How much is the Internet worth?

by on February 7, 2006 at 7:39 am in Web/Tech | Permalink

For some goods, the main cost of buying the product is not the price but rather the time it takes to use them. Only about 0.2% of consumer spending in the U.S., for example, went for Internet access in 2004 yet time use data indicates that people spend around 10% of their entire leisure time going online….we calculate that consumer surplus from the Internet may be around 2% of full-income, or several thousand dollars per user. This is an order of magnitude larger than what one obtains from a back-of-the-envelope calculation using data from expenditures.

Here is the paper.  I call it a good start, but let us not forget the Internet also brings price closer to marginal cost in many markets.  Your on-line searching has external benefits for others.  Or how about another paper: "What is the iPod worth?"  TiVo?  The more we are changing the use of our time, the less we can trust real income statistics.

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