Some Economics of Personal Activity and Implications for the Digital Economy

Abstract

This paper documents, from 1925 to the present, some important historical facts about personal activity and commercial efforts to attract personal attention. First, increases in personal time spent with media as the primary focus of activity match closely increases in total personal discretionary time. Second, the share of advertising spending in total economic output (GDP) has been roughly constant long-term. Third, real advertising spending per person-hour spent with media has been roughly constant long-term. These historical facts suggest that the traditional approach of buying personal attention through media advertising will not support relatively rapid growth in the digital economy, even with significant changes in media technology such as higher bandwidth and greater interactivity. The growth of the digital economy is likely to depend instead on growth of discretionary time and integration of digital technology into new forms of socializing, transacting, and spending time.

Keywords: media, advertising, communications, time, digital economy

JEL Classification: L8, M3, N7