Measuring the Value of Free Digital Goods


Measuring the Value of Free Digital Goods


Thursday 2 November 2023, 12:00 — 13:15


We examine the value derived by UK households from the utilisation of free digital goods. For this exercise, we estimate value from the final consumption of three forms of free digital goods: videoconferencing, personal email, and online news. As our measurement strategy, we employ the prices of “premium” or paid internet goods as a proxy for the value from their free counterparts. We also use hedonic regression to extract the value of the “free component” of these goods and untangle them from the value of the premium-exclusive components. Our estimates show that in 2020, the aggregate gross value derived by UK households from the consumption of the three digital services was between GBP 7.0 billion and GBP 25.4 billion, which is 1.1 to 2 percent of household final consumption expenditures (HFCE). We also observe that the value derived by households from consuming these goods is growing much faster than HFCE. Our estimates show that in 2020, the initial year of the COVID pandemic, real HFCE decline would have been 0.07 to 0.13 percentage points slower had the value of the three digital goods been incorporated in the estimates.

John Lourenze Poquiz is a doctoral candidate specializing in Economics at King’s College London. His professional background spans over seven years, during which he has been actively engaged in the field of economic measurement. Notably, he was a senior statistician for the National Accounts team at the Philippine Statistics Authority, where he was involved in the compilation/estimation of the quarterly GDP, seasonal adjustment of GDP estimates, analysis of GDP revisions, and the development and compilation of various Satellite Accounts. At present, John’s research revolves around enhancing the measurement strategies for critical macroeconomic indicators such as GDP, Household Consumption, and Intangible Investments.

Chair: Leonard Nakamura, Federal Reserve Bank of Philadelphia

Discussant: Carmit Schwartz, University of New South Wales

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