Consumer Welfare in the Digital Economy

Abstract

Digital goods generate a large amount of consumer welfare but these welfare gains are not properly measured in existing macroeconomic measures. This chapter summarizes existing research on measuring consumer welfare from digital goods. Recent research suggests that massive online choice experiments could be used to measure welfare gains from digital goods in a scalable manner. These estimates can be used to construct macro-economic welfare measures such as GDP-B that better reflect the reality in the digital economy. However, digital goods need not contribute to improved subjective well-being.