Productivity growth in the digital economy

Households use their time, along with capital services and digital products, to produce leisure services. This production is currently missing from official statistics, leading to an understatement of economic activity.

This project estimates values that households attach to digital leisure activities through a multi-wave online survey on a representative sample of the UK population, examining their robustness across time and sensitivity to socio-demographic differences.

The project also investigates how the ability of households to produce digital leisure services is influenced by the size of their social networks. It uses this information to derive extended measures of activities for the UK economy and examine their effect on conventional GDP and productivity growth.

To address the absence of observable prices and quantities in households’ production of digital leisure services, we adopt the methodology proposed by Schreyer (2021). This approach is consistent with the principles of the System of National Accounts (SNA) and enables the construction of coherent nominal values, unit costs, and volume indices for household production on own account.

Since the methodology requires estimating the value households place on digital leisure activities, we conduct a multi-wave online survey with a representative sample of the UK population. This allows us to build a panel dataset capturing household valuations for selected digital leisure activities, and to assess their reliability and robustness across socio-demographic groups and over time.

We also examine how the capacity of households to produce digital leisure services is shaped by the size of their user networks – another central feature of Schreyer’s framework.

By combining these valuations with estimates of network effects, we generate extended measures of activity (EMA) for the UK economy and evaluate their implications for conventional indicators such as GDP and productivity growth.

• Preliminary results suggest that the nominal value of digital leisure services corresponds to 8% of the UK nominal GDP.
• A positive effect is also expected with respect to real values and their growth rates.
• While the effect on produced output is expected to be positive, the effect on measures of productivity is not straight-forward.
• Once real EMA estimates and their growth rates are calculated, we will also construct EMA based estimates of labour productivity and Total Factor Productivity to examine the effect of digital leisure services on productivity growth.

The project will deliver practical, scalable tools to improve the measurement of productivity and economic welfare in the digital age. Outcomes include:

• New frameworks for valuing non-market digital services and incorporating them into GDP and productivity measures.
• Guidance for National Statistical Institutes on addressing digital goods, household production, and product churn.
• Improved economic indicators that better reflect consumer experience, informing more effective economic and innovation policy.

By enhancing the alignment between digital consumption trends and official statistics, this work supports evidence-based responses to productivity challenges and helps restore the relevance of economic measurement in a rapidly evolving digital economy.

Brynjolfsson, E., Collis, A., Diewert, W.E., Eggers, F. and Fox, K.J. ‘GDP-B: Accounting for the value of new and free goods’ American Economic Journal: Macroeconomics (forthcoming)

Schwartz, C., Fox, K., Poquiz, J.L. ‘Productive screentime’ Contributed session I: National Accounts/prices. ESCoE Conference on Economic Measurement, King’s College London, 21-23 May 2025.

Brynjolfsson, E. ‘GDP-B: A new framework for measuring the economy‘ Plenary session II. ESCoE Conference on Economic Measurement, King’s College London, 21-23 May 2025.

Fox, K., Schwartz, C., Lourenze Poquiz, J. and Collis A. ‘Productive screentime’ The 8^th World KLEMS Conference, Tokyo, March 2025