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Do‐it‐yourself Digital: the Production Boundary, the Productivity Puzzle and Economic Welfare

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  • Diane Coyle

Abstract

Part of the debate about the ‘productivity puzzle’ concerns potential mismeasurement of GDP due to digital activities. This paper discusses some measurement issues arising from digitally‐enabled substitutions in activity across the conventional production boundary. Production boundary issues are not new, as conventionally defined GDP statistics account for the monetary cost but not the time cost of consumption and production. This means that changes in the way in which time is allocated between market and home production affect measured growth and productivity, as well as economic welfare. Just as technological innovation in domestic appliances led to a substitution from home production into market consumption in the second half of the 20th century, today's digital innovations are driving some reverse substitution out of the market into home production. Statistical agencies do not currently collect the data needed to measure the scale of the switch, but the available evidence suggests that it may be enough to make a contribution to understanding the current productivity puzzle.

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  • Diane Coyle, 2019. "Do‐it‐yourself Digital: the Production Boundary, the Productivity Puzzle and Economic Welfare," Economica, London School of Economics and Political Science, vol. 86(344), pages 750-774, October.
    • Handle: RePEc:bla:econom:v:86:y:2019:i:344:p:750-774
    DOI: 10.1111/ecca.12289
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    Cited by:

    1. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    2. Diane Coyle & Leonard Nakamura, 2022. "Time Use, Productivity, and Household-centric Measurement of Welfare in the Digital Economy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 42, pages 165-186, Spring.
    3. Ajayi, V. & Pollitt, M .G., 2022. "Green growth and net zero policy in the UK: some conceptual and measurement issues," Cambridge Working Papers in Economics 2255, Faculty of Economics, University of Cambridge.
    4. Diane Coyle & David Nguyen, 2020. "Free goods and economic welfare," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2020-18, Economic Statistics Centre of Excellence (ESCoE).

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