Monday, November 27, 2023

The Digital Welfare of Nations: New Measures of Welfare Gains and Inequality

Digital goods can generate large benefits for consumers, but these benefits are largely unmeasured in the national accounts, including GDP and productivity. In this paper, we measure welfare gains from 10 popular digital goods across 13 countries by conducting large-scale incentivized online choice experiments on representative samples of nearly 40,000 people. We estimate that these goods—many of which are free to users—generate over $2.5 trillion in aggregate consumer welfare across these countries per year, which is roughly equivalent to 6% of their combined GDP. We find that lower-income individuals and lower-income countries obtain relatively larger welfare gains from these goods compared to higher-income individuals and countries. This suggests that digital goods may reduce inequality in welfare within and across countries by disproportionately benefiting lower-income groups.

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