The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

by Erik Brynjolfsson

With a greater volume of digital goods introduced each year that do not have a dollar price, this traditional GDP heuristic is becoming less useful. As we discussed in chapter 4, the second machine age is often described as an “information economy,” and with good reason. More people than ever are using Wikipedia, Facebook, Craigslist, Pandora, Hulu, and Google, with thousands of new digital goods introduced each year. The U.S. Bureau of Economic Analysis defines the information sector’s contribution to the economy as the sum of the sales of software, publishing, motion pictures, sound recording, broadcasting, telecommunications, and information and data processing services. According to the official measures, these account for just 4 percent of our GDP today, almost precisely the same share of GDP as in the late 1980s, before the World Wide Web was even invented. But clearly this isn’t right. The official statistics are missing a growing share of the real value created in our economy.

Good point