NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy

Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, Kevin J. Fox

NBER Working Paper No. 25695
Issued in March 2019
NBER Program(s):Development of the American Economy, Economic Fluctuations and Growth, Productivity, Innovation, and Entrepreneurship

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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Document Object Identifier (DOI): 10.3386/w25695

 
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