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

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  • Brynjolfsson, Erik
  • Collis, Avinash
  • Diewert, W. Erwin
  • Eggers, Felix
  • Fox, Kevin J.

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.

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  • Brynjolfsson, Erik & Collis, Avinash & Diewert, W. Erwin & Eggers, Felix & Fox, Kevin J., 2019. "GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy," OSF Preprints sptfu, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:sptfu
    DOI: 10.31219/osf.io/sptfu
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    Cited by:

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    2. Arvai Kai & Mann Katja, 2022. "Consumption Inequality in the Digital Age," Working papers 890, Banque de France.
    3. Diane Coyle & David Nguyen, 2020. "Valuing Goods Online and Offline: the Impact of Covid-19," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-10, Economic Statistics Centre of Excellence (ESCoE).
    4. Geoffrey Parker & Georgios Petropoulos & Marshall Van Alstyne, 2021. "Platform mergers and antitrust [Ex-post assessment of merger control decisions in digital markets]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(5), pages 1307-1336.
    5. Enache, Andreea & Friberg, Richard & Wiklander, Magnus, 2023. "Demand for in-app purchases in mobile apps—A difference-in-difference approach," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    6. Richard Davies, 2021. "Prices and inflation in the UK - A new dataset," CEP Occasional Papers 55, Centre for Economic Performance, LSE.
    7. Ryan Martin, 2020. "Identifying Consumer-Welfare Changes when Online Search Platforms Change Their List of Search Results," Staff Working Papers 20-5, Bank of Canada.
    8. Byrne, David M. & Corrado, Carol A., 2020. "The increasing deflationary influence of consumer digital access services," Economics Letters, Elsevier, vol. 196(C).
    9. Alexandre Bourgeois, 2020. "Free Services from the Digital Economy: Do We Need to Measure Their Value and How?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 517-518-5, pages 157-172.
    10. Boppart, Timo & Li, Huiyu, 2021. "Productivity slowdown: reducing the measure of our ignorance," CEPR Discussion Papers 16478, C.E.P.R. Discussion Papers.
    11. Changya Di & Decai Tang & Yifan Xu, 2023. "Impact of Digital Economy on the High-Quality Development of China’s Service Trade," Sustainability, MDPI, vol. 15(15), pages 1-19, August.
    12. Wulong Gu & Michael Willox, 2023. "The Post-2001 Productivity Growth Divergence between Canada and the United States," International Productivity Monitor, Centre for the Study of Living Standards, vol. 45, pages 27-60, Fall.
    13. Ricky N. Lawton & Daniel Fujiwara & Ulrike Hotopp, 2022. "The value of digital archive film history: willingness to pay for film online heritage archival access," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(1), pages 165-197, March.
    14. Diane Coyle & David Nguyen, 2020. "Free goods and economic welfare," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-18, Economic Statistics Centre of Excellence (ESCoE).
    15. Edward Castronova, 2023. "Preference evolution, attention, and happiness," Kyklos, Wiley Blackwell, vol. 76(2), pages 301-315, May.
    16. Dr. Cesar R Salas-Guerra, 2021. "Impact of digital economic activity on regional economic growth: A Case study from northern Minas Gerais between 2009 To 2018," Papers 2105.02849, arXiv.org.
    17. David M. Cutler & Kaushik Ghosh & Kassandra Messer & Trivellore Raghunathan & Allison B. Rosen & Susan T. Stewart, 2020. "A Satellite Account for Health in the United States," NBER Working Papers 27848, National Bureau of Economic Research, Inc.
    18. Robert Bucknall & Stephen Christie & Richard Heys & Cliodhna Taylor, 2021. "GDP and Welfare: Empirical Estimates of a Spectrum of Opportunity," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2021-08, Economic Statistics Centre of Excellence (ESCoE).
    19. Ege Erdil & Tamay Besiroglu, 2023. "Explosive growth from AI automation: A review of the arguments," Papers 2309.11690, arXiv.org, revised Oct 2023.
    20. David Byrne & Carol Corrado, 2020. "Accounting for Innovations in Consumer Digital Services: IT Still Matters," NBER Chapters, in: Measuring and Accounting for Innovation in the Twenty-First Century, pages 471-517, National Bureau of Economic Research, Inc.
    21. Du, Juntao & Shen, Zhiyang & Song, Malin & Zhang, Linda, 2023. "Nexus between digital transformation and energy technology innovation: An empirical test of A-share listed enterprises," Energy Economics, Elsevier, vol. 120(C).
    22. MARTENS Bertin, 2020. "An economic perspective on data and platform market power," JRC Working Papers on Digital Economy 2020-09, Joint Research Centre.
    23. Josh Martin & Rebecca Riley, 2023. "Productivity measurement - Reassessing the production function from micro to macro," Working Papers 033, The Productivity Institute.
    24. Daniel Sichel & Eric von Hippel, 2021. "Household Innovation and R&D: Bigger than You Think," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(3), pages 639-658, September.
    25. Straubhaar, Thomas, 2021. "Datenwirtschaft: Was ist neu und anders?," Edition HWWI: Chapters, in: Straubhaar, Thomas (ed.), Neuvermessung der Datenökonomie, volume 6, pages 9-25, Hamburg Institute of International Economics (HWWI).

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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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