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Accounting for Innovation in Consumer Digital Services: IT Still Matters

David Byrne and Carol Corrado

No 26010, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a framework for measuring digital services in the face of ongoing innovations in the delivery of content to consumers. We capture what Brynjolfsson and Saunders (2009) call "free goods" as the capital services generated by connected consumers' stocks of IT digital goods, a service flow that augments the existing measure of personal consumption in GDP. Its value is determined by the intensity with which households use their IT capital to consume content delivered over networks, and its volume depends on the quality of the IT capital. Consumers pay for delivery services, however, and the complementarity between device use and network use enables us to develop a quality-adjusted price measure for the access services already included in GDP. Our new estimates imply that accounting for innovations in consumer content delivery matters: The innovations boost consumer surplus by nearly $1,800 (2017 dollars) per connected user per year for the full period of this study (1987 to 2017) and contribute more than 1/2 percentage point to US real GDP growth during the last ten. All told, our more complete accounting of innovations is (conservatively) estimated to have moderated the post-2007 GDP growth slowdown by nearly .3 percentage points per year.

JEL-codes: E01 E21 E22 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-pay
Date: 2019-06
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Chapter: Accounting for Innovations in Consumer Digital Services: IT Still Matters (2019) Downloads
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