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Estimating Future Consumer Welfare Gains from Innovation: The Case of Digital Data Storage

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  • Austin, David H.
  • MacAuley, Molly K.

Abstract

We develop a quality-adjusted cost index to estimate expected returns to investments in new technologies. The index addresses the problem of measuring social benefits from innovations in service sector inputs, where real output is not directly observable. We forecast welfare gains from two U.S. Advanced Technology Program innovations equaling 25%-50% of expected price, and aggregate consumer benefits of $1-$2 billion, relative to trends in existing technologies. Our model's probabilistic parameters reflect uncertainty about prospective outcomes and in our hedonic estimates of shadow values for selected product attributes. The index can be readily adopted by research and development (R&D) managers in industry and government.

Suggested Citation

  • Austin, David H. & MacAuley, Molly K., 2000. "Estimating Future Consumer Welfare Gains from Innovation: The Case of Digital Data Storage," Discussion Papers 10814, Resources for the Future.
    • Handle: RePEc:ags:rffdps:10814
    DOI: 10.22004/ag.econ.10814
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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
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    7. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
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    Cited by:

    1. MacAuley, Molly K. & Shih, Jhih-Shyang & Aronow, Emily & Austin, David H. & Bath, Tom & Darmstadter, Joel, 2002. "Measuring the Contribution to the Economy of Investments in Renewable Energy: Estimates of Future Consumer Gains," Discussion Papers 10588, Resources for the Future.
    2. MacAuley, Molly K. & Darmstadter, Joel & Fini, John N. & Greenberg, Joel S. & Maulbetsch, John S. & Schaal, A. Michael & Styles, Geoffrey S.W. & Vedda, James A., 2000. "Can Power from Space Compete?," Discussion Papers 10542, Resources for the Future.
    3. Nathalie Taverdet-Popiolek, 2022. "Economic Footprint of a Large French Research and Technology Organisation in Europe: Deciphering a Simplified Model and Appraising the Results," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 44-69, March.

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