Get $50 or Stay on Facebook? Would you make the exchange to help economists?

The question is simple, but will you do it? We see a lot of free technologies, in fact, we use many including Facebook, Maps, Twitter, and others, but what benefit is it bringing for the users? Is it helping them in their welfare or if it is adding up to the economy? The answer might surprise you.

Recently, the same question was asked by Erik Brynjolfsson and some other researchers of MIT, with the only difference that this research was aimed to benefit the economists to fix the GDP.

As many apps comes free of cost, then they are certainly not adding up to the GDP, but not if you are seeing them in another way. The authors insisted on the fact that technologies that cost zero dollars can add up to around 0.11% to the annual GDP of the U.S.

The research paper was presented in San Diego during the annual meeting of the American Economic Association.

The main focus of the research paper was on how much user’s lives benefiting from these technologies? The answer is simple; how much are they making users rich? But, those apps that are free are adding to the GDP only in welfare terms.

To solve this issue to a great extent, the researchers conducted experiments to know about the monetary value that users attach to free goods and services. The cost is basically based on perceived benefits and not only actual money.

People in the U.S. attached a total of $42.17 to Facebook. So, can you answer the question now?

Another research in the Netherlands showed that people attached a total of $598 (535.73 euros) to WhatsApp, 100 euros to Facebook and 1 euro to Twitter.

With this information, the economists can develop an alternative to GDP, also known as GDP-B. These new findings can help economists to assess the influence of goods and services on the policies and GDP.


Photo: Gabby Jones/Bloomberg

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