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The welfare contributions of new goods and free goods are not well-measured
in our current national accounts. 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.
We find that including the gains from Facebook adds 0.05 to 0.11 percentage
points to welfare growth per year while improvements in smartphones adds
approximately 0.63 percentage points per year.
