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Free Digital Products and Aggregate Economic Measurement

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  • Diane Coyle
  • David Nguyen

Abstract

[eng] The widespread use of free digital services such as online search and social media raises the question of how to measure the economic activity and welfare provided by zero price digital products. Among the possible approaches, the so‑called stated preference method directly questions consumers about the value they place on these products. Through three large representative UK surveys before and during COVID‑19 lockdowns, we ascertain consumers’ stated willingness to accept the loss of a range of ‘free’ online and offline products, and some paid substitutes. The average stated value for free products is generally high, with clear rankings among products, while the natural experiment of the lockdown brought about changes in stated values that were often significant and of plausible sign and scale. The stated preference method therefore provides useful insights. However, there are limitations in using it to estimate aggregate economic welfare, including the absence of a budget constraint.

Suggested Citation

  • Diane Coyle & David Nguyen, 2023. "Free Digital Products and Aggregate Economic Measurement," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 539, pages 27-50.
    • Handle: RePEc:nse:ecosta:ecostat_2023_539_2
    DOI: https://doi.org/10.24187/ecostat.2023.539.2096
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    1. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2020. "Inequality in the impact of the coronavirus shock: Evidence from real time surveys," Journal of Public Economics, Elsevier, vol. 189(C).
    2. Adams-Prassl, A. & Boneva, T. & Golin, M & Rauh, C., 2020. "Inequality in the Impact of the Coronavirus Shock: New Survey Evidence for the UK," Cambridge Working Papers in Economics 2023, Faculty of Economics, University of Cambridge.
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