Measuring the Welfare Gain from Personal Computers

12 Pages Posted: 30 Nov 2012

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: January 2013

Abstract

The welfare gain to consumers from the introduction of personal computers (PCs) is estimated. 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 will not 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 PCs is 2%–3% of consumption expenditure.

JEL Classification: E01, E21, O33, O47

Suggested Citation

Greenwood, Jeremy and Kopecky, Karen A., Measuring the Welfare Gain from Personal Computers (January 2013). Economic Inquiry, Vol. 51, Issue 1, pp. 336-347, 2013. Available at SSRN: https://ssrn.com/abstract=2182990 or http://dx.doi.org/10.1111/j.1465-7295.2011.00447.x

Jeremy Greenwood

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-1505 (Phone)

HOME PAGE: http://jeremygreenwood.net

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Karen A. Kopecky

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
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)

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
325
PlumX Metrics