Freaks, Geeks, and GDP
Why hasn't the Internet helped the American economy grow as much as economists thought it would?
But providing an alternative measure of what we produce or consume based on the value people derive from Wikipedia or Pandora proves an extraordinary challenge—indeed, no economist has ever really done it. Brynjolfsson says it is possible, perhaps, by adding up various "consumer surpluses," measures of how much consumers would be willing to pay for a given good or service, versus how much they do pay. (You might pony up $10 for a CD, but why would you if it is free?) That might give a rough sense of the dollar value of what the Internet tends to provide for nothing—and give us an alternative sense of the value of our technologies to us, if not their ability to produce growth or revenue for us.
Of course, if our most radical and life-altering technologies are not improving incomes or productivity or growth, then we still have problems. Quality-of-life improvements do not put dinner on the table or pay for Social Security benefits. Still, even Cowen does not see all doom and gloom ahead, with incomes stagnating endlessly as we do more and more online and bleed more and more jobs and money. Who knows what awesome technologies might be just around the bend?
Correction, March 8, 2011: This article originally misspelled Erik Brynjolfsson's surname. (Return to the corrected sentence.)
Annie Lowrey, formerly Slate’s Moneybox columnist, is economic policy reporter for the New York Times.
Illustration by Mark Alan Stamaty.