Economics on the small scale

Friday, April 14, 2006

The Internet Makes You Richer (and Television ?)


Via Brad Delong comes this little tidbit from this abstract:
Only about 0.2% of consumer spending in the U.S. ... went for Internet access in 2004 yet time use data indicates that people spend around 10% of their entire leisure time going online... Based on expenditure and time use data and our elasticity estimate, we calculate that consumer surplus from the Internet may be around 2% of full-income, or several thousand dollars per user.

Yes Indeed, people get a lot of value out of the Internets.

However, I'd love to see how it compares against Broadcast TV and Cable TV.
The big reason I fled from TV after my College Freshman year was because TV had the ability to capture my attention for (much too) long periods of time with shows (and commercials) that were not worthwhile to watch. Actually, this was probably true when I was younger too, but College is when it became problematic.

Which brings up a different point; Broadcast TV is "free" (besides the cost the equipment and electricity, just like home Internet access) except for a 27% tax on your leisure time in the form of commercials. And the reason that companies buy expensive Television advertisement is that they believe it makes them richer by inducing you to spend on things that you would not otherwise buy.

So my personal belief is that watching TV makes you poorer. I'd love to see if what I believe is measurable doing the same sort of study(PDF) as Austan Goolsbee and Peter J. Klenow have put together.

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