Measuring the Economy Project

Measuring the Economy Project is led by Erik Brynjolfsson, Avinash Collis and Jae-Joon Lee and managed by Devin Cook.

Our Research

1. Measuring the Impact of Free Goods on Real Household Consumption

Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers and Kevin Fox

AEA Papers and Proceedings, Vol. 110, MAY 2020

We suggest a methodology that allows statistical agencies to form approximations to the benefits that flow to households from new free goods. The present production-oriented GDP measures are not satisfactory for measuring real household consumption and will be increasingly inaccurate as free goods, such as those made possible by the digital revolution, become more important. Advertising expenditures are not an adequate substitute for measuring the benefits of new goods to the household sector. Instead, we need to draw on estimates such as those provided by choice experiments.

Erik Brynjolfsson and Avinash Collis

Harvard Business Review, Nov/Dec 2019.

Macroeconomic indicators can be precisely measured, but they tell only part of the story. Well-being metrics convey a truer picture of how consumers are doing, but they are more subjective. By considering an array of measures, including our GDP-B metric, policy makers, regulators, and investors can establish a better foundation for decision making.

Erik Brynjolfsson, Avinash Collis and Felix Eggers

Proceedings of the National Academy of Sciences, 116 (15) 7250-7255, April 2019.

Previously circulated as: NBER Working Paper No. 24514

GDP and derived metrics (e.g., productivity) have been central to understanding economic progress and well-being. In principle, the change in consumer surplus (compensating expenditure) provides a superior, and more direct, measure of the change in well-being, especially for digital goods, but in practice, it has been difficult to measure. We explore the potential of massive online choice experiments to measure consumers’ willingness to accept compensation for losing access to various digital goods and thereby estimate the consumer surplus generated from these goods. We test the robustness of the approach and benchmark it against established methods, including incentive compatible choice experiments that require participants to give up Facebook for a certain period in exchange for compensation. The proposed choice experiments show convergent validity and are massively scalable. Our results indicate that digital goods have created large gains in well-being that are missed by 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 existing national income and product accounts.

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Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers and Kevin Fox

NBER Working Paper No. 25695, March 2019

The welfare contributions of the digital economy, characterized by the proliferation of new and free goods, are not well-measured in our current national accounts. We derive explicit terms for the welfare contributions of these goods and introduce a new metric, GDP-B which quantifies their benefits, rather than costs. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive-compatible choice experiments. For example, including the welfare gains from Facebook would have added between 0.05 and 0.11 percentage points to GDP-B growth per year in the US.

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Erik Brynjolfsson, Avinash Collis and Felix Eggers

AEA Papers and Proceedings, Vol. 108, MAY 2018

GDP is a measure of production, and yet it is widely used as a proxy for well-being. It is particularly ill-suited for assessing the contributions of digital goods which are free to consumers and thus excluded from GDP measures. This underscores the need to develop new measures of well-being which can assess not only the contributions of digital goods but also welfare more generally. In Brynjolfsson, Eggers, and Gannamaneni (2017), we propose a new way of measuring consumer welfare using massive online choice experiments. This brief paper motivates the need for such an approach and introduces the method.

