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Hidden value: how consumer learning boosts output

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  • Leonard I. Nakamura

Abstract

Iphones. Ipads. Wikipedia. Google Maps. Yelp. TripAdvisor. New digital devices, applications, and services offer advice and information at every turn. The technology around us changes fast, so we are continually learning how best to use it. This increased pace of learning enhances the satisfaction we gain from what we buy and increases its value to us over time, even though it may cost the same ? or less. However, this effect of consumer learning on value makes inflation and output growth more difficult to measure. As a result, current statistics may be undervaluing household purchasing power as well as how much our economy produces, leading us to believe that our living standards are declining when they are not.

Suggested Citation

  • Leonard I. Nakamura, 2014. "Hidden value: how consumer learning boosts output," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 9-14.
    • Handle: RePEc:fip:fedpbr:00012
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/2014/q3/brQ314_hidden_value.pdf
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    References listed on IDEAS

    as
    1. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(4), pages 515-539.
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    Cited by:

    1. Leonard Nakamura & Jon Samuels & Rachel Soloveichik, 2017. "Measuring the “Free” Digital Economy within the GDP and Productivity Accounts," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2017-03, Economic Statistics Centre of Excellence (ESCoE).
    2. Leonard I. Nakamura & Jon Samuels & Rachel Soloveichik, 2016. "Valuing \"Free\" Media in GDP: An Experimental Approach," Working Papers 16-24, Federal Reserve Bank of Philadelphia.

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