Why Managers Should Care) (October 1, 2009). Sloan Management Review, Vol. 51, No. 1, pp. 95-96, Available at SSRN: https://ssrn.com/abstract=1483312

Erik Brynjolfsson (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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617-253-4319 (Phone)

HOME PAGE: http://digital.mit.edu/erik

National Bureau of Economic Research (NBER) ( email )

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Adam Saunders

University of British Columbia (UBC) - Sauder School of Business ( email )

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Vancouver, British Columbia V6T 1Z2
Canada
604-822-9956 (Phone)

HOME PAGE: http://www.sauder.ubc.ca/Faculty/People/Faculty_Members/Saunders_Adam

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