Using Massive Online Choice Experiments to Measure Changes in Well-Being

Proceedings of the National Academy of Sciences, 116 (15) 7250-7255, April 2019.

49 Pages Posted: 1 May 2018 Last revised: 16 Sep 2019

See all articles by Erik Brynjolfsson

Erik Brynjolfsson

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

Avinash Collis

University of Texas at Austin - McCombs School of Business

Felix Eggers

University of Groningen

Multiple version iconThere are 2 versions of this paper

Date Written: March 26, 2019

Abstract

GDP and derived metrics such as productivity have been central to our understanding of economic progress and well-being. In principle, changes in consumer surplus provide a superior, and more direct, measure of changes in well-being, especially for digital goods. In practice, these alternatives have been difficult to quantify. We explore the potential of massive online choice experiments to measure consumer surplus. We illustrate this technique via several empirical examples which quantify the valuations of popular digital goods and categories. Our examples include incentive compatible discrete choice experiments where online and lab participants receive monetary compensation if and only if they forgo goods for pre-defined periods. For example, the median user needed a compensation of about $48 to forgo Facebook for one month. Our overall analyses reveal that digital goods have created large gains in well-being that are not reflected in conventional measures of GDP and productivity. By periodically querying a large, representative sample of goods and services, including those which are not priced in existing markets, changes in consumer surplus and other new measures of well-being derived from these online choice experiments have the potential for providing cost-effective supplements to the existing National Income and Product Accounts.

Keywords: Consumer Surplus, Digital Goods, Free Goods, GDP, Choice Experiments

JEL Classification: C82, I30, O40

Suggested Citation

Brynjolfsson, Erik and Collis, Avinash and Eggers, Felix, Using Massive Online Choice Experiments to Measure Changes in Well-Being (March 26, 2019). Proceedings of the National Academy of Sciences, 116 (15) 7250-7255, April 2019., Available at SSRN: https://ssrn.com/abstract=3163559 or http://dx.doi.org/10.2139/ssrn.3163559

Erik Brynjolfsson

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

E53-313
Cambridge, MA 02142
United States
617-253-4319 (Phone)

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

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Avinash Collis (Contact Author)

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX
United States

HOME PAGE: http://www.avinash.info

Felix Eggers

University of Groningen

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