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GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy

Author

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  • Erik Brynjolfsson
  • Avinash Collis
  • W. Erwin Diewert
  • Felix Eggers
  • Kevin J. Fox

Abstract

The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US.

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  • Erik Brynjolfsson & Avinash Collis & W. Erwin Diewert & Felix Eggers & Kevin J. Fox, 2019. "GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy," NBER Working Papers 25695, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25695
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    Cited by:

    1. Diane Coyle & David Nguyen, 2020. "Valuing Goods Online and Offline: the Impact of Covid-19," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-10, Economic Statistics Centre of Excellence (ESCoE).
    2. Ryan Martin, 2020. "Identifying Consumer-Welfare Changes when Online Search Platforms Change Their List of Search Results," Staff Working Papers 20-5, Bank of Canada.
    3. Byrne, David M. & Corrado, Carol A., 2020. "The increasing deflationary influence of consumer digital access services," Economics Letters, Elsevier, vol. 196(C).
    4. David Byrne & Carol Corrado, 2020. "Accounting for Innovations in Consumer Digital Services: IT Still Matters," NBER Chapters, in: Measuring and Accounting for Innovation in the Twenty-First Century, National Bureau of Economic Research, Inc.
    5. Bertin Martens & Alexandre de Streel & Inge Graef & Thomas Tombal & Nestor Duch-Brown, 2020. "Business-to-Business data sharing: An economic and legal analysis," JRC Working Papers on Digital Economy 2020-05, Joint Research Centre (Seville site).

    More about this item

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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