Social media is a problem for economists. They don’t know how to value it. It has long been argued that it ought to be in the national accounts as part of gross domestic product.
One 2019 study estimated Facebook alone is worth US$40 to US$50 per month for consumers in the United States. But that’s not what we pay. Social media isn’t charged for, and the national accounts measure only the things we pay for, no matter how significant they are in our lives and how many hours per day we spend using them.
As the Australian Senate prepares to hold an inquiry into the impact of social media, economists meeting in Adelaide at the annual conference of the Economic Society of Australia have been presented with new findings about the value of social media that point in a shocking direction. They suggest it is negative. That’s right: the findings suggest social media is worth less to us than the zero we pay for it.
That suggests we would be better off without it. Better off without social media? Leonardo Bursztyn of the University of Chicago presented the findings in the keynote address to the conference. The findings are shocking because they upend one of the tenets of modern economics – that we value the things we do.
Put differently, it’s that our behaviour is the best indication of our preferences. The man who developed this theory of revealed preference went on to win the Nobel Prize in Economics. Here’s what Bursztyn and his colleagues did.
They surveyed more than 1,.