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

Author

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

Abstract

The welfare contributions of new goods and free goods are not well-measured in standard statistical agency metrics like GDP or productivity. 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. Our new approach can help measure welfare changes over time and reveal which goods and innovations contribute the most to economic growth and well-being.

Suggested Citation

  • Erik Brynjolfsson & Avinash Collis & W. Erwin Diewert & Felix Eggers & Kevin J. Fox, 2025. "GDP-B: Accounting for the Value of New and Free Goods," American Economic Journal: Macroeconomics, American Economic Association, vol. 17(4), pages 312-344, October.
    • Handle: RePEc:aea:aejmac:v:17:y:2025:i:4:p:312-44
    DOI: 10.1257/mac.20210319
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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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