Essays on Measuring the Modern Economy

Abstract

The goal of these essays is to provide a set of novel methods for measuring different aspects of the modern economy. In the first essay, we develop a framework for the valuation and accounting of free digital services, such as videoconferencing, email, and online news. In this framework, we relax the barter model, which implies that household sells viewership to platforms in exchange for digital services, by allowing the value of digital services to exceed the value of viewership. We also provide an accounting framework on how to record these transactions in a use table. The second essay provides a methodology to empirically quantify the value of these services. We employ the price of paid digital products as a proxy for the value of their free counterparts. We also use hedonic regression to untangle the shadow price of the “free component” of the service from the set of prices from the paid components. We find that the aggregate value of free digital services in the UK makes up 0.57 to 2 percent of household consumption. We extend this methodology to digital piracy in the third essay. The National Accounts does not discriminate between legal and illegal goods and services. If efforts are being made to measure the value of free digital services, for completeness, these efforts could also be extended to free digital services accessed through illegal means. We find that the value of digital piracy is at a similar level to other illegal products recorded in the UK’s National Accounts, namely narcotics and prostitution. In the fourth essay, we develop a novel methodology that exploits the variations in Google Search results to estimate the depreciation of intangibles. In this exercise, we focus on original software and movies. We use the decline in the search activity for each software and movie title as our indicator of the obsolescence of these assets. This assumes that a decline in search activity reflects a decline in the sale of output produced by these assets.

Date of Award	1 Aug 2024
Original language	English
Awarding Institution	King's College London
Supervisor	Mary O'Mahony (Supervisor) & Martin Weale (Supervisor)