Life without it is impossible to imagine both literally and figuratively. Without it some developing economies would not be able to use e-payment methods which have cut costs and made growth possible. (more on e-payment benefits). Figuratively some of us would not be able to survive without the latest social media update delivered to us wherever and whenever we want. Yes the internet has its drawbacks like flooring college productivity, but can we quantify all the amazing things it has given us thus far?
A new report in the Economist has put together great findings which answer that question. One of the more cliché conclusions is that you really can’t put a price on some of the conveniences the internet has given us. For example looking up medical information or cures with a few clicks has given countless people comfort and a sense of control over their ailment.
However economically there are many sides to the profit ‘coin’ for the internet. Wikipedia and ebooks have put the paperback industry out of business, or has it? The savings for the consumer is called the ‘consumer surplus’ and is technically a non-monetary benefit. Also for something like google ad sales the dollar amount can be measured but the convenience gained (welfare) is again something we can’t count.
A couple of brains at U of Rochester tried to create a demand curve based on broadband internet revenue and resulting welfare from it. However their findings don’t take into account free internet spots and their model assumes same average usage of internet from 1999 to 2006. Facebook and Google would say otherwise.
Another study done by Google measured time it took to answer questions using the internet as opposed to a library. They found that the consumer welfare was up to $150 billion nationally (in the US).
No matter how we measure it the bottom line is that the internet has revolutionized our lives from the get-go. The common denominator between all the studies is that the savings due to the internet are in the billions and only rising. Next time you tweet, remember you are creating welfare, not just wasting time!
What other things could be considered while measuring value gained from using the internet?
Can this even be measured even by a large range of numbers? Or is it something that is just an economist’s dream?