How much is the Internet worth?

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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