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Give up Facebook for a month and help economists fix GDP

Would you quit Fb for one month in trade for US$50 (RM205)?

The query, posed by MIT’s Erik Brynjolfsson and 4 co-authors of a brand new paper, could assist economists get a greater measure of the extent to which new, free applied sciences are reshaping the financial system and our lives. The reply, unsurprisingly, is lots.

They estimate that the social community by itself may add as a lot as 0.11 share factors yearly to US gross home product if measured by its profit to customers. The paper was introduced Saturday on the annual assembly of the American Financial Affiliation in San Diego.

The paper will get at a broader query going through economists: How a lot is expertise enhancing our lives? Historically, they’ve addressed that query by asking how a lot richer varied improvements have made us. Thus the reply would present up in GDP, an imperfect however cheap measure of mixture welfare.

That process will get tougher, nevertheless, when the applied sciences remodeling society are free, a minimum of in greenback phrases, although the authors additionally nod to the concept that “free” items and providers can come at an implicit value.

In any case, if Fb, Twitter, GPS map providers and a bunch of different apps in your smartphone come at zero price, then they gained’t present up in GDP, nor in conventional measures of productiveness – even when they enhance our lives and make us extra productive.

To resolve this, Brynjolfsson and his co-authors first performed a set of experiments and surveys geared toward teasing out the financial worth folks assign to sure free items and providers. This enables them to assemble a substitute for GDP, which they name GDP-B, based mostly not on precise prices however on perceived advantages.

Amongst a consultant pattern of US Web customers, they discovered the median value of giving up Fb for a month was US$42.17 (RM173.07).

Amongst a separate group of check topics within the Netherlands, requested a few handful of free Web-based providers, the group assigned the best worth to WhatsApp, owned by Fb Inc, at a staggering €535.73 (RM2,461) for only one month’s abstinence. Fb was subsequent highest at round €100 (RM459). Twitter, utilized by only a third of the group, was valued at lower than €1 (RM4.59).

“GDP-B and the associated metrics proposed on this paper allow a extra thorough exploration of the impacts of recent and free items on welfare, with important potential coverage implications,” the authors concluded.

For starters, they stated, the implied changes to GDP “could go some option to explaining the a lot documented and debated productiveness progress slowdown skilled by industrialised nations since 2004”. – Bloomberg

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