MIT | Digital Economy is Undervalued by Trillions of Dollars

According to research conducted by MIT's Measuring the Economy Project, the digital sector generates billions of dollars of welfare for consumers that is not accounted for in official GDP data. The results of a digital survey conducted by MIT economists showed that the median US consumer would agree to pay about $150 per year to use Wikipedia, which would add over $40 billion to US GDP.  If Wikipedia's ratio between the median price forgone and wealth is applied to other popular digital products, the cumulative wealth generated for US consumers by popular digital services alone could bring in an additional $9 trillion, or over 40% of US GDP.

Although these digital products generate wealth for consumers, firms capture only a small fraction of the total value generated. William Nordhaus estimated that firms were able to capture only 2.2 percent of the total surplus generated from technological innovations during the 20th century while the remaining 97.8 percent of the surplus went to consumers. Other examples of these price versus value discrepancies from the MIT survey:

• Among digital products, survey respondents valued web search engines the most. To retain access to search, the median US consumer would be willing to pay $17,500 per year. This number seems far fetched on a practical level, but the message is clear - consumers derive greater value from digital services than their payment for those services currently suggests.
• Even paid video-streaming services, such as Netflix, Hulu, and HBO, could generate a consumer revenue five to 10 times larger than what users pay now to access them.