Claims

Factual · Economics and markets

“And if you try to measure something like consumer surplus from Facebook, it's really quite high.”

Tyler Cowen, economist, interview guest · 18 July 2019 · Tyler Cowen on Big Business (EconTalk)

Measured consumer surplus from Facebook is quite high.

Resolved true The record shows it happened or was so.

What would count as true or false

Judge as of 2019-07-18. True: published research measuring the consumer surplus from Facebook (for example willingness-to-accept or choice-experiment studies such as Brynjolfsson et al. or Corrigan et al.) finds large values (for example hundreds of dollars or more per user per year, or a large total relative to Facebook's revenue or to what users pay), and no comparably credible studies of that time find it low. Mostly true: most such studies find high values but estimates vary a lot or carry clear method caveats, so 'really quite high' slightly overstates it. Mixed: credible estimates differ widely, some high and some modest. Mostly false: the high figures exist but come only from narrow or outlier samples, and the main body of evidence shows modest surplus. False: the measurements available at the time show low or negligible consumer surplus.

Evidence

1. Using massive online choice experiments to measure changes in well-being Proceedings of the National Academy of Sciences (MIT DSpace record) · 26 March 2019

   “For example, the median user needed a compensation of about $48 to forgo Facebook for 1 mo.”

2. How much is social media worth? Estimating the value of Facebook by paying users to stop using it PubMed Central (National Library of Medicine) · 19 December 2018

   “we consistently find the average Facebook user would require more than $1000 to deactivate their account for one year.”

3. Facebook is free, but should it count toward GDP anyway? MIT News · 26 March 2019

   “For instance, Facebook is worth about $40 to $50 per month for U.S. consumers, according to a series of surveys the researchers conducted.”

4. Facebook is free, but should it count toward GDP anyway? MIT News · 26 March 2019

   “Regarding specific companies and products, the surveys found that consumers who use YouTube or Instagram place a lower value on Facebook.”

Reasoning

A peer-reviewed PNAS choice-experiment study published before the claim date found that the median user needed about $48 to give up Facebook for one month, roughly $576 a year (E1, E3). A separate study found that the average Facebook user would need more than $1000 to deactivate their account for a year (E2). Both figures reach the criteria's benchmark of hundreds of dollars or more per user per year. The only caveat in the evidence is that valuations vary between user groups (E4), and no study in the evidence finds the surplus to be low.

Cite this claim

Tyler Cowen, “Measured consumer surplus from Facebook is quite high.” (said 18 July 2019). Verdict: resolved true. Reliability API, claim c_4b3f8369e89c, method 0.1.0+c876030c. https://epistacklabs.com/claims/c_4b3f8369e89c