The Economic Effects of Facebook

Abstract

Social media permeates many aspects of our lives, including how we connect with others, where we get our news and how we spend our time. Yet, we know little about the economic effects for users. In 2017, we ran a large field experiment with over 1,765 individuals to document the value of Facebook to users and its causal effect on news consumption and awareness, well-being and daily activities. Participants reveal how much they value one week of Facebook usage and are then randomly assigned to a validated Facebook restriction or normal use. Those who are off Facebook for a week reduce news consumption, are less likely to recognize politically-skewed news stories, report being less depressed and engage in healthier activities. One week of Facebook is worth $67, and this increases by 19.6% after experiencing a Facebook restriction (33% for women), reflecting information loss or that using Facebook may be addictive.

Keywords: Social Media, Field Experiment, Value of Facebook, News Awareness, Well-Being, Gender

JEL Classification: C93, D91, D83, I31