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

54 Pages Posted: 25 Mar 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

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

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 the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive-compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US.

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 in the Digital Economy (March 1, 2019). Available at SSRN: https://ssrn.com/abstract=3356697 or http://dx.doi.org/10.2139/ssrn.3356697

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)

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

100 Main St.
Cambridge, MA 02142
United States

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

W. Erwin Diewert

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

997-1873 East Mall
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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