Results for “Larry Summers”
197 found

How much of the value of the internet is not captured in gdp?

by Tyler Cowen May 27, 2015 at 1:33 am in

I have been hearing this question more and more lately, even in China. Overall I think it has gone from an underrated effect to an overrated effect. Tim Worstall offers an introduction to this debate.

Let’s not forget that you do in fact pay for Facebook access, indirectly, when you pay for your cable connection, your iPad, and your smart phone. including the monthly bill, all of which are part of measured gdp. The more value Facebook brings you, the more you would be willing to pay for these goods and services. The same is true for Google and the like. So Facebook and other internet services are part of a bundled package of market value, but that is very different from claiming they are not measured in gdp at all.

There is of course consumer surplus from the internet and Facebook, just as there is from Dunkin’ Donuts. Might that consumer surplus be especially high? Well, we don’t know, but don’t assume it will be. I did some casual googling, and found a number of estimates suggesting that smart phone demand is relatively price elastic, with the iPhone a possible exception to that regularity. That implies consumer surplus isn’t especially high, because many people aren’t willing to buy at the higher price. I thus think Brad DeLong is far too optimistic in his estimates of ratio consumer surplus to market price.

You also could look at the literature on the demand for cable internet services. The results are mixed, but again I don’t see a strong case for a disproportionately high consumer surplus from these services, if anything the contrary.

Now maybe these estimates are wrong, or looking at the wrong margin in some way, but the fact that I hear them mentioned so rarely gives me pause. Cowen’s Third Law.

There is also advertising over the internet. Let’s say Facebook is a profit maximizer. Insofar as Facebook is of value to consumers, the company can get away with putting a lot of ads on the site. These will spur additional market purchases, and so part of the value of the site is again captured in gdp. Obviously some of these ad effects are simply expenditure-switching, and so there is no full capture of value, but still Facebook shows up in gdp statistics in yet another way.

Here are some previous posts on this topic.

Tuesday assorted links

by Tyler Cowen April 7, 2015 at 2:15 pm

1. Santoor music from Iran (short video).

2. Dean Baker on inequality and mobility and me.

3. Delong on Bernanke, Summers, and Krugman and how they think.

4. An ideological Turing simulation of certain Straussian ideas. By Will Wilkinson.

5. Brad DeLong’s arguments for more government, Paul Krugman comments. I see too quick a move from “funder” to “provider” in both sets of remarks. Furthermore most of the hyperbolic argument doesn’t imply much more than a series of low budgetary cost legal mandates, or perhaps nudges. It does not imply a massive expansion of the state sector, quite the contrary. On top of that, government agents and voters presumably are hyperbolic as well.

Assorted links

by Tyler Cowen April 1, 2015 at 12:37 pm

1. Soda taxes don’t seem to work.

2. Can a health care company actually satisfy the customer?

3. How hard is it to become really good at table tennis? And the common law origins of the infield fly rule.

4. Summers responds to Bernanke. And Robert Moses responds to Robert Caro. And Bernanke on the global savings glut.

5. John von Neumann documentary.

6. The original markets in everything.

Assorted links

by Tyler Cowen January 12, 2015 at 12:51 pm

1. Book preview for 2015. Good stuff, including volume four of Knausgaard, a new Stephenson, a new Gaiman, a new Ishiguro, a Philip Glass memoir, perhaps the Niall Ferguson book on Kissinger will be interesting too. Here is another preview list. And who was nominated for a literary Nobel Prize in 1964.

2. The pick-up culture that is Chinese.

3. Another (right-wing?) view on why the leading public intellectual economists are left-wing. And more from Krugman.

4. Voodoo and Haitian mental health. And the culture that is Singapore.

5. Sri Lanka’s surprise (positive) political transition.

6. Summers responds to Andreessen on secular stagnation.

Tuesday assorted links

by Tyler Cowen January 6, 2015 at 12:35 pm

1. “Ekki staðalbúnaður í smalamennsku!” With video, of course, and implying the advantages of water transport.

2. The new “I, Pencil”?

3. Steven Landsburg makes some good points, but Summers may be able to invoke threshold effects.

4. Harvard faculty actually seem to hate the best parts of Obamacare. Bravo to this article. And quick summaries of evidence-based medicine.

5. “I’m the poster child of evil [art] speculation…” An excellent piece, also NYT.

6. How big is the sexism problem in economics? Kimball and anon.

7. Sorkin covers the Lucian Bebchuk fracas.

Assorted links

by Tyler Cowen December 28, 2014 at 12:56 pm

1. How the Chinese mimic foreign brands.

2. Using DNA to catch canine culprits.

3. The David Beckworth criticisms of secular stagnation theories. Just for review, here is the longest Summers statement of the theory I know of.

4. Are the arts dead in New York City? I say “no,” but I couldn’t help but notice that those arguing “no” in this piece made the best case for the “yes” point of view.

5. “Fire Sale: How the Asset Buying Binge of the Great Depression Changed America.”

6. Will Magic Leap make a magic leap?

7. Britain to pay off debts from 1720.