The bottom line:
“Ordinary people have known little about the extent of income inequality in their societies, its rate and direction of change, and where they personally fit into the distribution.”
Mark Perry discusses consumption in the information age:
From 1973 to 2013, using data from the Recording Industry Association of America and available here from Minnesota Public Radio. Music sales have collapsed from almost $20 billion in 1999 to less than $6 billion in 2013, the lowest in more than 40 years. Measured by final sales of recorded music for GDP purposes, it would look like the “music well-being” of Americans was at the lowest level in at least several generations, maybe longer. And yet, most Americans (including myself) would probably agree that their access to music today is greater than ever before, and their “music well-being” is at an all-time high – in direct contradiction to what standard GDP statistics would tell us.
Bottom Line: Perhaps all of the discussions about GDP being below potential GDP and fretting about sub-par economic (GDP) growth are really simply a reflection of the fact that GDP is really no longer the best measure of economic performance, economic growth and economic well-being in the Information Age? Thanks to the advances in computer technologies, the Internet and smartphone apps, consumers are getting more and more services like GPS for free (or at a significantly reduced cost compared to the past) today and displacing services that used to get accounted for as market-based production (maps and road atlases). In past decades like the 1950s, maybe economic output measured by GDP was a pretty good measure of both economic performance and Americans’ economic well-being. In 2015, that may no longer be the case.