I think the question of GDP measurement is a big deal here. GDP deflators determine what counts as “economic growth” compared to nominal price changes, but deflators don’t really know what to do with new products that didn’t exist. What was the “price” of an iPhone in 2000? Infinity? Could this help recover Roodman’s model? If ideas being produced end up as new products that never existed before, could that mean that GDP deflators should be “pricing” these replacements as massively cheaper, thus increasing the resulting “real” growth rate?
This is an interesting idea. It wasn’t a focus of my work, but my loose impression is that when economists have attempted to correct for these kinds of problems the resulting adjustment isn’t nearly large enough to make Roodman’s model consistent with the recent data. Firstly, measurements of growth in the 1700s and 1800s face the same problem, so it’s far from clear that the adjustment would raise recent growth relative to old growth (which is what Roodman’s model would need). Secondly, I think that when economists have tried to measure willingness to pay for ‘free’ goods like email and social media, the willingness is not high enough to make a huge difference to GDP growth.
This is an interesting idea. It wasn’t a focus of my work, but my loose impression is that when economists have attempted to correct for these kinds of problems the resulting adjustment isn’t nearly large enough to make Roodman’s model consistent with the recent data. Firstly, measurements of growth in the 1700s and 1800s face the same problem, so it’s far from clear that the adjustment would raise recent growth relative to old growth (which is what Roodman’s model would need). Secondly, I think that when economists have tried to measure willingness to pay for ‘free’ goods like email and social media, the willingness is not high enough to make a huge difference to GDP growth.