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Using Massive Online Choice Experiments to Measure Changes in Well-being

Erik Brynjolfsson, Felix Eggers and Avinash Gannamaneni

No 24514, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: E01 E16 O1 O4 (search for similar items in EconPapers)
Date: 2018-04
New Economics Papers: this item is included in nep-big, nep-dcm, nep-eff, nep-hap, nep-ict, nep-mac and nep-pay
Note: EFG PR
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Published as Proceedings of the National Academy of Sciences, March 2019

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Journal Article: Using massive online choice experiments to measure changes in well-being (2019) Downloads
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