Michael J. Lippitz

The New Macroeconomics of Consumer Surplus

The standard way to measure economic growth in an economy is through increases in Gross Domestic Product (GDP). However, because prices for digital products and services have been rapidly falling for years, the rapid growth of the digital economy is not well-captured by GDP. In this paper, we review recent efforts to measure the digital economy through Consumer Surplus (CS) and present a framework for measuring the growth of CS as a percentage of economy, along with three examples. We argue that a better way to account for progress in economy would be to combine GDP with CS.