Accounting for Innovation in Consumer Digital Services: IT Still Matters

Byrne, David; Corrado, Carol

doi:10.3386/w26010

Cited by 7 publications

(4 citation statements)

References 18 publications

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“…Through a series of choice experiments, we find that free digital goods provide substantial value to consumers even if they do not contribute substantially to GDP. Moreover, the consumer surplus generated by all digital goods, estimated using quality-adjusted prices of devices (phones and computers) and their data usage intensity (21), is numerically similar to the sum of consumer surplus estimates generated by most popular digital goods (sum of valuations in Table 1), thereby providing further validity of our results.…”

Section: Discussionsupporting

confidence: 74%

Using massive online choice experiments to measure changes in well-being

Brynjolfsson

Collis

Eggers

2019

Proc. Natl. Acad. Sci. U.S.A.

109

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Gross domestic product (GDP) and derived metrics such as productivity have been central to our understanding of economic progress and well-being. In principle, changes in consumer surplus provide a superior, and more direct, measure of changes in well-being, especially for digital goods. In practice, these alternatives have been difficult to quantify. We explore the potential of massive online choice experiments to measure consumer surplus. We illustrate this technique via several empirical examples which quantify the valuations of popular digital goods and categories. Our examples include incentive-compatible discrete-choice experiments where online and laboratory participants receive monetary compensation if and only if they forgo goods for predefined periods. For example, the median user needed a compensation of about $48 to forgo Facebook for 1 mo. Our overall analyses reveal that digital goods have created large gains in well-being that are not reflected in conventional measures of GDP and productivity. By periodically querying a large, representative sample of goods and services, including those which are not priced in existing markets, changes in consumer surplus and other new measures of well-being derived from these online choice experiments have the potential for providing cost-effective supplements to the existing national income and product accounts.

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Section: Discussionsupporting

confidence: 74%

Using massive online choice experiments to measure changes in well-being

Brynjolfsson

Collis

Eggers

2019

Proc. Natl. Acad. Sci. U.S.A.

109

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“…Another category of mismeasurement is digital service innovations. Byrne & Corrado (2019) propose a framework for measuring improvements in consumer content provision. They find that in the last 10 years content delivery services increased consumer surplus by almost $1,800 per connected user per year and contributed over 0.50 percentage points to US real GDP growth.…”

Section: Measuring Gdp In a Data Economymentioning

confidence: 99%

Data and Markets

Farboodi

Veldkamp

2023

Annual Review of Economics

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Big data is changing every corner of economics and finance. The largest firms in the US economy are valued chiefly for their data. Yet, these data are largely excluded from macroeconomic and finance research. We review work and relevant tools for measuring economic activity, market power, data markets, and the role of data in financial markets. We also highlight areas where future work is needed. Expected final online publication date for the Annual Review of Economics, Volume 15 is August 2023. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

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“…There is general agreement that true inflation tends to be over-estimated and, accordingly, real GDP growth is under-estimated, possibly quite significantly, by the practices currently used by government statistical offices. The literature which mainly concerns the United States, has, for example, highlighted not taking quality change in most of the economy seriously (Feldstein, 2017), the use of inappropriate imputation of prices where old goods are replaced by new goods (Aghion et al, 2017), and failures adequately to track declines in the prices of IT equipment and IT services (Byrne and Corrado, 2017a) or to incorporate well new aspects of consumption such as digital services (Byrne and Corrado, 2017b). It is not difficult to think that the growth rate of real GDP in the United States is of the order of 1 percentage point per year faster than officially stated.…”

Section: Growth Is Under-estimatedmentioning

confidence: 99%