The Internet’s Benefit to Man


In economics the term “consumer surplus” is used to describe the benefit a consumer receives from using a service or product.  It is measured by subtracting what the consumer paid for the good or service from what he was willing to pay for it.  In the age of the internet, calculating the consumer surplus is becoming more and more difficult.  Many services on the internet are completely free (Facebook, Wikipedia, Google, etc.) and it is very difficult to figure out what consumers are actually willing to pay for these services.  IAB Europe, a web-advertising industry group, commissioned McKinsey, a consultancy, to perform a study on what consumers are willing to pay for the services that are already free.  They asked 3,360 consumers how much they would pay for 16 different services that are currently paid for by advertisements on the sites’ pages.  The average price stated was $50 a month.  McKinsey then subtracted the costs to consumers from intrusive ads and privacy issues and came up with a consumer benefit of $41.7 billion to Americans and $89.9 billion to Europeans.  I doubt these numbers come even close to measuring the benefit the internet has had on people’s lives, but economists have to start somewhere.  It will be interesting to see how our understanding of the internet and its benefit (and harm) to humanity evolves over time.

Written by: Toma Karamanolev



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