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The Welfare Effects of Social Media

Hunt Allcott, Luca Braghieri, Sarah Eichmeyer, Matthew Gentzkow

NBER Working Paper No. 25514
Issued in January 2019, Revised in November 2019
NBER Program(s):Industrial Organization, Political Economy

The rise of social media has provoked both optimism about potential societal benefits and concern about harms such as addiction, depression, and political polarization. In a randomized experiment, we find that deactivating Facebook for the four weeks before the 2018 US midterm election (i) reduced online activity, while increasing offline activities such as watching TV alone and socializing with family and friends; (ii) reduced both factual news knowledge and political polarization; (iii) increased subjective well-being; and (iv) caused a large persistent reduction in post-experiment Facebook use. Deactivation reduced post-experiment valuations of Facebook, suggesting that traditional metrics may overstate consumer surplus.

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Document Object Identifier (DOI): 10.3386/w25514

Published: Hunt Allcott & Luca Braghieri & Sarah Eichmeyer & Matthew Gentzkow, 2020. "The Welfare Effects of Social Media," American Economic Review, vol 110(3), pages 629-676.

 
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