4 ms·

Estimating Consumer Welfare Gains from Free Online Services

• Bostonian 3y ago
  ... `The survey data suggest that among Facebook users, the ten digital goods generate $2.52 trillion in consumer welfare across the 13 countries, corresponding to 5.95 percent of the countries’ total GDP, and ranging from $1.29 trillion in the United States to $13 billion in Romania. The gains represent a higher share of income in lower-income countries as well as a higher share of income among individuals with lower income and wealth. The researchers therefore conclude that freely available digital goods reduce disparities in consumer welfare both within and across nations. The results suggest that most of the welfare gains from using these digital goods accrue to consumers and not to the platforms. For example, the researchers estimate that the user value generated by Facebook is $284 billion for the 13 countries studied, more than twice as much as Meta’s $115 billion in advertising revenue from Facebook, Instagram, and WhatsApp globally. Because free digital goods generate substantial welfare for consumers but are not included in GDP, economic growth and labor productivity — typically defined as GDP per hour worked — have been underestimated in recent years, at least for the countries in the study’s sample. Traditional measures of output and productivity do not reflect the full contribution of digital goods. The researchers’ findings are not driven by consumers who spend an outsize amount of time on digital platforms. The estimated welfare gains are distributed across a broad range of users, not concentrated among those who are very active online.`