Must-read: Gavyn Davies: “The internet and the Productivity Slump”

Must-Read: Gavyn Davies: The internet and the Productivity Slump: “How much would an average American, whose annual disposable income is $42,300…

…need to be paid in order to be persuaded to give up their mobile phone and access to the internet, for a full year? Would it be more, or less, than $8,400 for the year?… Chad Syverson… calculates that the productivity slowdown in the US is equivalent to about $2.7 trillion of lost output per annum by 2015. Even on the most generous method that he can find to calculate the extent of the underestimated consumer surplus from the digital economy, he reckons that only about one third of the productivity gap can be explained in this way…. He suggests, on prima facie grounds, that few people would value their access to the digital economy at one fifth of their disposable income. Maybe, but… most people are now extremely reliant upon, or addicted to, the internet, especially via their smartphones. Faced with the choice, I doubt whether they would be prepared to be transported back to the obsolete technology of a decade ago in exchange for an annual payment of less than, say, a few thousand dollars a year–i.e. far less than than the value currently accorded to digital activity in GDP…