Brynjolfsson, Erik; Collis, Avinash; Diewert, W Erwin; Eggers, Felix; Fox, Kevin J
IDEAS Working Paper Series from RePEc,
01/2019
Paper
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.
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