Although digital technology has become a ubiquitous presence in society — with the Internet, artificial intelligence (AI), data, and machine learning now underlying how we watch TV, eat, exercise, and more importantly how we floss, brush our hair, and toast bagels — measuring its precise impact on the economy is difficult. However, in spite of this, every year dozens of national agencies and research institutes attempt to capture this metric. Why? Because although quantifying the impact of digital technology on the economy may be challenging, it’s a critical data point, known to have a significant impact on everything from GDP to employment to labor productivity.
Unlike estimating the impact of sectors dominated by physical goods, such as the agriculture, food, or automobile industries, the digital sector is harder to quantify because a large portion of it is not physical. It is also frequently an input providing efficiencies for other sectors, and many digital products are free to the user.
But there’s no question that digital technology is critical to economic activity; one estimate reports that the “Internet sector” was responsible for approximately $966.2 billion, or 6% of real GDP, in 2014 alone. As such, these estimates can inform investments, government policies, and regulations. And, what’s more, understanding digital technology’s current impact on the economy may help predict (and therefore prepare for) its future impact.
Consequently, what has resulted is a multitude of institutions and agencies attempting to quantify the economic impact of digital technology, using a multitude of methods to do so.