Tyler Cowen raises more questions than he answers in Fast Company:
The traditional gauge of economic success is profit, but over time we’ll find that such statistics as measures of GDP tell us less and less about broader efforts to improve human well-being. Much of the Web’s value is experienced at the personal level and does not show up in productivity numbers. Buying $2 worth of bananas boosts GDP; having $20 worth of fun on the Web does not. And this effect is a big one. Each day more enjoyment, more social connection, and, indeed, more contemplation are produced on the Web than had been imagined even 10 years ago. But how do we measure those things?
This is not necessarily new. Having $20 worth of fun by reading a library book, or running down a hill, or visiting the Tate Gallery, doesn’t boost GDP much either. So I guess my question for Tyler is this: are you saying that the web has increased the amount of fun that people can have without spending money, or at least has increased the nation’s aggregate fun-to-spending ratio? Are you saying that the correlation between aggregate fun and GDP used to be stronger than it is now, thanks to the advent of the web? And if so, are you implying that policymakers should be concentrating on new aggregates, such as some kind of Gross National Happiness measure, since GDP is proving an increasingly bad proxy for such things?
Of course, determining whether the fun-to-GDP ratio is improving requires coming up with some independently quantifiable measure of aggregate fun, which seems pretty hard. Maybe as an interim measure, before we get there, we should start thinking about Joe Stiglitz’s concept of green net national product. Maybe that would be more correlated to fun than GDP.
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In 1968, a few weeks before he was assasinated, RFK spoke towards how measuring GDP and the equities markets didn’t represent our quality of life:
“We will find neither national purpose nor personal satisfaction in a mere continuation of economic progress, in an endless amassing of worldly goods. We cannot measure national spirit by the Dow Jones Average, nor national achievement by the Gross National Product. For the Gross National Product includes air pollution, and ambulances to clear our highways from carnage. It counts special locks for our doors and jails for the people who break them. The Gross National Product includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and missles and nuclear warheads…. It includes… the broadcasting of television programs which glorify violence to sell goods to our children. “And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… the Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile, and it can tell us everything about America — except whether we are proud to be Americans.”
- Posted by Mark G.Thanks for reminding me why it’s called the dismal science.
- Posted by ottoI would go further and say that the burden of proof is on Cowen and his fellow web enthusiasts to prove (or at least convincingly demonstrate) that the advent of the web has not simply displaced other, offline pursuits of fun with online ones. I, for one, have not noticed a net increase in my disposable leisure hours since the advent of the worldwide web. If anything, I spend more hours hunched in front of a glowing screen than I ever did 20 years ago. Is this progress? Is this fun? Is it even healthy?
- Posted by The Epicurean DealmakerI think he’s replaying Sanford’s idea of fiscal conservatism, with all this talk of fun (but gotta keep it in the country, right?)
- Posted by VennDataThere have been attempts to measure a more wholistic product, but let me mention an issue that’s kind of “fun.” Real studies show that people enjoy hobbies much more than TV. It’s not even close; TV tests as a low payback device that requires low up front investment versus hobbies (and interests) which tend to pay back 4 times as much but which require more up front. So if the net increases “fun,” then is it recovering what TV cost us?
Remember that middle class people used to own pianos. One can argue that TV brought more low grade “fun” to more people - though radio had done that earlier and radio allowed people to do something else while listening - but then how much penetration does the net have? So maybe the net will pay us with more fun, but it may have a 50 year deep hole to fill in.
- Posted by jonathanI guess I’m skeptical of the correlation between being Green, which usually implies a hair shirt lifestyle and “fun” — driving your Prius anywhere versus driving a Ferrari, for example.
But I’d love to see some convincing examples in favor.
- Posted by GeneWell, if I’m getting $20 worth of fun from using my internet connection, I ought to be willing to pay $20 to their ISP to be able to have that fun. But really, most people aren’t willing to pay that. So, revealed preferences say no. Now, I’m sure Tyler has some consumer surplus, but it’s the case with every good (in a market where price discrimination doesn’t work) that most consumers get *some* surplus.
So what, is he saying that the consumer surplus is somehow getting bigger?
- Posted by secretivekMark G. beat me to it. A comment always worth remembering when we talk about economics.
- Posted by AndrewBWFelix wrote:
Wouldn’t aggregate time consumed by “fun” or recreational activities with respect to GDP be the ideal measure?
- Posted by IronmanSecretivec,
It is completely reasonable that some goods have higher consumer surpluses than others. Water, for example, has more than diamonds. The invention of a good with high consumer surplus but low price, like the polio vaccine or perhaps the internet, will raise happiness more than GDP.
- Posted by VictorPersonally I found the Internet to be a lot more fun before money was involved in it at all. Letting commerce onto the Internet was a big mistake. It was way more fun when we techies had our own personal toy to play on. ;^)
- Posted by donnaHow perceptive of you. Your commentary is always sharp and on target. You are a real gift to the internet (seriously).
- Posted by Lord