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Media Coverage

  1. Bloomberg: ‘Late Capitalism’? Not Even Close, January 2020
  2. Bloomberg: Give Up Facebook for a Month and Help Economists Fix GDP, January 2020
  3. BRINK: How Do You Capture the Economic Value of Free Digital Services Such as Search?, December 2019
  4. Financial Times: To GDP — or not to GDP?, October 2019
  5. Washington Post: What you do on the Internet is worth a lot. Exactly how much, nobody knows, October 2019
  6. CNBC: Would you give up Google for $17,000 a year? The Federal Reserve wants to know, October 2019
  7. Federal Reserve Board: Data-Dependent Monetary Policy in an Evolving Economy, October 2019
  8. La Presse: Le mystère de la valeur de l’internet, August 2019
  9. Frankfurter Allgemeine Zeitung: Was ist die Google-Suche wert?, June 2019
  10. The Wall Street Journal: When GDP Won’t Do: A New Method For Measuring Digital’s Value, May 2019
  11. World Economic Forum: An economist explains how to value the internet, May 2019
  12. CBC: €500 a month for WhatsApp? Study suggests cash values for 'free' digital services, April 2019
  13. Forbes: At Last, We Have An Idea Of What Digital Goods Add To Our Economy, April 2019
  14. The Wall Street Journal: How Much GDP Is Facebook Worth?, April 2019
  15. MarketWatch: Here’s what it would take for users to give up Facebook for a month, April 2019
  16. Quartz: How to redesign GDP for the 21st century, March 2019
  17. MIT News: Facebook is free, but should it count toward GDP anyway?, March 2019
  18. Axios: 1 big thing: The measure of our stuff, March 2019
  19. Project Syndicate: What Will Succeed GDP?, February 2019
  20. American Enterprise Institute: There is no more valuable ‘digital dividend’ than technological progress, February 2019
  21. Washington Post: People love Facebook so much they wouldn’t quit unless we paid them a lot, February 2019
  22. The Boston Globe: What’s Facebook worth to you?, December 2018
  23. Quartz: Half of US college students would quit Facebook for a year if you gave them $200, December 2018
  24. Financial Times: Recalculating GDP for the Facebook age, November 2018
  25. CNN: Technology helped America's economy way more than we thought, August 2018
  26. Financial Times: A few ideas for fixing GDP, August 2018
  27. The Guardian: Why the UK economy needs a platform 9¾ leap of imagination, July 2018
  28. Financial Times: We need a publicly funded rival to Facebook and Google, July 2018
  29. NPR: Internet a la Carte, May 2018
  30. BBC: The Race To Driverless Cars, May 2018
  31. The Times: If the best things in life are free, how do you measure their value?, May 2018
  32. The Australian: Social media worth a fortune to us, May 2018
  33. Independent: If you want to know how much Google and Facebook are worth to you, try thinking about how much money it would take for you to stop using them, May 2018
  34. The Sydney Morning Herald: How much is Facebook and Google worth to you?, May 2018
  35. Bloomberg: How Much Is It Worth to Use Facebook? It Depends, May 2018
  36. Boing Boing: Facebook is worth much less to its users than search and email, but it keeps a larger share of the value, May 2018
  37. The Economist: How much would you pay to keep using Google?, April 2018
  38. Financial Times: Treat social media like email and search engines, April 2018
  39. The Wall Street Journal: Real Time Economics, April 2018
  40. Quartz: How much would you pay for Facebook?, April 2018
  41. BuzzFeed: How Much Would You Pay For Ad-Free Facebook?, April 2018
  42. Marginal Revolution: The value of Facebook and other digital services, April 2018
  43. Die Welt: Nur für diesen Betrag würden Nutzer auf Google verzichten, April 2018
  44. Neue Zürcher Zeitung: Facebook ist für Nutzer 50 Dollar pro Monat wert, April 2018
  45. Il Sole 24 Ore: Quanto pagheresti per continuare a usare Google? La (sorprendente) risposta, April 2018
  46. Le Temps: Un an sans Facebook, April 2018
  47. De Standaard: Voor 31 euro zijn we bereid Facebook op te geven, April 2018
  48. The Economic Observer (经济观察网): 变革的印迹——印刷术对于近代欧洲的影响, March 2018
  49. The Economist: The “free” economy comes at a cost, April 2017
  50. MIT Sloan Management Review: Why We Need New Measures of the U.S. Economy, June 2016


Principal Investigators

Erik Brynjolfsson, Stanford University

Avinash Collis, The University of Texas at Austin

Jae Joon Lee, Stanford University

Project Coordinator: Devin Cook


W. Erwin Diewert, The University of British Columbia

Felix Eggers, University of Groningen

Kevin Fox, University of New South Wales

Ongoing projects

In addition to several ongoing projects by our team, other agencies and companies are also replicating our work across the world including:

  • ESCOE and ONS in UK
  • Google in EU and APAC
  • Nomura Research Institute in Japan and southeast Asia

Contact us

Do you have any suggestions/ questions regarding our research?

Are you interested in collaborating with us on expanding our research?

Please contact Avinash Collis at: