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Using Massive Online Choice Experiments to Measure Changes in Well-being

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  • Erik Brynjolfsson
  • Felix Eggers
  • Avinash Gannamaneni

Abstract

GDP and derived metrics (e.g., productivity) have been central to understanding economic progress and well-being. In principle, the change in consumer surplus (compensating expenditure) provides a superior, and more direct, measure of the change in well-being, especially for digital goods, but in practice, it has been difficult to measure. We explore the potential of massive online choice experiments to measure consumers’ willingness to accept compensation for losing access to various digital goods and thereby estimate the consumer surplus generated from these goods. We test the robustness of the approach and benchmark it against established methods, including incentive compatible choice experiments that require participants to give up Facebook for a certain period in exchange for compensation. The proposed choice experiments show convergent validity and are massively scalable. Our results indicate that digital goods have created large gains in well-being that are missed by conventional measures of GDP and productivity. By periodically querying a large, representative sample of goods and services, including those which are not priced in existing markets, changes in consumer surplus and other new measures of well-being derived from these online choice experiments have the potential for providing cost-effective supplements to existing national income and product accounts.

Suggested Citation

  • Erik Brynjolfsson & Felix Eggers & Avinash Gannamaneni, 2018. "Using Massive Online Choice Experiments to Measure Changes in Well-being," NBER Working Papers 24514, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24514
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    Cited by:

    1. Bodo Herzog, 2018. "Valuation of Digital Platforms: Experimental Evidence for Google and Facebook," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 6(4), pages 1-13, October.
    2. Diewert, Erwin & Fox, Kevin J., 2019. "Productivity Indexes and National Statistics: Theory, Methods and Challenges," Microeconomics.ca working papers erwin_diewert-2019-8, Vancouver School of Economics, revised 25 Apr 2019.
    3. repec:hig:fsight:v:13:y:2019:i:3:p:6-12 is not listed on IDEAS
    4. Diewert, Erwin & FOX, Kevin J. Fox & SCHREYER, Paul, 2017. "The Digital Economy, New Products and Consumer Welfare," Microeconomics.ca working papers erwin_diewert-2017-12, Vancouver School of Economics, revised 14 Dec 2017.
    5. 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).
    6. Brynjolfsson, Erik & Collis, Avinash & Diewert, Erwin & Eggers, Felix & FOX, Kevin J., 2019. "GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy," Microeconomics.ca working papers erwin_diewert-2019-6, Vancouver School of Economics, revised 27 Mar 2019.
    7. Leonard I. Nakamura & Diane Coyle, 2019. "Toward a Framework for Time Use, Welfare, and Household Centric Economic Measurement," Working Papers 19-11, Federal Reserve Bank of Philadelphia, revised 12 Feb 2019.
    8. Bart Los & Marcel Timmer, 2018. "Measuring Bilateral Exports of Value Added: A Unified Framework," NBER Chapters, in: The Challenges of Globalization in the Measurement of National Accounts, National Bureau of Economic Research, Inc.
    9. David Byrne & Carol Corrado, 2019. "Accounting for Innovations in Consumer Digital Services: IT Still Matters," NBER Chapters, in: Measuring and Accounting for Innovation in the 21st Century, National Bureau of Economic Research, Inc.
    10. Diewert, Erwin & Fox, Kevin J. & Schreyer, Paul, 2019. "Experimental Economics and the New Commodities Problem," Microeconomics.ca working papers erwin_diewert-2019-4, Vancouver School of Economics, revised 13 Mar 2019.
    11. Haixia Wu & Yan Ge, 2019. "Excessive Application of Fertilizer, Agricultural Non-Point Source Pollution, and Farmers’ Policy Choice," Sustainability, MDPI, Open Access Journal, vol. 11(4), pages 1-17, February.

    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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