MIT Sloan School of Management
100 Main Street
Cambridge, MA 02142
Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|March 2019||GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy|
with Erik Brynjolfsson, W. Erwin Diewert, Felix Eggers, Kevin J. Fox: w25695
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.
|April 2018||Using Massive Online Choice Experiments to Measure Changes in Well-being|
with Erik Brynjolfsson, Felix Eggers: w24514
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 compensa...
Published: Proceedings of the National Academy of Sciences, March 2019