NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach

Jeremy Greenwood, Karen A. Kopecky

NBER Working Paper No. 13592
Issued in November 2007
NBER Program(s):   EFG   PR

The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 to 3 percent of consumption expenditure.

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This paper was revised on February 1, 2011

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Document Object Identifier (DOI): 10.3386/w13592

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