GDP-B: Accounting for the Value of New and Free Goods

58 Pages Posted: 25 Mar 2019 Last revised: 3 Sep 2021

See all articles by Erik Brynjolfsson

Erik Brynjolfsson

National Bureau of Economic Research (NBER); Stanford

Avinash Collis

University of Texas at Austin - Red McCombs School of Business

W. Erwin Diewert

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Felix Eggers

University of Groningen

Kevin J. Fox

UNSW Australia Business School, School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 1, 2019

Abstract

The welfare contributions of new and free goods are not well-measured in our current national accounts. We derive explicit terms for the contributions of these goods and introduce a new framework and metric, GDP-B which quantifies their benefits. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive-compatible choice experiments. We find that including the gains from Facebook adds 0.05 to 0.11 percentage points to welfare growth per year while improvements in smartphones adds approximately 0.63 percentage points per year.

Keywords: Welfare measurement, GDP, Productivity, mismeasurement, productivity slowdown, new goods, free goods, online choice experiments, GDP-B

JEL Classification: C43, D60, E23, O3, O4

Suggested Citation

Brynjolfsson, Erik and Collis, Avinash and Diewert, W. Erwin and Eggers, Felix and Fox, Kevin J., GDP-B: Accounting for the Value of New and Free Goods (March 1, 2019). Available at SSRN: https://ssrn.com/abstract=3356697 or http://dx.doi.org/10.2139/ssrn.3356697

Erik Brynjolfsson

National Bureau of Economic Research (NBER) ( email )

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Stanford ( email )

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HOME PAGE: http://brynjolfsson.com

Avinash Collis (Contact Author)

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

Austin, TX
United States

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

W. Erwin Diewert

University of British Columbia (UBC) - Department of Economics ( email )

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Vancouver, BC V6T 1Z1
Canada
604-822-2544 (Phone)
604-822-5915 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Felix Eggers

University of Groningen

Kevin J. Fox

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
(02)9385-3320 (Phone)
(02)9313-6337 (Fax)

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