What’s in A Price? : Valuation for Welfare and National Accounts

Modern economies combine market and non-market products and producers. Although many market products have observable prices, many digital services are offered at zero monetary cost, relying instead on data capture or advertising, and their consumer value is insufficiently captured in national accounts. Public services face a similar issue, as they are typically valued at production cost rather than by the consumer welfare they generate. Recent advances in measurement - such as incentivized online experiments - offer a way to quantify welfare effects. However, not every welfare valuation is suitable for comparison or integration into the National Accounts. We develop a unified framework for valuing market and non-market products, introduce virtual and reservation prices, average compensation, unit costs, quality-adjustment of prices, and clarify their relationship to the national accounts and price index measurement.