These caveats aside, the clear conclusion is that we’re really, really, getting our GDP numbers wrong. Or to be more precise, the numbers might be accurate, but they are a horrible guide to what we’re really trying to measure. What we want to know is ‘how rich are we? How close with popping with the pleasure of it all are we, being alive in this very digital dawn?’.
In economic terms the best we can do here is to estimate the value we get to consume. As a proxy for that – and we really must note that it’s a proxy – we measure GDP, which is value created at market prices. This is a problem when there’s no direct market value for something. As Google’s chief economist Hal Varian has said, GDP has a problem with free.