The Welfare Effects of Social Media

114 Pages Posted: 31 Dec 2018 Last revised: 31 Jan 2019

See all articles by Hunt Allcott

Hunt Allcott

New York University (NYU)

Luca Braghieri

Stanford University - Department of Economics

Sarah Eichmeyer

Stanford University - Department of Economics

Matthew Gentzkow

Stanford University

Date Written: January 27, 2019

Abstract

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 2,844 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. We use participants' pre-experiment and post-experiment Facebook valuations to quantify the extent to which factors such as projection bias might cause people to overvalue Facebook, finding that the magnitude of any such biases is likely minor relative to the large consumer surplus that Facebook generates.

Keywords: Social media, political polarization, subjective well-being, consumer surplus, projection bias

JEL Classification: D12, D90, I31, L86, O33

Suggested Citation

Allcott, Hunt and Braghieri, Luca and Eichmeyer, Sarah and Gentzkow, Matthew, The Welfare Effects of Social Media (January 27, 2019). Available at SSRN: https://ssrn.com/abstract=3308640 or http://dx.doi.org/10.2139/ssrn.3308640

Hunt Allcott (Contact Author)

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Luca Braghieri

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Sarah Eichmeyer

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Matthew Gentzkow

Stanford University ( email )

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