GDP-B: Accounting for the Value of New and Free Goods

The welfare contributions of new goods and free goods are not well-measured in standard statistical agency metrics like GDP or productivity. We derive explicit terms for the contributions of these goods and introduce a new framework and metric, GDP-B, which quantifies their benefits. We apply this framework to several empirical examples, including Facebook and smartphone cameras, and estimate their valuations through incentive-compatible choice experiments. Our new approach can help measure welfare changes over time and reveal which goods and innovations contribute the most to economic growth and well-being. (JEL D13, E01, E23, O30)