The information sector is growing relentlessly, and especially its profits, but its share of US
GDP has actually declined over the last 10 years You’d be forgiven for thinking that this sector doesn’t contribute anything to wealth and to productivity But you would be dead wrong A cynic, Oscar Wilde wrote, is a man who knows the price of everything but the value of nothing And the same thing can be said for our GDP measurements
Because we know exactly how much we pay for stuff, but it’s very difficult to estimate the value we get from things that we get for free or almost for free So, when we replace physical goods we paid for – maps, cameras, calculators, encyclopedias – with digital versions that are almost free, it looks like GDP and productivity decline, but for the consumer it means getting much better quality, greater variety almost for free It’s possible to measure this consumer surplus by asking people how much they would demand to go without a particular service for a month And then it turns out that we value search engines at almost $18,000, email services at more than $8,000 and digital maps at $3,600 If we were to include just those three services in our GDP, then GDP per capita just increased by 50%
And hey, what about these Dead Wrong clips? You get them for free How much would you demand to go without them for a month, huh?