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What’s it worth to you?

September 19, 2016

Mark Perry at Carpe Diem has a good post about what I’ll call the Information Economy (for lack of a better term). He starts out writing about the different ways music has been delivered for sale and then moves on to the more general point of how information of all kinds gets delivered now.

I particularly liked the "What’s the internet worth to you?" question.

[t]he limitations of GDP accounting

Thanks to the advances in computer technologies, the Internet and smartphone apps, consumers are getting more and more services like GPS for free (or at a significantly reduced cost compared to the past) today and displacing services that used to get accounted for as market-based production (maps and road atlases). In past decades like the 1950s, maybe economic output measured by GDP was a pretty good measure of both economic performance and Americans’ economic well-being. In 2016, that may no longer be the case.

Finally, the video below captures the point I’m trying to make by asking people:

How much would someone have to pay you to give up the Internet for the rest of your life? Would a million dollars be enough? Twenty million? How about a billion dollars?

“When I ask my students this question, they say you couldn’t pay me enough,” says Professor Michael Cox, director of the O’Neil Center for Global Markets and Freedom at Southern Methodist University’s Cox School of Business. The free market, says Cox, creates a huge gap between what consumers would be willing to pay for Internet access and how much it actually costs.
From the video: Since we’re getting something that we really value that is almost free, and wouldn’t give it up for even $1 million or more, “In some ways, maybe we’re all millionaires and billionaires, if we have something that’s worth that much to us… You might just be richer than you realize…”


Update/Related (HT: Joe Sullivan): From a July 2015 WSJ interview with Hal Varian, Google’s chief economist — “Silicon Valley Doesn’t Believe U.S. Productivity Is Down: Contrarian economists at Google and Stanford say the U.S. doesn’t have a productivity problem, it has a measurement problem”:

“There is a lack of appreciation for what’s happening in Silicon Valley,” says Hal Varian, “because we don’t have a good way to measure it.” One measurement problem is that a lot of what originates here is free or nearly free.

Take, for example, a recent walk Mr. Varian arranged with friends. To find each other in the sprawling park nearby, he and his pals used an app that tracked their location, allowing them to meet up quickly. The same tool can track the movement of workers in a warehouse, office or shopping mall. “Obviously that’s a productivity enhancement,” Mr. Varian says. “But I doubt that gets measured anywhere.”

Consider the efficiency of hailing a taxi with an app on your mobile phone, or finding someone who will meet you at the airport and rent your car while you’re away, a new service in San Francisco. Add in online tools that instantly translate conversations or help locate organ donors—the list goes on and on.

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