Gross Domestic Product, or GDP, has long been considered the benchmark for economic well-being. Yet in a rapidly changing digital economy, GDP has lost its relevance as it fails to consider new and emerging business models, such as platform-based companies.
The Stanford Digital Economy Lab is building new metrics for measuring changes in consumer well-being that capture the value of currently unmeasured (and often free) digital goods and services. Our evolved index of digital goods and traditional goods, the GDP-B Index, will be a comprehensive measure of economic output that allows decision-makers to manage the economy more effectively.
GDP measures what people pay for goods and services but what about digital goods and services that are offered for free? Erik Brynjolfsson and Avinash Collis propose GDP-B, a new way to measure the digital economy.