The Welfare Effects of Social Media
116 Pages Posted: 31 Dec 2018 Last revised: 2 Apr 2019
Date Written: March 25, 2019
The rise of social media has provoked both optimism about potential societal benefits and concern about harms such as addiction, depression, and political polarization. We present a randomized evaluation of the welfare effects of Facebook, focusing on US users in the run-up to the 2018 midterm election. We measured the willingness-to-accept of 2,743 Facebook users to deactivate their Facebook accounts for four weeks, then randomly assigned a subset to actually do so in a way that we verified. Using a suite of outcomes from both surveys and direct measurement, we show that Facebook deactivation (i) reduced online activity, including other social media, while increasing offline activities such as watching TV alone and socializing with family and friends; (ii) reduced both factual news knowledge and political polarization; (iii) increased subjective well-being; and (iv) caused a large persistent reduction in Facebook use after the experiment. Deactivation reduced post-experiment valuations of Facebook, but valuations still imply that Facebook generates substantial consumer surplus.
Keywords: Social media, political polarization, subjective well-being, consumer surplus from digital technologies
JEL Classification: D12, D90, I31, L86, O33
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