What is the internet worth

McKinsey, best known for dubious advice (they convinced GE that they had no problems and were chief advisers to Enron, to name but two), have produced a report trying to calculate the economic value of the internet. A daunting task, and there are some serious methodological challenges involved, but there might be interesting things in the exercise itself.

The main findings are that the internet accounts for

  • 3.4% of GDP in 13 countries
  • 21% of GDP growth
  • 2.6 jobs created for each destroyed
  • 10% intra-business productivity gains
  • A consumer surplus of €20/month per user
  • That last one is particularly slippery. Consumer surplus has a very specific economic definition, but there are certainly benefits (and costs) to internet use that are difficult to measure. For one provocative take on this, check out this economic paper on the correlation between increased internet access and rape.

    (via Marginal Revolution)