NOT IN THE GNP—THE FULL VALUE OF THE INTERNET.

NOT IN THE GNP—THE FULL VALUE OF THE INTERNET. The internet has dramatically changed my life and the lives of everybody reading this. This article in the Economist points out that most of the economic impact of these changes on the consumer does not appear in GDP and that this means that the GDP figures greatly underestimate recent economic growth. (One estimate discussed in the article is that GDP should have been increased by $564 billion in 2011 to reflect consumer use of the internet). The article points out that measuring the economic impact of the internet is “devilishly difficult because so much of it has no price….This problem is an old one in economics. GDP measures monetary transactions, not welfare.” The Economist points out that other free leisure activities, such as “watching television” or “playing with your children” are also not valued in GDP calculations. The comments on this post by Tyler Cowen on the Marginal Revolution blog discuss some of the issues in valuing leisure activities on the internet.