CeDEx Seminar - Avinash Collis (University of Texas at Austin)

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

Abstract:

Gross domestic product (GDP) measures production and is not meant to measure well-being. While many people nonetheless use GDP as a proxy for well-being, consumer surplus is a better measure of consumer well-being. This is increasingly true in the digital economy where many digital goods have zero price and as a result the welfare gains from these goods are not reflected in GDP or productivity statistics. We propose a way of directly measuring consumer well-being using massive online choice experiments. We find that digital goods generate a large amount of consumer welfare that is currently not captured in GDP. For example, the median Facebook user needed a compensation of around $48 to give it up for a month.