Federal Reserve Bank of Atlanta
1000 Peachtree ST NE
Atlanta, GA 30309
Information about this author at RePEc
NBER Working Papers and Publications
|November 2007||Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach|
with Jeremy Greenwood: w13592
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.