Last year, Robert J. Gordon of Northwestern University proposed that the I.T. revolution has pretty much exhausted its promise. He asked, provocatively: “Is U.S. economic growth over?” And he forecast stagnating living standards for the vast majority of Americans for decades to come.
Government statistics lend support to his skepticism: Value added by the information technology and communications industries — mostly hardware and software — has remained stuck at around 4 percent of the nation’s economic output for the last quarter century.
But these statistics do not tell the whole story. Because they miss much of what technology does for people’s well-being.
News organizations that take advantage of computers to let go of journalists, secretaries and research assistants will show up in the economic statistics as more productive, making more with less. But statisticians have no way to value more thorough, useful, fact-dense articles.
What’s more, gross domestic product only values the goods and services people pay for. It does not capture the value to consumers of economic improvements that are given away free. And until recently this is what news media organizations like The New York Times were doing online.
The Commerce Department is in the process of revising the way it measures G.D.P. to take better account of the contributions of investment in research and development and artistic creation. But even though the revisions to be announced this summer are expected to make the economy look bigger, they are not devised to capture the value that Americans get from digital technologies.
“G.D.P. is not a measure of how much value is produced for consumers,” said Erik Brynjolfsson of the Massachusetts Institute of Technology. “Everybody should recognize that G.D.P. is not a welfare metric.”
G.D.P. misses what Americans gain from sharing information on Facebook or finding information on Google or Wikipedia. It misses how dating sites reduce the cost and increase the odds of finding a mate. It misses the time saved by drivers who use Google Maps and the time gained by consumers from shopping online. Measured in money — what it contributes to G.D.P. — the recording industry is shrinking. Yet never before have Americans had access to so much music.
If using a rental car, a GPS device almost guarantees one never gets lost, ensuring less time (and gas) wasted and more time enjoying the trip. ATMs replace the need for carrying around large amounts of foreign currency when traveling abroad in developed countries (and even many lesser developed ones). Digital cameras help people get the pictures they want, and eliminate the guessing game of shooting with film (also saving the cost of photo development) and producing better memories (which are then easily shared in short order online with friends and family rather than mailed or placed in a photo album).
But what about the qualitative changes such as reduced time being lost or making phone calls for hotel and airline reservations? What about the satisfaction from getting exactly what you're looking for in a hotel room, with no surprises? Or the happiness generated from the hundreds or even thousands of photographs and video taken with a run-of-the-mill digital camera? How is this measured, and how much is it worth?
It's an amazing world, and we're lucky to be living in it.