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MIT Research Looks at Facebook's Worth to People

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Monday, May 6, 2019   

CHARLESTON, W.Va. — A new Massachusetts Institute of Technology study aims to capture how much people would pay for free online services such as Facebook, Wikipedia and YouTube. The researchers' premise is that because a country's Gross Domestic Product is a measurement of spending, it fails to include much of the digital economy - which is free.

To calculate this gap, they asked 65,000 people in online surveys what they would need to be paid to stop using various digital services for one month. Respondents in the U.S. said, for instance, they'd want $48 on average to give up using Facebook for a month.

Study co-author Avinash Collis, co-leader of the Measuring the Economy project said he didn't anticipate the responses.

"We were really surprised by the magnitude of these numbers,” Collis said. “We did not expect them to be as high as we found."

The study offers a new category of GDP, known as GDPB - the B is for benefit - to try to quantify the economic impact of services that aren't included in the traditional GDP. It's part of a growing body of research that suggests the whole concept of Gross Domestic Product may need an update.

But according to Collis, the lessons from this research are not simple. First, he said, it would be hard for online services to start charging users.

"Many of these products substitute for each other. Like with Facebook, we found that lots of people who use Facebook also use and value Instagram and YouTube really high,” he said. “So, if you start charging for Facebook, they could migrate to Instagram or YouTube. The implications there are not clear."

In other words, people could just move to whatever service is still free.

He also mentioned that beyond their economic impact, the societal benefits of these platforms need further analysis. Collis offered an interesting comparison.

"Some people could argue that these goods might be like cigarettes - more people buy them, then GDP would increase,” he said. “But it probably is not good from the health implications for a society."

The research indicates economic production isn't the only measure of a nation's well-being.


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