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The Value of the Internet for Consumers

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Abstract

Several studies have examined the market value of paid-for internet services and internet access. This paper estimates the value of leisure time spent online for which the consumer pays no monetary price and which has become increasingly important as a leisure activity. We apply a methodology developed be Goolsbee and Klenow (2006), which relies on differences in time spent online and opportunity cost of time, to an internet users clickstream dataset for the five largest economies in the European Union (Germany, United Kingdom, France, Italy and Spain). We find that, according to our most conservative measure, leisure time spent on the internet generated a consumer surplus of between 0.6 and 1% of full income in 2011 in the countries studied. The total consumer surplus for each country amounted to between 18 billion euros (Italy) and 44 billion euros (Germany).

Suggested Citation

  • Smaranda Pantea & Bertin Martens, 2014. "The Value of the Internet for Consumers," JRC Working Papers on Digital Economy 2014-08, Joint Research Centre.
    • Handle: RePEc:ipt:decwpa:2014-08
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    File URL: https://joint-research-centre.ec.europa.eu/reports-and-technical-documentation/value-internet-consumers_en
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    References listed on IDEAS

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    1. Greenstein, Shane & McDevitt, Ryan C., 2011. "The broadband bonus: Estimating broadband Internet's economic value," Telecommunications Policy, Elsevier, vol. 35(7), pages 617-632, August.
    2. Jeremy Greenwood & Karen A. Kopecky, 2007. "Measuring the Welfare Gain from Personal Computers: A Macroeconomic Approach," NBER Working Papers 13592, National Bureau of Economic Research, Inc.
    3. Smaranda Pantea, 2014. "Has the digital divide been reversed? – Evidence from five EU countries," electronic International Journal of Time Use Research, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)) and The International Association for Time Use Research (IATUR), vol. 11(1), pages 13-42, December.
    4. Pénard, Thierry & Poussing, Nicolas & Suire, Raphaël, 2013. "Does the Internet make people happier?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 105-116.
    5. Russel J. Cooper, 2012. "Measuring the Impact of Innovations in Public IT Infrastructure on the Standard of Living in OECD Economies," OECD Digital Economy Papers 196, OECD Publishing.
    6. Jeremy Greenwood & Karen A. Kopecky, 2013. "Measuring The Welfare Gain From Personal Computers," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 336-347, January.
    7. Austan Goolsbee & Peter J. Klenow, 2006. "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet," American Economic Review, American Economic Association, vol. 96(2), pages 108-113, May.
    8. Hausman, Jerry, 1999. "Cellular Telephone, New Products, and the CPI," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(2), pages 188-194, April.
    9. repec:ipt:wpaper:2013-06 is not listed on IDEAS
    10. Oecd, 2013. "Measuring the Internet Economy: A Contribution to the Research Agenda," OECD Digital Economy Papers 226, OECD Publishing.
    11. Goldfarb, Avi & Prince, Jeff, 2008. "Internet adoption and usage patterns are different: Implications for the digital divide," Information Economics and Policy, Elsevier, vol. 20(1), pages 2-15, March.
    12. Scott Wallsten, 2013. "What Are We Not Doing When We're Online," NBER Working Papers 19549, National Bureau of Economic Research, Inc.
    13. Shane Greenstein & Ryan McDevitt, 2012. "Measuring the Broadband Bonus in Thirty OECD Countries," OECD Digital Economy Papers 197, OECD Publishing.
    14. Ward, Michael R., 2012. "Does time spent playing video games crowd out time spent studying?," 23rd European Regional ITS Conference, Vienna 2012 60374, International Telecommunications Society (ITS).
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    Cited by:

    1. Sobolewski, Maciej, 2021. "Measuring consumer well-being from using free-of-charge digital services. The case of navigation apps," Information Economics and Policy, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    Internet Services; Consumer Surplus; Leisure.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D6 - Microeconomics - - Welfare Economics
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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