NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Kevin Fox

School of Economics
UNSW Sydney
NSW 2052
Australia

E-Mail: K.Fox@unsw.edu.au
Institutional Affiliation: University of New South Wales

NBER Working Papers and Publications

March 2019GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy
with Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers: 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.
 
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