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Sunday, April 03, 2016

'The Internet and the Productivity Slump'

Gavyn Davies:

The internet and the productivity slump: How much would an average American, whose annual disposable income is $42,300, need to be paid in order to be persuaded to give up their mobile phone and access to the internet, for a full year? ... The question is relevant to a much more familiar issue. Why has productivity growth slowed down so much in all major economies...

Chad Syverson reckons that the unrecorded value of the digital economy to the average citizen would need to be $8400 per year in order to explain the entire productivity gap. This is one fifth of net disposable income per person. He suggests, on prima facie grounds, that few people would value their access to the digital economy at one fifth of their disposable income.

Maybe, but what is the appropriate figure? ... Faced with the choice, I doubt whether they would be prepared to be transported back to the obsolete technology of a decade ago in exchange for an annual payment of less than, say, a few thousand dollars a year...

If that conjecture (and it is no more than a conjecture) is valid, there might be something in the mismeasurement hypothesis after all. But the evidence suggests that it is not the main reason for the productivity debacle .

    Posted by on Sunday, April 3, 2016 at 10:33 AM in Economics, Productivity, Technology | Permalink  Comments (113)


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