Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach

Jeremy Greenwood and Karen Kopecky

No 559, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 to 3 percent of consumption expenditure.

Keywords: Compensating Variation; Computers; Electricity; Equivalent Variation; Technological Progress; Tornqvist Price Index; Welfare Gain. (search for similar items in EconPapers)
JEL-codes: E01 E21 O33 O47 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2011-01
New Economics Papers: this item is included in nep-mac and nep-mic
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Related works:
Working Paper: Measuring the welfare gain from personal computers: a macroeconomic approach (2011)
Working Paper: Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach (2007)
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